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Emissions Trading Scheme

Volume 715: debated on Wednesday 16 December 2009


Asked by

To ask Her Majesty's Government what changes they are considering for Phase 3 of the European Union Emission Trading Scheme from the end of 2012. [HL785]

As part of the EU Climate and Energy Package, in December 2008 EU member states reached agreement on a revised European Union Emission Trading System (EU ETS) to apply from 1 January 2013. The revised EU ETS will play an important in meeting the EU's commitment to reduce greenhouse gas (GHG) emissions by 20 per cent by 2020. It includes:

a centralised, EU-wide cap on emissions with a trajectory declining annually by 1.74 per cent of 2005 emissions. This will deliver an overall reduction of 21 per cent below 2005 verified emissions by 2020;

a significant increase in auctioning levels—at least 50 per cent of allowances will be auctioned from 2013; compared to around 3 per cent in Phase II;

100 per cent auctioning to the power sector in the UK and across most of the EU from 2013;

sectors at significant risk of carbon leakage to receive 100 per cent free allocation, based on an environmentally ambitious benchmark;

access to international project credits from outside the EU to be limited to no more than 50 per cent of the reductions required in the EU ETS across 2008-20;

the potential for opting out small emitters and hospitals from EU ETS, providing they are subject to equivalent national measures; and

inclusion of aviation in the EU ETS from 2012.

In the event that the EU moves to a 30 per cent GHG emissions reduction commitment as part of an international agreement on climate change, further changes will be needed to the EU ETS, including tightening the cap to meet the 30 per cent reduction target.