On 27-th of November 2024, representatives of KOBIZE/CAKE had the opportunity once again to participate in the next 5th edition of the TECHCO FORUM Conference organized by the Polish Chamber of Chemical Industry in a thematic block devoted to energy transition – regulations, costs and technologies.
Maciej Pyrka, Head of the Strategy, Analysis and Auction Team of KOBIZE/CAKE gave a presentation entitled. “EU ETS Reform after 2030: “Challenges and Opportunities on the Road to Climate Neutrality.” In his presentation, he outlined the current challenges in EU climate policy and regarding the future of the EU ETS, the depletion of the allowance pool by around 2040, possible solutions such as the establishment of a European Central Carbon Bank (ECCB), and presented the latest results of the work and analysis of CAKE and LIFEVIIEW2050.
Robert Jeszke, Deputy Director of IOŚ-PIB, CEO of KOBIZE/CAKE was one of the speakers in the panel discussion: “Regulatory environment in the context of Polish industry determinants: RED III, EUETS, CBAM – challenges, opportunities, forecasts, strategies”. During his speech, he stressed the need to increase the competitiveness of the European Union in the area of new technologies, which are the foundation of a low-carbon economy. He also pointed out the key role of low-cost hydrogen electricity and energy storage, enabling efficient use of surplus production from RES. He pointed out that in the long term, national surpluses of energy from RES can be achieved with the support of nuclear power, which will provide a stable base for the energy system. In addition, he pointed to the need to develop a hydrogen economy, while warning of the risk of dependence on hydrogen imports from outside Europe, which could lead to a repeat of the problems known from the gas sector. He also stressed the importance of CO₂ sequestration technologies, which will help offset the EU’s remaining emissions and possibly reduce costs in the EU ETS (if included in the system), and pointed out that the development of new technologies will require access to rare earth resources. In the context of climate policy, he pointed out that it can become an opportunity to build the competitiveness of EU industry if it focuses on investing in low-carbon and innovative technologies needed for the future. Poland and Europe need to develop innovative industrial sectors, go beyond the patterns and build competitive advantages in key areas.
We are pleased to present the latest report prepared by CAKE/KOBiZE titled “VIIEW on EU ETS 2050: Linking EU ETS with other carbon pricing mechanisms”. The publication was developed as part of the LIFE VIIEW 2050 project and is available in English. The document thoroughly discusses the possibilities and implications of linking the European Union Emissions Trading System (EU ETS) with other global carbon pricing mechanisms, as well as the role of offset mechanisms in achieving international climate goals.
Dowload here:
VIIEW on EU ETS 2050: Linking EU ETS with other carbon pricing mechanisms (3.0 MiB, 274 hits)
The EU ETS plays a key role in achieving the European Union’s climate goals, such as reducing greenhouse gas emissions by 55% by 2030 and achieving climate neutrality by 2050. One of the challenges associated with further development of this system is minimizing the risk of carbon leakage and improving the cost-efficiency of emissions reductions.
In response to these challenges we are pleased to present our latest report prepared by CAKE/KOBiZE titled “VIIEW on EU ETS 2050: Linking EU ETS with other carbon pricing mechanisms”. The publication was developed as part of the LIFE VIIEW 2050 project and is available in English.
Our report examines:
Through macroeconomic analysis, the report assesses how this integration could affect carbon pricing, emissions reductions and economic indicators in different regions. Presented measures aim to improve market stability, mitigate carbon leakage, foster international cooperation, and ensure a cost-effective path toward achieving climate neutrality by 2050.
In the current analysis, we present and analyse baseline scenario and two analytical scenarios reflecting different levels of ETS integration and policy mechanisms. We consider linking the EU ETS with other international ETSs and limited use of offsets in the EU ETS. First scenario explores how linking the EU ETS with systems in other regions could lower emissions reduction costs, stabilize allowance prices, and reduce economic disruptions. The second scenario analyzes the use of offsets sourced from Global South countries within the EU ETS. Such a mechanism could lower compliance costs and support low-carbon development in developing nations.
The analysis was performed using advanced modelling tools developed by CAKE experts. Such an extensive and comprehensive analysis was possible thanks to the implementation of the LIFE VIIEW 2050 project – The impact assessment of the EU Emission Trading System with the long-term vision for a climate neutral economy by 2050 implemented at KOBiZE with the financial support of the LIFE Program and the National Fund for Environmental Protection and Water Management.
This is another in a series of analyses on various aspects of the development of the EU ETS. Other analyses, which cover ETS2, removals, hydrogen or transport policies, among others, can be found here.
On the 18th November 2024 CAKE experts participated on the last event organised by CAKE at COP29 which took place in the Greek Pavilion tittle: “Powering Climate Action: Balancing Ambitious Targets with Effective Mechanisms for Emissions Reduction”.
We invited and were delighted to host:
The discussion, moderated by Maciej Cygler from CAKE, centered on the challenges of developing robust carbon pricing systems and their role in achieving net-zero ambitions. Drawing on insights from the LIFEVIIEW2050 project, he framed the conversation. Mentioning the expected shortage of carbon credits in the EU ETS appeared to be a good starting point for discussing options for the further development of this type of measures. He then went on to ask a series of questions to moderate the interventions of our distinguished speakers.
Kurt Vandenberghe outlined the hurdles of linking emissions trading schemes globally, citing the need for systems to be equivalent in structure and integrity. He reflected on past EU experiences with CERs and emphasized that domestic reductions must remain the priority. Although the idea is theoretically sound, its practical implementation seems unfeasible today. There are too many obstacles to overcome to make it work and be accepted, including not only the economic implications, but most importantly the differences in carbon pricing mechanisms in jurisdictions with such measures. There are only two examples that work – California and Quebec, and the EU ETS and Switzerland. The systems to be coupled should be equivalent in all dimensions, and that is a challenge. However, he highlighted the potential of CBAM and carbon removals in driving global action under Article 6 of the Paris Agreement, while stressing that removals must not replace mitigation efforts.
Gerassimos Thomas underscored the need for predictability in climate policies, crucial for investor confidence. Carbon pricing and CBAM are different sides of the same coin, but at the moment both sides are mainly focused on the most emission and energy intensive sectors, while clean technologies should not feel challenged. Moreover, carbon pricing provide revenues to be invested. If we develop right measures – private sector would engage with investments, technology transfer and capacity building. He advocated for measures that balance carbon pricing and CBAM to ensure they protect clean technologies while incentivizing investments in decarbonization.
Krzysztof Bolesta proposed exploring both “hard” and “soft” linking of ETSs, as well as offset mechanisms, to lower the cost of achieving reductions while fostering international cooperation. He stressed that offsetting could unlock funding and incentivize emission reductions in other jurisdictions.
Simone Borghesi emphasised the inevitable role of removals in achieving ambitious reduction targets in long term, both in the EU and in the world. All the models predicts to include increased role of CDR as the solution – the problem it is not whether, by when and how? Timing would be crucial in this process, however it depends also on social acceptability. As we have a number of different CDR methods, we should carefully consider pros and cons. There is not one good solution. Also integrity issue is important. And finally, removals must not replace mitigation efforts.
Robert Jeszke linked these perspectives to CAKE’s analysis, emphasizing the need for diversity in climate policy tools. He supported removals as essential to the ETS’s future but agreed that linking non-equivalent systems is currently unfeasible. Robert introduced the idea of a European Central Carbon Bank (ECCB) to stabilize the EU ETS, mitigate costs, and support international cooperation under Article 6. Such a bank seems to be a good solution to mitigate costs and price increases resulting from carbon pricing measures, but also to protect mechanisms such as the EU ETS from shocks. Moreover, the bank could help other countries to provide funds, also under Art. 6 of the Paris Agreement. The ETS needs additional flows, which can come from removals and linking the system. However, we should be looking at future solutions, including those that are compatible with global schemes, with Article 6 as a central piece. Today’s most pressing challenges are to reduce emissions, to keep the ETS as the main instrument for reducing emissions, to keep industry in the EU and to save European households.
The event concluded with a shared understanding of the challenges and opportunities in refining carbon pricing mechanisms.
On Friday 15 November 2024, CAKE participated in the III side event organised by Forum Energii “The EU Clean Industrial Deal – what to expect?” in the Greek Pavilion. This was another opportunity to present CAKE’s views at COP29, based on the work and analysis of the LIFE VIIEW 20250 project.
The centrepiece of the event was a panel discussion chaired by Joanna Pandera, President of Forum Energii, with high-profile speakers Jan Dusík, Deputy Director General, DG CLIMA, European Commission, Rosana Santos, Executive Director in E+, Brazil, and Robert Jeszke, CEO of the National Centre for Emissions Management (KOBiZE) and The Centre for Climate and Energy Analyses (CAKE) and Deputy Director for Emissions Management of the Institute of Environmental Protection -National Research Institute (IOŚ-PIB).
Speakers noted that while the current global geopolitical situation is undoubtedly influencing climate policy and negotiations, it is moving forward and we can see a number of policy developments around the world. “EU emissions are falling, so we are on the right track. And we still need to be ambitious, there is no other starting point” – said Jan Dusík. We should do it in a smart way – he added.
Robert Jeszke went on to explain how climate change policy can evolve. He emphasised the importance of linking climate policies globally, including carbon pricing mechanisms, and responded to concerns raised during the discussion on CBAM by saying that it is actually a temporary solution and that we can already see a number of carbon pricing mechanisms being developed around the world. It seems that CBAM could be one of the drivers.
In this context, it was great to hear from Rosana Santos that Brazil has just passed a law to set up an emissions trading scheme and that it is drawing on European experience. However, we should take into account the diversity of countries and regions – in Brazil, 75% of emissions come from deforestation and agriculture, so policy measures should be prioritised in a slightly different way than in the European Union and other developed countries – she added.
Robert Jeszke also reflected on Poland’s Presidency of the Council of the European Union next year, pointing out the particularly difficult situation due to the war in Ukraine, as well as the different circumstances in member states regarding energy transition, including sensitivity to energy prices and other burdens in society. In particular, policymakers should pay careful and responsible attention to vulnerable groups, especially regarding energy affordability. Another challenge is to mobilise private capital, as the investment needs for the energy transition are overwhelming, fostering investments in RES and storage, supplemented with nuclear energy.
Whatever difficult issues and challenges were raised during the discussion, there was a sense of determination to move forward together towards climate neutrality.
Thank you to the distinguished speakers for their inspiring speeches, to Joanna Pandera for moderating, and to Greece at COP for hosting the event in its pavilion.
The Centre for Climate and Energy Analyses (CAKE) is involved in organisation and particpation in several side events at this year’s COP29- 29th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), where results of the LIFE VIIEW 2050 project were presented. One of the side event was organised together with the Energy Community Secretariat and held on the 14 of November 2024 and hosted in Ukrainian Pavilion.
Carbon pricing continues to be an issue of interest to both countries that already have emissions trading schemes and those that do not. Unsurprisingly, it is also one of the topics being debated and negotiated at COP29. And it was the subject of another side event at COP29 – Carbon pricing as a response to climate change in the EU’s neighbouring countries – organised by CAKE and LIFE VIIEW 2050 together with the Energy Community Secretariat and hosted in the Ukrainian pavilion at COP29 on 14 November 2024.
Side event started with opening remarks by Ołeh Bondarenko, Chairman of the Commission of the Verkhovna Rada of Ukraine on Environmental Policy. Then the panel discussion, which was the highlight of the event, was preceded by a presentation from CAKE and LIFE VIIEW 2050 expert Maciej Cygler, who set the scene for the discussion to follow. He presented an overview of the evolving carbon pricing measures around the world, as well as the results of analyses focused on different patterns of emissions trading scheme the EU – gave very interesting descriptions of how they are responding to the calls for increased use of different forms of carbon pricing around the world.
The Panel Discussion, chaired by Monika Figaj of the Energy Community Secretariat, then took place, featuring our distinguished panellists. Our panellists – most of whom represent countries outside the EU – described in a very interesting way how they are responding to the calls related to the increasing use of various forms of carbon pricing worldwide. Artur Lorkowski, Director of the Energy Community Secretariat, Aliona Rusnac, Secretary of State at Ministry of Environment, Moldova, and Oleksii Riabchyn, Energy and EU Green Deal Advisor to Deputy Prime-Minister for European and Euro-Atlantic Integration of Ukraine,
without substantially questioning the inevitability of the expansion of policy instruments based on carbon pricing, they stressed that one of the major challenges facing the candidate countries in the near future is CBAM. However, at the same time, they stressed that CBAM is not an immoveable obstacle whose existence must be limited, but a specific circumstance that must be taken into account to some extent. To support this thesis, they explained how plans and work are well advanced to establish relevant climate measures in their countries that are compatible with those in the EU.
In his intervention, Robert Jeszke, Deputy Director for Emissions Management at IOŚ-PIB and CAKE/KOBiZE CEO, described the paths taken in the development of carbon pricing mechanisms around the world and backed up his remarks with the results of analyses carried out by CAKE. He also underlined the importance and benefits of ongoing and future processes related to the development and linking of emissions trading schemes around the world, while not shying away from the challenges and obstacles involved. In response to concerns about the implementation of CBAM, he emphasised that, in the context of the ongoing development of emissions trading schemes, the CBAM being implemented in the EU should be seen as a transitional mechanism that will lose its relevance over time.
More information on the side event you can found at: LINK
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