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Title:
The EU Emissions Trading Scheme and Biomass
 
Author(s):
Schwaiger, Hannes; Türk, Andreas; Arasto, Antti; Vehlow, Jürgen; Kautto, Niina; Sijm, J.P.M.; Hunder, Marzena; Brammer, John
 
Published by: Publication date:
ECN Policy Studies 20-4-2009
 
ECN report number: Document type:
ECN-O--09-009 Other
 
Number of pages: Full text:
73  Not available.

Abstract:
Within its Energy and Climate Package, adopted by the European Parliament in December 2008, the European commission set a 10% minimum for the market share of renewables in the transport sector in 2020. To find the appropriate instruments to reach this target and the instrument mix with which biomass use in general could be best stimulated are the main questions of this project. An important instrument of the European Climate Policy is the European Emissions Trading Scheme (EU-ETS), which started operation in 2005. Previous work done within Bioenergy NoE showed that only a high share of auctioning of allowances and a high CO2 price provide necessary incentives for a higher biomass use. According to the Energy and Climate Package, all allowances will be auctioned in the energy sector from 2013 on, with exceptions for a few CEE countries. Based on work done within the project, a model has been developed to analyse at which CO2 price biomass becomes competitive in case of 100 per cent auctioning or at a lower level. The European Commission furthermore decided not to include the road transport sector into the EU-ETS until 2020. Whether the inclusion of the road transport sector in the EU-ETS, could help introducing biofuels, a separate trading scheme for biofuels should be set up, or biofuels should be addressed with other policy instruments, was another main question of this project. The first result shows that an integrated scheme would hardly have any effects on the use of liquid biofuels in the transportation sector, but might cause higher CO2 prices for the energy and industry sector. A separate trading scheme has been implemented in the UK in 2008, California is planning such as scheme in addition to include the road transport sector into the future ETS. Within this project the design of such as system has been elaborated based on the comparison of several policy instruments to increase the use of liquid biofuels in the transportation sector. Policy interaction was a further major focus of the project. At present, multiple policy instruments are applied simultaneously in the climate and energy policy field at both the EU and Member State levels. The targets and objectives of these instruments often overlap, creating interactions between such instruments. This interaction can be complementary and synergistic, yet various instruments can also reduce the effectiveness of one another and undermine meeting the objectives of each instrument, when the targets are contradictory. This task analysed the interactions between the EUETS and national climate/bioenergy support instruments and their impact on biomass use in the seven NoE countries involved in the project. The country analyses confirmed that it is important to identify the overlaps and interactions of policy instruments as there can occur both synergies and conflicts. The effect of the EU-ETS alone on biomass use is difficult to isolate, however the changes in fuel mix in the NoE countries suggest the combined effect of the national policy instruments and the EU-ETS. Competition for biomass resources is not yet seen as serious, however it is anticipated to tighten in the future due to high carbon allowances and the RES targets set at the EU and national levels. National biomass action plans have the opportunity to coordinate all biomass related policies, and include the consideration of the interplay of support measures.


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