IEEP & IES Environmental Policy Forum


"The EU ETS: Reform Prospects and Past Experience"

Picture of the lecturers
Left to right: Oberthür, Bernheim, Wettestad, Pallemaerts
On Thursday 28 February the Institute for European Studies at Vrije Universiteit Brussel (IES) together with the Institute for European Environmental Policy (IEEP) organised an Environmental Policy Forum on "The EU Emissions Trading System (ETS): Reform Prospects and Past Experience". 32 participants attended the forum. The members of the panel were Thomas Bernheim (DG Environment, Unit dealing with Market-based Instruments), Jørgen Wettestad (Senior Research Fellow at the Fridtjof Nansen Institute, Oslo, and co-author of the book EU Emissions Trading: Initiation, Decision-making and Implementation (Ashgate, 2008) Sebastian Oberthür (IES Academic Director) and Marc Pallemaerts (Senior Fellow and Head of Environmental Governance Research Team at the IEEP).

Summary


Sebastian Oberthür opened the forum and gave the floor to Mr. Bernheim who presented the Commission’s new proposals for the future of the EU Emissions Trading System (ETS). When presenting the objectives of EU ETS revision, Mr. Bernheim highlighted the need to ensure a cost-effective contribution to achieving 20% GHG reduction by 2020, and up to a 30% reduction to be reached in the case of an international agreement on binding GHG reductions, He also emphasised the need to improve the EU ETS based on experience led so far, enhance predictability and certainty for long-term emission reductions and contribute to developing the international carbon market and encourage action globally. Mr. Bernheim then went through the proposal’s scope, targets/cap-setting, allocation methods, international aspect, monitoring, reporting, verification and compliance issues. He then exposed what the next steps are meant to be, emphasising the endeavour to achieve adoption of the proposal by Council and Parliament before the next European elections in spring 2009. According to Mr. Bernheim the ETS is the cornerstone of the EU’s market based-strategy to reduce greenhouse gases cost-effectively. The essential features of the ETS review are a fully harmonised approach, an ambitious cap to ensure real emissions reductions, improvement taking into account past experience, and an open and transparent process for implementation.

Sebastian Oberthür then gave the floor to Jørgen Wettestad to comment on the basis of his research on the development and implementation of the EU ETS in its current form. Mr. Wettestad focused on four key ETS design characteristics: centralisation, sectoral coverage, the method of allocation and the links to Kyoto CDM/JI. On each of those aspects, he confronted the Commission’s proposal for ETS post-2012 with what the Commission initially intended (preferences expressed in e.g. 2000 Green Paper and 2001 ETS proposal) and then elaborated on whether and why the Commission’s position would prevail. As a conclusion, Mr. Wettestad expressed his main impression: the Commission seems now set to achieve the centralised and auction-based ETS it initially sought. He then wondered whether this could be seen as a grand tactical victory for the Commission and whether this ’method/tactic’ would be applied in the case of renewables trading.

Mr. Oberthür then opened the floor to questions. Amongst others, Mr. Bernheim answered Mr. Pallemaerts’ questions as to whether the Commission would have sufficient human resources to fulfil its increased implementation and monitoring tasks under the new proposal, stating that even though the European Commission’s DG Environment is composed of approximately 600 employees with around 20 persons working on the ETS, the administrative burden did not make it impossible to deal with the scheme thanks to the comitology procedure and close working relations with the European Parliament and private actors.


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