European Roundtable on Climate Change
and Sustainable Transition
REPORT: Border Carbon Adjustments in the EU: Issues and Options
This report brings together the main takeaways from the project ‘Border Carbon Adjustments (BCAs) in the EU: Issues and Options’ launched in November 2019 to provide analytical input and foster an informed debate with domestic and international stakeholders as the CBAM file progresses through the early stages of the legislative process.
Drawing on extensive feedback obtained in a series of stakeholder consultations, the report offers a detailed analysis of the building blocks of BCAs as a policy option in the European context, discusses alternative policy options, and considers different combinations of policy instruments to achieve the desired outcomes.
This report is one of the deliverables of ERCST's project "Border Carbon Adjustments in the EU: Issues and Options”, which was made possible by support from Enel, Eurofer, FuelsEurope, the Government of France, the Government of Germany, HeidelbergCement, Metinvest, and Solvay.
ERCST's Director Andrei Marcu speaks at "Expert workshop on the Market Stability Reserve" by Vivid Economics, European Commission.
3 December 2020, 11:00 CET
Mr. Marcu will participate at the panel "Options for changes to MSR design and other considerations" in which will discuss key channels of impact of changing external and policy environment on the MSR and EU ETS functioning. The panel includes: Mark Lewis, BNP Paribas and Sam Van den Plas, Carbon Market Watch.
ERCST's Director Andrei Marcu speaks at panel "Re-designing the EU ETS to ensure a Just Transition"
30 November 2020, 12:00 CET
Energypost.eu & PGE Polska Grupa Energetyczna are organising an online panel discussion on: "Re-designing the EU ETS to ensure a Just Transition". This discussion will look into how increased CO2 reduction target means increased transition costs for key Member States.
These are some of issues and questions that will be covered during the panel:
- Does the EU ETS scheme need to be redesigned to ensure fairness in spreading the costs of the Transition?
- Should the Modernisation Fund be increased?
- Do we need reformed financing measures?
- Could a redesign of some of the EU ETS‘ features also be involved?
"The carbon border adjustment mechanism: A panacea or a trap?"
ERCST's Director Andrei Marcu speaks about CBAM at the Transatlantic Trade Conference organised by College of Europe
17 November 2020, 15:45 CET
The Department of European Economic Studies (College of Europe) organises a conference on transatlantic trade. The objective of this conference is to illustrate the options, challenges, and opportunities for the international trading system. Along with the transatlantic trading relationship, other topics to be covered include the Boeing/Airbus case, the role of trade rules in addressing climate change, and the reform of the WTO.
ERCST will be participating at the even session of the Conference on Trade rules as a tool to fight climate change to talk about CBAM.
PAPER: The role of the EU ETS funding mechanisms in financing the European Green Deal
Following up to the event organised at the end of October, this paper, written by ERCST in cooperation with CEEP, seeks to provide an overview of developments and regulatory decisions made in 2020 for the four EU ETS funding mechanisms, i.e. the Solidarity Provision, Article 10c Derogation, the Modernisation Fund, and the Innovation Fund.
In addition, this paper assesses how the size of the EU ETS funding mechanisms will be impacted under different scenarios. It shows how developments like a recalculation of the cap following Brexit, or an increase in the 2030 target, would affect the amount of allowances available under the EU ETS in phase 4, and under the individual funding mechanisms in each Member State.
Highlights from the debate on the role of the EU ETS funding mechanisms in delivering the European Green Deal
ERCST and CEEP have been working together on EU ETS ‘funding mechanisms’ for the last few years, organising workshops in Brussels and beneficiary Member States to facilitate a debate on how to successfully operationalise and utilise these funds.
The video showcases some highlights from the debate on the role of the EU ETS funding mechanisms in delivering the European Green Deal, held on 27th of October 2020.
ERCST's Director Andrei Marcu speaks about BCA Options at the Carbon Markets Virtual Pavilion by IETA ICAP
11 November 2020, 16:15 CET
The International Carbon Action Partnership (ICAP) and the International Emissions Trading Association (IETA) are hosting a Carbon Markets Virtual Pavilion on the 11th and 12th of November. The postponement of COP26 in Glasgow to November 2021 risks delaying climate negotiations but may also affect the momentum of carbon pricing observed in recent years. IETA and ICAP want to create an opportunity to engage stakeholders from the international community and ETS jurisdictions in discussions and exchanges centered around carbon markets and priorities for carbon pricing in the years ahead.
Fourth article of the Marcu My Words series with Carbon Pulse
Carbon Pulse, 5 November 2020
The importance of the Article 6 Guidelines to the success of the Paris Agreement
The absence of the Article 6 Guidelines creates uncertainty for the accounting treatment of assets in the emerging carbon market under the Paris Agreement as well as for other related markets.
From a purely business and financial return point of view, these related carbon assets need to be accounted for in an accurate, robust and clear manner. Otherwise, the carbon price will be inaccurate, incorrect and misleading
For an investor, this can lead to loss of value, asset write-downs and eventually loss of confidence in carbon markets and significant reputational risk. We need to get the international accounting treatment right and the provisions in the Article 6 Guidelines are the key to it.
Accounting issues should not be a political issue; like all balance sheet and budget questions, it's about making the numbers add up – accurately. Otherwise, these markets will struggle to reach their potential and make a meaningful contribution to meeting the objectives of the Paris Agreement.
ERCST's Director Andrei Marcu speaks at "Carbon Pricing in Africa: Opportunities for action at the sub-national level"
27 October 2020, 15:00 CET
Today ERCST is participating in the "Carbon Pricing in Africa: Opportunities for action at the sub-national level" workshop organised by UCLG Africa, the Carbon Pricing Leadership Coalition and the Covenant of Mayors in Sub-Saharan Africa.
This event brings together a wide range of panelists, including African Ministers and industry experts, that will contextualise carbon pricing and its objectives in relation to sub-national actors in Africa. It will focus on two key areas:
- Locally appropriate carbon pricing instruments
- How to address some of the challenges of carbon pricing in Africa
ERCST's Executive Director, Andrei Marcu, will join the panel.
ERCST's organises panel on BCA's at Carbon Forward 2020 Online Conference
14-15 October 2020
ERCST is supporting Carbon Forward 2020 by organising a panel on the topic of the EU's Carbon Border Adjustment Mechanism on the second day, moderated by our Executive Director, Andrei Marcu will join and moderate a panel on the second day, on the topic of the EU's Carbon Border Adjustment Mechanism.
Carbon Forward 2020, Carbon Pulse and Redshaw Advisors' annual flagship 2-day environmental markets event, will bring together carbon market expertise and talent from across the governmental, finance, energy, transport and aviation sectors to show you the way. Delegates will join those experts to discuss the risks and opportunities associated with constantly evolving climate change landscape.
ERCST's Director Andrei Marcu speaks at Eurelectric Webinar: ETS evolution and its impact on fuel switching
7 October 2020, 11:00 - 12:30 CET
Eurelectric together with ICIS will bring together leading policy makers, senior business executives and high-level experts for an on-line, interactive and thought-provoking discussion on the evolution of the ETS during the fourth trading period. The webinar will aim to evaluate the impact of the ETS and carbon pricing on fuel switching in the context of the EU 2030 greenhouse gas targets and the path to climate neutrality up to 2050!
ERCST's Executive Director, Andrei Marcu, will join the panel.
Bloomberg Green writes about ERCST's report on border carbon adjustments in the EU
Bloomberg Green, 29 September 2020
EU could add cement, power imports to ETS in initial border measures - study
Designing a carbon border tax that both works and complies with World Trade Organization rules is a major challenge. The European Roundtable on Climate Change and Sustainable Transition, a research group in Brussels, consulted lawmakers, EU trading partners and affected industries and set out its outlook in a major study of the options policy makers could adopt.
It expects a price should be put on imports of emissions-intensive goods, exemptions to be granted for the poorest nations and funds raised by the levy diverted to help pay for Europe’s green economic recovery.
“The mechanism will require a broader framework and is no silver bullet on its own,” said Andrei Marcu, one of the authors of the study published by the European Roundtable on Climate Change and Sustainable Transition. “Starting in 2024-2025 we could see some sort of a pilot program. I hope it will be a weapon that the EU will never have to use.”
Third article of the Marcu My Words series with Carbon Pulse
Carbon Pulse, 15 September 2020
The vision for the EU ETS in the 2030 framework - will it be up to the challenge?
At a minimum, a vision to what the ETS role is beyond 2030 needs to be provided, as it moves into “mid-life”. It is not young anymore.
A second requirement is that a vision is needed on how it will help industry decarbonise, without deindustrialising Europe, as it did for the power sector. The roles of the different tools, including the ETS, CBAM, consumption charges, contracts-for-difference, standards, etc. needs to be articulated, as well as how these tools will function together.
What we do not need is a review that has vague and general objectives – which only keeps everyone from objecting. The 55-60% target is clear, hard and challenging. The same level of clarity is needed in setting objectives and in defining what is needed in terms of changes to existing tools, and new tools if necessary.
Second article of the Marcu My Words series with Carbon Pulse
Carbon Pulse, 29 June 2020
Carbon Leakage and Competitiveness - different objectives different tools
In its feedback to the Inception Impact Assessment, ERCST, while not opposed to a BCA, has made clear its concerns about this approach: ERCST “would, in the course of the examination of how to address carbon leakage, urge a more open debate, with border carbon adjustments being one option. Other options, which may be complementary to BCA, should not be disregarded, including the creation of a framework that will lead to a market for low carbon products. Without such a market the tools available to the EU to implement the EU Green Deal will be incomplete”.
The recent report in Carbon Pulse of a statement signed by four countries, who, while also supportive of a BCA, question the total focus on BCA only, seems to vindicate this view. Germany, Belgium, Czechia and Hungary state in a recent letter that “an exchange of all possible mechanisms for protecting against carbon leakage among the member states is necessary in order to clarify the various open questions such as WTO compatibility or administrative feasibility”.
2020 State of the EU ETS Report
The yearly State of the EU ETS Report aims to be an independent contribution to the policy debate, which is needed to ensure that the EU ETS is “fit for purpose.”
It is intended as a “snapshot”, providing policymakers and stakeholders with an overview of how the EU ETS is doing by April of each year, based on previous year data.
ERCST's Director Andrei Marcu as a moderator at panel "The carbon border adjustment mechanism" in the EU-Russia Climate Conference
3 December 2020, 12:00 CET
The panel on carbon border adjustment mechanism (CBAM) will focus on the following questions:
- The role of CBAM to implement climate policy objectives
- What is the process to design it?
- How the public consultations are taking place?
- EU’s commitment to abide by international obligations
- What are the concerns of exporters, how they can get ready for the CBAM(at country/corporate level) and opportunities for green goods.
RECORDING OF EVENT: ERCST's Director Andrei Marcu speaks about BCA Options at the Carbon Markets Virtual Pavilion by IETA ICAP
The International Carbon Action Partnership (ICAP) and the International Emissions Trading Association (IETA) hosted the Carbon Markets Virtual Pavilion on the 11th and 12th of November.
Watch here the recording of Andrei Marcu on the first day of the Virtual Pavilion talking about key findings of the report and takeaways from the consultation process on the design options for a CBAM.