Figure 1. European Union Emission Trading Scheme: Verified Carbon Dioxide Emissions in First Trading
Period, in Metric Tonnes.
Verified Emissions
Country 2005
Austria 33,372,826
Belgium 55,363,223
Cyprus 5,078,877
Czech Republic 82,454,618
Denmark 474,990,760
Estonia 12,621,817
Finland 33,099,625
France 131,263,787
Germany 26,475,718
Greece 71,267,736
Hungary 26,161,627
Ireland 22,441,000
Italy 225,989,357
Latvia 2,854,481
Lithuania 6,603,869
Luxemburg 2,603,349
Netherlands 80,351,288
Poland 203,149,562
Portugal 36,425,915
Slovakia 25,231,767
Slovenia 8,720,548
Spain 183,626,981
Sweden 19,381,623
United Kingdom 242,513,099
Total 2,012,043,453
Source: European Commission Press Release, May 23, 2008.
2006
32,382,804
54,775,314
5,259,273
83,624,953
478,016,581
12, 109,278
44,621,411
126,979,048
34,199,588
69,965,145
25,845,891
21,705,328
227,439,408
2,940,680
6,516,911
2,712,972
76,701,184
209,616,285
33,083,871
25,543,239
8,842,181
179,711,225
19,884,147
251,159,840
2,033,636,557
2007
31,751,165
52,795,318
5,396,164
87,834,758
487,004,055
15,329,931
42,541,327
126,634,806
29,407,355
72,717,006
26,835,478
21,246,117
226,368,773
2,849,203
5,998,744
2,567,231
79,874,658
209,601,993
31,183,076
24,516,830
9,048,633
186,495,894
15,348,209
256,581,160
2,049,927,884
Change
2005 vs.
2007
- 4.9%
- 4.6%
6. 2%
6.5%
2.5%
21.5%
28.5%
- 3.5%
11.1%
2.0%
2.6%
- 5.3%
0.2%
-0.2%
- 9.2%
- 1.4%
-0.6%
3.2%
- 14.4%
- 2.8%
3.8%
1.6%
- 20.8%
5.8%
1.9%
This led to a complete breakdown of the
market for allowances in the last part of
the first trading period, since the market
was flooded. Member states also tend to
favor certain sectors considered important
in the national economy – for example,
the paper industry in Finland – to protect
their competitive situation in international
markets for their products.
Even though the ETS directive specifies
that NAPs should respect national obligations to reduce emissions, the total
amount of allowances available in the
first trading period did not lead to a
reduction of total emissions from the
EU (fig. 1). Verified emissions saw a net
increase over the first phase of the
scheme. In the countries for which data
is available (all 27 member states minus
Romania, Bulgaria and Malta), emissions
increased by 1. 9 percent between 2005
and 2007. It is difficult to assess whether
emissions would have been higher without the ETS, but since allowance prices
were very low, that is not probable. This
fact also led the European Commission
to reduce the total amount of allowances
issued in each country when approving
NAPs for the second trading period.
District Heating and Cooling
There will be no EU initiative comparable to the ETS directed at smaller
producers of emissions with less than
20 MW of thermal output before 2013,
when a new directive [Com(2008) 17] with
targets for emission reduction efforts in
this nontrading sector will take effect.
This directive aims at reducing the
greenhouse gas emissions from non-ETS
sources by 10 percent by 2020, by distributing the effort among member
states – hence the name “effort-sharing
directive,” taking into account those
member states’ development and gross
national product. Targets are individual
for each country, with a maximum
reduction of 20 percent for some rich
and developed states, and emission
increases allowed in poorer and less
developed member states.
Since only large installations are
covered by the ETS, small installations
(and 60 percent of EU CO emissions)
2
fall outside the system. There is some
concern that these smaller systems may
play a role in an effect similar to what
is known as ‘carbon leakage’ – a term
describing the effect of the ETS on the
global competitiveness of European
industry. Carbon leakage concerns the
leaking of jobs, not CO , as a result
2
of imposing a CO -reduction cost on
2
European industries that industries outside the EU don’t have. The fear is that
industry will move away from the EU.
In European district heating and cooling
circles, a similar effect is feared not
across geographical borders but across
the border between the trading sector in
the ETS with its large installations and
the non-ETS sector with small installations. The concern is that existing or
potential district heating and cooling
customers could choose to use individual
heating or cooling installations to avoid
the costs of the ETS placed on the district
energy system.
In the heating and cooling market,
district energy systems and their large
production plants are competing with
millions of small individual units. Most
European district heating systems are not
confined to a campus, hospital or such,
but are supplying heat to many buildings
with different owners across cities.
The effort-sharing directive mentioned
above, with its focus on reducing emissions from the non-ETS sector, leaves it
up to member states to decide emission
reductions (and thus costs) on production in small installations competing
with district heating and cooling systems.
This may leave individual heating and
cooling supply in some countries without
reduction obligations and cost, whereas
