13 September 2010

"Minuscule": Effects of European ETS on CO2 Emissions

The UK NGO Sandbag has released a report (PDF) evaluating the effects of the European Emissions Trading Scheme on the bloc's carbon dioxide emissions.  Here is an excerpt from the report:
We are now two years into the second Phase of the EU Emissions Trading Scheme (ETS) and it is already clear that, like Phase I, Phase I I will fail to deliver significant abatement2. Policymakers set a Phase I I cap sitting just 6% below 2005 allocations3. But as 2005 was actually overallocated by more than 7% meaning Phase I I actually represents a 1% growth cap against 2005 emissions4. Furthermore, this unambitious Phase I I cap was almost immediately blindsided by the recession. In 2009 the recession dragged down production levels by 1 3.85%, reducing emissions by 1 1 .6%5.

Even with an aggressive economic recovery, our projections find it unlikely that the Phase I I cap would constrain emissions by more than 32Mt across the full 5 years of the phase (2008-1 2), a meagre 0.3% of the 1 0.5 billion tonnes we expect covered installations to emit across the period. To put this in context, the current phase of the ETS, which polices more than 12,000 installations, would have been almost twice as effective if it had simply enforced a cap on one of Europe's largest polluters: Drax power station in the UK is likely to face a shortfall of 60Mt across the same period, double the net effect of the entire scheme.

Furthermore, the low cost and high availability of offsets make it is highly unlikely that this meagre 32Mt of abatement will take place in Europe. I t is more probable that European emitters will purchase cheap offsets to give them a carbon space to grow domestic emissions. In fact, despite the promise of much more aggressive Phase I I I caps we find that on-going availability of cheap offsets could allow Europe’s domestic emissions to grow a staggering 34% from current levels by 2016.
In The Climate Fix, I present data suggesting that Europe's rate of decarbonization was essentially unchanged before and after implementation of the Kyoto Protocol, up to the period covered by the Sandbag analysis.  The Sandbag analysis suggests that this finding holds to the present.  The strong implication is the that EU ETS has not accelerated BAU decarbonization in Europe.

Of note, the European Commission agrees with the Sandbag analysis, but not the implications that they draw:
The European Commission agrees in broad terms with the analysis underlying the Sandbag report, in that supply exceeds demand for allowances in the current trading phase, Maria Kokkonen, spokeswoman for Climate Action Commissioner Connie Hedegaard, told EurActiv.

"We do not, however, share all the policy conclusions drawn from it. The EU ETS has undergone a fundamental reform as part the climate and energy package and is on course to be even more effective in the future. The priority is to properly implement these fundamental reforms in a timely manner," she said.
This response would seem to suggest that the spell of emissions trading is still working its magic.  It will be interesting to see how long this illusion can persist.


  1. Great cartoon choice.

    Yes, deep cynicism all round. There is no intention of reducing CO2 that in any way interferes with business. Offsets will cover any targets easily. Monbiot was driven to fury by the EU climate conference targets (British plans were scuppered by the Germans and Poles).

    I have always said that environmentalists were being taken for a ride, but they are being well rewarded for the trip. Friends of the Earth have railed against carbon trading but 70% of their funds comes from promoting global warming for various European state entities. Behind all environmental groups appear to be either vast corporate / banking funds or former big oil trusts like Pew and Rockefeller.

  2. I recently discovered this view from the left. I haven't read the book yet. However, the review below pretty well sums up my take on the whole green movement. It is corporate co-opted class warfare from a movement which has always been right wing, often fascist and the tool of the aristocracy (both in Britain and the USA).

    Putting the hippies on the payroll

    Green Capitalism: Manufacturing Scarcity in an Age of Abundance, by James Heartfield

    "In other words, green capitalism is not a passing fad adopted by a few corporate bosses, too spineless to stand up to the hippies; it expresses an essential feature of the social system. As Heartfield reminds us, the origins of modern environmentalism lie in the 1970s when the elite industrialists of the Club of Rome commissioned The Limits to Growth report. As the long post-war boom ended, arguing that the world was running out of resources was another way of saying that there was nothing left to redistribute, and that trade unions must settle for lower wages (p27). (Needless to say, the Club of Rome’s predictions about the exhaustion of natural resources were all confounded [p13]).


  3. Heading typo "Miniscule" should read "Minuscule"

  4. -3-heyworth

    Thanks! That small error has been fixed ;-)

  5. Not one AGW inspired policy has worked.
    There is no reason to believe any ever will.
    So perhaps it is time to start checking the basic assumptions?
    In the real world that is what would be done: a thorough, open, no-holds-barred review. But AGW has never been about the real world, has it?

  6. I see Sandbag mis-spelled that word too.

    Roger did you notice http://www.sandbag.org.uk/carbondata/carma_top95 maps of all power stations in the world.

  7. Here is Monbiot's rant.


    Germany: the new dirty man of Europe:

    The new emissions agreement is a disaster. Angela Merkel is prepared to go green only when it doesn't hurt big business.

    So much for the Europeans leading the way on climate change. Even as our governments claim they want to drag the world into an effective climate agreement in Poznan in Poland, they have just pulled Europe out of one in Brussels.

    The agreement they have just reached is a disaster. The 20% carbon cut they promise by 2020 falls miles short of what's needed, and they'll be able to buy most of it from abroad anyway. All this means, in a world which has to eliminate most of its carbon pollution, is that other countries, which have sold their easiest reductions to us, will then find it harder to make emissions cuts of their own. It's carbon colonialism, in which Europe picks the low-hanging fruit in developing countries, leaving them with much tougher choices later on.


    This is Monbiot before he was contracted to propagandise global warming / carbon trading for the Guardian. He wasn't nearly as stupid as he pretends to be now. In fact he accurately predicted the current situation pretty well. Identifying the American Gore/Enron team as the main suspects at Kyoto. However, I believe he is being very naïve about the British position.


    Hurray! We’re Going Backwards!

    Before Kyoto, the other negotiators flatly rejected Gore’s proposals for emissions trading. So his team threatened to sink the talks. The other nations capitulated, but the US still held out on technicalities until the very last moment, when it suddenly appeared to concede. In 1997 and in 2007 it got the best of both worlds: it wrecked the treaty and was praised for saving it.

    Hilary Benn is an idiot. Our diplomats are suckers. United States negotiators have pulled the same trick twice and for the second time our governments have fallen for it.

    There are still two years to go, but so far the new agreement is even worse than the Kyoto Protocol. It contains no targets and no dates. A new set of guidelines also agreed at Bali extend and strengthen the worst of Al Gore’s trading scams, the clean development mechanism Benn and the other dupes are cheering and waving their hats as the train leaves the station at last, having failed to notice that it is travelling in the wrong direction.


  8. Clearly, I need to read the Climate Fix, but until them, I'm still confused about the argument here.

    The report seems to indicate that CO2 reductions have not materialized because the initial caps and shares were too high, so that the reduced cap has not netted a reduction. Ok. So, ratchet down the caps. Problem solved, right?

    But then there is the issue of offsets. They are "cheap" and presumably this means ineffective?? But reductions in carbon impact are real, changes in land use, potential capture technologies. Doesn't this speak to better regulation of what counts as an offset.

    Finally, there is the claim made by Monbiot that projected caps are insufficient. Fair enough.

    In other words, I see an argument that the current implementation of cap and trade is insufficient and in some determinable ways flawed. That's fair, but I don't see how it leads to the conclusion that cap and trade is a hoax. Why not lead to the conclusion that we should fix these practical issues?