Issue: 10 Wednesday, 22 June 2016
We are pleased to present the International Carbon Action Partnership (ICAP) newsletter, a quarterly summary of the latest developments in emissions trading around the world and activities here at ICAP.
For more information on operating cap-and-trade programs and those under development / consideration around the world, please visit the ICAP Interactive ETS Map on the ICAP website. It is updated regularly as new information becomes available.
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On 18 May, Ontario passed legislation introducing a cap-and-trade system. The system will launch next year, with a first compliance period starting 1 January 2017 and ending 31 December 2020. Ontario’s ETS design aligns closely with that of the California-Québec carbon market, with which it intends to link. In order to enable the province to meet its 2030 emissions target of reducing emissions by 37% from 1990 levels, the initial allowance cap for 2017 is set at 142 million tCO2e and set to decline by 4.17% per year until 2020. The system will cover emissions from the power sector (including imported electricity and natural gas distribution), industry and petroleum product suppliers.
On 17 May, the Republic of Korea’s Cabinet adopted several changes to the Korean emissions trading scheme (KETS). These changes had first been announced in February. The amendments to the green growth and carbon emissions trading ordinances give the Office for Government Policy Coordination (OGPC) under the Prime Minister overall control both over the KETS and the country’s climate change policies more broadly. Allocation in the KETS will be coordinated by the Ministry of Strategy and Finance, while the Ministry of Environment, alongside the ministries of finance, agriculture and transport are tasked with enforcing the KETS. In addition, the government approved measures to increase the supply of allowances in the Korean market to ease pressure on entities that are short of allowances.
On 11 May, French Environment and Energy Minister Ségolène Royal reconfirmed France’s intention to introduce a unilateral price floor for domestic electricity producers covered under the EU ETS. The proposed floor price would initially be set at EUR 30 per ton of CO2 and may increase thereafter. The proposal is expected to be included in the 2017 finance bill. The underlying objective is to decrease the amount of coal-fired electricity production in France, which, under current market conditions, is almost twice as profitable as gas.
The French initiative comes in the context of the ongoing negotiations on the design for the European Union Emissions Trading System for the post 2020 period, where France has been pushing for a “Soft price collar for the European Carbon Market”. Other topics at the heart of the review are the trajectory for the cap (Linear Reduction Factor, LRF), benchmarks, options to address carbon leakage, and how the innovation and modernization funds will be financed.
New Zealand has completed the first stage of the scheduled review of its Emissions Trading Scheme (NZ ETS). As Climate Change Minister Paula Bennett announced, the 1-for-2 surrender obligation will be phased out over the next three years. Introduced as a temporary measure in 2009, the measure allows participants to surrender one allowance for every two tons of emissions released, hence entities currently only face 50% of the compliance cost. However, starting in 2017, participants will face 67% of the compliance cost, rising to 83% in 2018, with participants facing the full cost per ton of emissions from January 2019. Changes will affect all sectors under the NZ ETS with a compliance obligation, including industry, power generation, waste, and transport. Together, these account for around half of New Zealand’s emissions.
On 13 May, the National Development and Reform Commission (NDRC), in charge of the national ETS development in China, issued a non-public notice (Chinese) to the local DRCs expanding the subsectors covered by the national ETS in the chemicals, iron and steel, and power sectors. The overall covered sectors have not changed. Estimates (Chinese) suggest that approximately 7,000 companies would be included in the national ETS from next year.
On 22 April, the Kazakh Parliament passed amendments to the Environmental Code temporarily suspending the Kazakh Emissions Trading System until 2018 (press release - Russian). The aim is to improve the monitoring, reporting and verification (MRV) system, as well as the overall greenhouse gas emissions regulation and ETS operation. In the meantime, the system is due to restart in 2018 with new allocation methods and trading procedures for all market participants.
CNY 53.66 (USD 8.14)**CNY 10.00 (USD 1.52)**CNY 13.18 (USD 2.00)**CNY 7.14 (USD 1.08**CNY 16.39 (USD 2.49)**CNY 36.00 (USD 5.46)**CNY 19.00 (USD 2.88)**
Tanjiaoyi News Service (Chinese)
Carbon News New Zealand
On 26 May, the German Federal Ministry of Environment, Nature Conservation, Building and Nuclear Safety (BMUB) and ICAP co-hosted a side event on joint governance structures for linking. Benjamin Görlach, Ecologic Institute, presented the findings of a report on the legal arrangements for linking, as well as the institutional frameworks for managing a joint carbon market. Policymakers from Germany, New Zealand and Vermont then discussed prospects and pathways for linking going forward.
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