Publications

 The EU Carbon Border Adjustment Mechanism (CBAM) - Preliminary Analysis of the EU Commission Proposal, 14 July 2021 

As part of its “Fit for 55” climate and energy package, the European Commission issued a proposal for a regulation establishing a Carbon Border Adjustment Mechanism (CBAM) on 14 July 2021. The mechanism seeks to address the risk of carbon leakage by imposing a carbon price on imports of certain carbon intensive goods from outside the EU. It is a proposal that few would have anticipated not so long ago. 

This paper aims to provide a quick review of its provisions and high-level preliminary conclusions, with more to come from ERCST.

Author(s): Andrei Marcu, Alexandra Maratou, Aaron Cosbey, Michael Mehling

The Review of the EU ETS - Overview of the EU Commission Proposal, 14 July 2021 

The European Commission issued on 14 July 2021 a proposal for the review of the EU ETS. The proposal is designed to make the ETS able to deliver 61% GHG emissions reduction by 2030, in line with an at least overall 55% target.

This paper identifies and analyses the main elements of the EU Commission proposal and assess their impact on the EU Carbon Market.

Author(s): Andrei Marcu, Stefano Cabras

State of the European Green Deal: the process of making Europe Fit for 55

09/07/2021

This paper intends to provide a general overview of the EU Green Deal State of Play and capture the evolutionary and transformational nature of the EGD, providing the reader an easy understanding of its past, present and future.

The paper will also briefly address the state of play of key integral parts of the EGD such as the EU-ETS, the introduction of a Carbon Border Adjustment Mechanism (CBAM), the EU sustainable finance agenda and the development of an EU hydrogen economy.

Author(s): Dariusz Dybka, Antonio Fernandez, Andrei Marcu, Stefano Cabras and Pietro Cesaro

Hydrogen paper in preparation for the 'Fit for 55 package': Identifying key issues and questions 

09/07/2021

This paper will:

  • Provide a high level summary of the current policy framework;
  • Analyse key issues and questions  before the publication of the 'Fit for 55 package';
  • Point out convergence of views between different stakeholders on key issues;
  • A prospective exercise about where (in which pieces of legislation) key issues identified will be addressed in the upcoming legislation review.

Author(s): Antonio Fernandez, Andrei Marcu and Olivier Imbault

Impact on Households of the Inclusion of Transport and Residential Buildings in the EU ETS

This work describes the impact on EU households’ budgets of applying carbon pricing to the transport and residential building sectors. We analyse different scenarios and, based on the results, suggest mitigating policies that can shield the poorest households that cannot afford to invest in new low-carbon technologies and solutions.

If carbon pricing is extended to road trans- port and buildings, our proposals are outlined below:

→ Offering revenue recycling schemes to assist vulnerable people. For residential buildings, this could be transfer payments, direct energy bill assistance or targeted energy efficiency programmes for the poorest households. In the transport sec- tor, revenues can be recycled by provid- ing consumer rebates for low-carbon and electric vehicles and tax breaks for lower- income households to offset the increase in fuel prices due to carbon pricing.

→ Implementing new and enhancing current energy efficiency and renewable energy policies, as well as legislation specifically targeting the building and the transport sectors, which has the potential to accel- erate the deployment of renewable energy solutions and lower energy demand, thus putting downward pressure on equilibrium EUA prices.

→ Maintaining and strengthening EU tools, like the solidarity mechanism that redistributes resources in favour of poor- er member states. With this, it should be required that 100% of the revenues generated by solidarity allowances should be spent on energy and climate purpose.

→ Increasing the Modernisation Fund and Innovation Fund to mitigate the impact of the ETS extension in those member states where the transition is more chal- lenging, as well to help bringing to the market breakthrough clean technologies in transport and buildings sectors. To en- sure the fair and efficient redistribution of resources, the allocation of funds should also take into account countries’ actual in- vestment needs and relative capabilities, as well as the national level of GDP per capita.

25/06/2021

Author(s): Andrei Marcu, Stefano Cabras, Magdalena Maj, Wojciech Rabiega, Aleksander Szpor, Dóra Fazekas

The aluminium value chain and implications for CBAM design

22/06/2021

When designing the Carbon Border Adjustment Mechanism (CBAM), the EU has to determine not only the type of materials/sectors to be covered, but also how far downstream in the value chain to go in terms of product coverage.

The aluminium sector has complex downstream value chains where trading of semi-finished products is significant. At the same time, the EU aluminium industry depends on imports of primary aluminium in a significant way, with EU dependency on imports of aluminium ingot requirements reaching close to 50% in 2020.

In particular, this paper demonstrates how the application a CBAM only on primary aluminium would lead to higher costs for downstream producers, either incentivizing the relocation of that production outside Europe, or increasing imports of products at the next step in the value chain.

Author(s): Alexandra Maratou and Andrei Marcu

Update on developments in the international jurisdictions on the Border Carbon Adjustments - part 3

01/06/2021

This paper is intended as an update on the status of discussions on border carbon adjustments (BCAs) around the world and it is a new version for developments in June 2021.

 

BCA has been discussed for a long time, but the political commitment of the EU and the expected proposal for a BCA from the EU Commission in June has catalyzed discussions and interest around the world. So far, the only jurisdiction that has such a tool in place is California with respect to imports of electricity.

Author(s): Dariusz Dybka

Preliminary Study on the economic impact that EU CBAM could potentially impose on foreign exporters of products to the EU market - Thailand, India, and Vietnam

25/05/2021

This paper is a preliminary study on the economic impact that EU CBAM could potentially impose on foreign exporters of products to the EU market for the following countries: Thailand, India, and Vietnam.
Author(s): Alexandra Maratou (ERCST) and the World Bank 

Recommendations on Funding Mechanisms in the Revised EU ETS

04/05/2021

ERCST and CEEP put forward the following recommendations in light of the review of the EU ETS under the European Green Deal.

  1. Ensure auctioning revenues are fully mobilised to for climate and energy purposes
  2. Safeguard the solidarity mechanism from the functioning of the Market Stability Re serve (MSR )
  3. Ensure an adequately increased Modernisation Fund
  4. Maintain trust and stability by keeping financing rules for the Modernisation F und unchanged until the 2024 review
  5. Taking additional factors into account when distributing the modernisation fund among MS
  6. Ensure sufficient revenues are mobilised through the Innovation F und to finance breakthrough low-carbon technologies
  7. Explore additional financing options to deploy low-carbon technologies at scale

Authors: Andrei Marcu, Domien Vangenechten, Angelina Bartosik (CEEP)

The Review of the Market Stability Reserve (MSR)

29/04/2021

The report is intended as a ‘mock’ review of the MSR in which its track-record and potential issues and options for the review are modelled and assessed. This report is the continuation and implementation of ERCST 2019 report ‘Preparing for the Review of the MSR‘ in which the main building blocks of a MSR review were outlined.

The paper outlines a set of scenarios for a potential review while showing the implications they would have for the market using a modelling exercise. It aims to promote a debate on what the role of the MSR in the EU climate policy architecture and what the MSR is and is not supposed to do. It ultimately tries to answer the question why the MSR is, or is not, fit for purpose in its current design and how it could be improved in the context of the upcoming revision.

Authors: Andrei Marcu, Domien Vangenechten,Stefano Cabras, Thomas Mertens, Jean-Yves Caneill, Jahn Olsen

Update on developments in the international jurisdictions on the Border Carbon Adjustments

28/04/2021

This paper is intended as an update on the status of discussions on border carbon adjustments (BCAs) around the world and it is a new version for developments in April 2021.

 

BCA has been discussed for a long time, but the political commitment of the EU and the expected proposal for a BCA from the EU Commission in June has catalyzed discussions and interest around the world. So far, the only jurisdiction that has such a tool in place is California with respect to imports of electricity.

Author(s): Andrei Marcu, Dariusz Dybka

Border Carbon Adjustments in the EU: A Policy Proposal

22/04/2021

On March 18, ERCST presented the Sectoral CBAM Report with a deep dive into the specificities of individual sectors as well as chapter synthetizing the findings to a general CBAM Design. According to the roadmap for the European Green Deal, and European Council conclusions from July, a proposal for a BCA for “selected sectors” will be released in 2021 and should be introduced by the end of 2022.

This report delves into a CBAM Proposal with the optimal options for the general CBAM Design. This report is the second in a series of fours reports that will be published during the 2nd part of ERCST’s project on Border Carbon Adjustments in the EU.

Authors: Andrei Marcu, Aaron Cosbey, Michael Mehling

2021 State of the EU ETS Report

14/04/2020

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.

This year, the report focuses on 5 key areas:

  • Recent policy developments
  • Environmental delivery
  • Economic delivery
  • Market functioning
  • The EU ETS in the European Green Deal

This report is jointly produced by ERCST, BloombergNEF, the Wegener Center and Ecoact 

Author(s): Andrei Marcu, Domien Vangenechten, Emilie Alberola, Jahn Olsen, Jean-Yevs Caneill, Stefan P. Schleicher and Stefano Cabras

The report is also available in different languages:

Ensuring the Acceptability of Border Carbon Adjustments

25/03/2021

This brief essay identifies some of the red-line issues that are likely to prove decisive in the political and diplomatic process to adopt a border carbon adjustment, including compliance with World Trade Organization rules, the principle of common but differentiated responsibilities in international climate cooperation, use of revenue, treatment of exports, interaction with current leakage protection measures, and consideration of foreign climate policy efforts. Fostering an early, transparent, and inclusive debate on these issues will be critical to secure the acceptability of border carbon adjustments.

Authors: Andrei Marcu and Michael Mehling

Border Carbon Adjustments in the EU: Sectoral Deep Dive

18/03/2021

This report is a sectoral assessment analyzing the suitability of a CBAM in addressing carbon leakage and the competitiveness of individual industrial sectors, as well as its impacts. The sectors considered in the analysis include: cement, chemicals, electricity, ferrous metals, fertilisers, non-ferrous metals, pulp & paper and refined petroleum products. Lastly, the report draws on information gathered through extensive consultations with stakeholders and experts, research, data analysis and cooperation with sectoral associations.

This report is the first in a series of fours reports that will be published during the 2nd part of ERCST’s project on Border Carbon Adjustments in the EU. The first part of the BCA in the EU project culminated in a report published in September on the issues and options for introducing a BCA in the EU. 

Authors: Andrei Marcu, Aaron Cosbey, Michael Mehling

Update on developments in the international jurisdictions on the Border Carbon Adjustments

16/03/2021

This paper is intended as an update on the status of discussions on border carbon adjustments (BCA) around the world and will be updated for new developments, as appropriate.

 

BCA has been discussed for a long time, but the political commitment of the EU and the expected proposal for a BCA from the EU Commission in June has catalyzed discussions and interest around the world. So far, the only jurisdiction that has such a tool in place is California with respect to imports of electricity.

Author(s): Andrei Marcu, Dariusz Dybka

Addressing the supply-demand imbalance in the EU ETS through the Market Stability Reserve

08/02/2021

This paper makes the case that that while many levers could be used to address current and future issues related to the carbon market and climate policy in general, including EU ETS market imbalances, each of them should focus on what they were intended to achieve, and not give way to expedience and inappropriate use. It also makes the case that the market stability reserve (MSR) was intended to address EU ETS market imbalances, and not raise climate ambition.

In addition, the paper outlines a number of consideration that should be part of the MSR review, in the context of making the EU ETS “fit for 55”.

Author(s): Andrei Marcu, Domien Vangenechten and Jean-Yves Caneill

Division and use of revenues in Phase 4 of the EU ETS - options to operationalise the December 2020 EUCO conclusions

08/02/2021

This paper intends to capture the state of debate regarding the use of revenues from EU ETS allowances, as well as how revenues are to be divided among Member States. Special attention is given to the recent European Council conclusions from December 10/11, 2020.

The paper puts forward options to operationalise relevant elements in the Council conclusions and discusses key questions that should be considered by stakeholders and policymakers when deciding on the division and use of revenues in the EU ETS.

Author(s): Domien Vangenechten and Andrei Marcu

ERCST's feedback to the European Commission's public consultation for the review of the EU ETS

05/02/2021

This position paper accompanied ERCST's response to the Commission's public consultation for the review of the EU ETS. This paper presents the rationale behind ERCST’s submission.

In this paper, ERCST provides its views on the various elements included in the consultation, including:

  1. The Contribution of the EU ETS to the overall climate ambition for 2030
  2. Addressing the risk of carbon leakage
  3. An increasing role for emissions trading
  4. Extension to Maritime greenhouse gas emissions
  5. Market Stability
  6. Revenues
  7. Low-carbon support mechanisms

This paper further highlights two areas which are missing from the public consultation:

  1. Flexibility and negative emissions
  2. Long-term considerations

Author(s): Domien Vangenechten, Andrei Marcu and Jean-Yves Caneill and Thomas Mertens

Decoding Article 6 of the Paris Agreement

01/12/20

This report is a sequel to the first version which was published in 2018 leading up to COP24.

Version II shows that there has been progress in the negotiations, and that there is a better understanding among countries of the options and alternatives to engaging in cooperative approaches under Article 6 of the Paris Agreement

Author(s): Andrei Marcu for the Asian Development Bank

ERCST's feedback to the European Commission's inception impact assessment (IIA) for the review of the EU ETS

26/11/2020

This position paper was submitted in response to the feedback opportunity to the European Commission's inception impact assessment (IIA) for the Revision of the EU Emissions Trading System (EU ETS).

In this paper, ERCST puts forward 6 issues that should be assessed in the Impact Assessment and addressed through the review:

  1. Write a story for the decarbonisation of industry, incl. carbon leakage protection;
  2. Address EU ETS policy overlap and supply-demand imbalance, incl. through the MSR and cap review;
  3. Assess how to price carbon in other sectors and assess the articulation between ETS, ETD, CBAM and other instruments;
  4. Assess the use of flexibility mechanisms such as domestic and international offsets;
  5. Assess division and use of auctioning revenues; and
  6. Ensure long-term visibility and predictability for market participants.

Author(s): Domien Vangenechten, Andrei Marcu and Jean-Yves Caneill

Summary of stakeholder responses to the public consultation for a border carbon adjustment in the EU

25/11/2020

The European Commission published a questionnaire on a Carbon Border Adjustment Mechanism (CBAM) for the public consultation that took place between July 22 and October 28 2020.

The objective of this paper is to highlight and summarize key points raised in the submissions responding to the latest public consultation, capturing the differences, commonalities and general trends, in order to provide the reader with a concise overview of stakeholders’ positions on CBAM for the EU. This paper is limited to the over 20 submissions that were made available to ERCST by some of the stakeholders that made submissions. An overview of the submissions covered, highlighting the key points made, is presented in alphabetical order in a summary table.

Given the limited number of submissions considered for this paper, the official summary by the European Commission may be different.

Author(s): Andrei Marcu, Dariusz Dybka and Alexandra Maratou

ERCST-CEEP paper, the role of the EU ETS funding mechanisms in financing the European Green Deal

16/11/2020

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.

Author(s): Andrei Marcu, Mariusz Kawnik, Domien Vangenechten and Angelina Bartosik

Position paper - ERCST's rationale for the submission to the Public Consultation for the Border Carbon Adjustment Mechanism under the European Green Deal

28/10/2020

This position paper accompanied ERCST's response to the European Commission's public consultation for the Border Carbon Adjustment Mechanism under the European Green Deal. This paper presents the rationale behind ERCST’s submission.

ERCST’s response to the Public Consultation builds on the work that it has carried out previously on the topic of Border Carbon Adjustments, and a long- term interest and examination of issues related to addressing carbon leakage and competitiveness.

Author(s): Andrei Marcu, Dariusz Dybka and Alexandra Maratou

Position paper - ERCST's rationale for the submission to the Public Consultation for the Revision of the Energy Taxation Directive

14/10/2020

This position paper accompanied ERCST's response to the Commission's public consultation for the revision of the Energy Taxation Directive (2003/96/EC). This paper presents the rationale behind ERCST’s submission.

From discussion with stakeholders, we consider two main priorities for the revision of the ETD:

  1. Avoiding double taxation between the EU ETS, which is seen as the main carbon pricing instrument at the European level, and the ETD, if this will be revised to tax fuels based on their carbon content.
  2. Eliminating “fossil fuel subsidies”, also deriving from the current revision’s mandatory exemption for aviation and maritime fuels. For the aviation sector, the carbon component is covered by the EU ETS. Therefore, to avoid double taxation, the ETD should exempt aviation fuel at least for its carbon content, if the ETD will be revised to include a CO2 component.

Author(s): Andrei Marcu and Dana Agrotti

Border Carbon Adjustments in the EU: Issues and Options

30/09/2020

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.

The report applies a heuristic multi-criterion analysis to BCAs and breaks this policy instrument down into eight design elements, each with several implementation options. 

Author(s): Andrei Marcu, Michael Mehling and Aaron Cosbey

Reflections on ERCST's "creating markets for low-carbon products in the EU" work stream

08/07/2020

This paper represents some take-aways and general reflections from the ERCST discussions on creating markets for low-carbon products in the EU.

After outlining the existing regulatory framework and highlighting the challenges on the supply side and demand side, this paper discusses a set of policy solutions that could help address the following questions:

  1. How to incentivise companies to invest in low-carbon production technologies?
  2. How to incentivise consumers to buy low-carbon products?
  3. How to create a level playing field for low-carbon products?
  4. Who pays the bill? The polluter, the government, the society?

Author(s): Andrei Marcu and Matteo Caspani

Position Paper- Comments to the Public Consultation for the 2030 Climate Target Plan

23/06/2020

This position paper accompanied ERCST's response to the Commission's public consultation for the EU Climate ambition for 2030 and for the design of certain climate and energy policies of the European Green Deal. 

Author(s): Andrei Marcu, Dariusz Dybka and Domien Vangenechten

Background Paper - The EU ETS Market Stability Reserve: Coping with Covid-19 and Preparing for the review

16/06/2020

This background note, the authors reflect on some of the recent developments and raise five issues for discussion with regard to the upcoming review of the Market Stability Reserve, and its role in the EU ETS.

These issues should not be seen as ‘truths’ in any way, but simply served as ‘food for thought’ for the June 16 meeting organised by ERCST.

Author(s): Andrei Marcu, Jean-Yves Caneill and Domien Vangenechten

Feedback paper - European Commission's proposal for a European Climate Law

30/04/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s proposal for the European Climate Law.

Author(s): Andrei Marcu and Domien Vangenechten

2020 State of the EU ETS Report

28/04/2020

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.

This year, the report focuses on 6 key areas:

  • Implications of COVID-19
  • Recent policy developments
  • Environmental delivery
  • Economic delivery
  • Market functioning
  • The EU ETS in the European Green Deal

This report is jointly produced by ERCST, BloombergNEF, the Wegener Center and Ecoact 

Author(s): Andrei Marcu, Domien Vangenechten, Emilie Alberola, Jahn Olsen, Jean-Yevs Caneill, Stefan P. Schleicher and Roman de Rafael

The Paris Agreement's Article 6 and the WTO: Points of Convergence

27/04/2020

Climate change is one of the defining challenges of our time. That is, it is becoming ever clearer that relative global success or failure in addressing this challenge will fundamentally dictate the nature of humanity’s future. As such, it behooves us to think of the ways in which all areas of policy might contribute to efforts to address climate change. In the area of trade law and policy, this boils down to two types of actions: amending trade law or policy that unduly impedes climate action, and formulating new trade laws or policies that proactively support climate change objectives such as mitigation or adaptation. This essay will explore the first type of option: the links between World Trade Organization (WTO) law and article 6 of the Paris Agreement.

Copyright © 2020 by the Centre for International Governance Innovation. The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Centre for International Governance Innovation or its Board of Directors. This work is licensed under a Creative Commons Attribution – Non-commercial – No Derivatives License. To view this license, click hereFor re-use or distribution, please include this copyright notice.

Author(s): Andrei Marcu and Aaron Cosbey

Feedback paper - Inception Impact Assessment on the 2030 Climate Target Plan

14/04/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s Inception Impact Assessment on 2030 Climate Target Plan .

Author(s): Andrei Marcu and Dariusz Dybka 

Feedback paper - Inception Impact Assessment on the Energy Taxation Directive Review

31/03/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s Inception Impact Assessment on the review of the Energy Taxation Directive .

Author(s): Andrei Marcu, Dana Agrotti and Dariusz Dybka 

Feedback paper - Inception Impact Assessment on the Carbon Border Adjustment Mechanism

27/03/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s Inception Impact Assessment on the Carbon Border Adjustment Mechanism .

Author(s): Andrei Marcu, Dariusz Dybka and Eric Wilczynski 

Beyond the EU NDC - Assessing efforts to be Europe's climate leaders

20/03/2020

In the context of the Paris Agreement, the European Union is increasing its efforts towards decarbonisation. Currently, the EU climate strategy is centred around three emissions reduction targets compared to 1990 levels: a cut of 20% of GHG emissions by 2020, at least 40% by 2030; and an implicit reduction of 80-95% by 2050. These targets have increasingly been put into question, as many stakeholders are pushing the EU to speed up its decarbonisation efforts and embrace the goal of climate neutrality by 2050.

The ‘Beyond the EU NDC’ report proposes a methodology which can be used to assess whether Member States and other stakeholders are undertaking efforts to go ‘beyond’ their respective 2030 targets, and what is their perspective on the 2050 strategy and the target of carbon neutrality.

Author(s): Wijnand Stoefs, Andrei Marcu, Eric Wilczynski

Feedback paper - draft implementing regulation on the EU ETS Modernisation Fund

16/03/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s draft implementing regulation laying down detailed rules for the operation of the Modernisation Fund. 

Author(s): Domien Vangenechten

Feedback paper - proposal for a regulation establishing the Just Transition Fund

12/03/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s proposal for a regulation establishing the Just Transition Fund.

Author(s): Andrei Marcu & Dariusz Dybka

Public consultation response - draft ETS state aid guidelines for indirect costs compensation

8/03/2020

This position paper accompanied ERCST's response to the public consultation regarding the Commission’s ‘draft guidelines on certain State Aid measures in the context of the system of greenhouse gas emissions trading post- 2021'.

Author(s): Domien Vangenechten

Reporting on the Impacts of Response Measures

02/12/2019

Climate change mitigation policies (also known under the UNFCCC as ‘Response measures’) will need to be put in place and/or strengthened around the world to enable the transition of economies and societies away from fossil fuels and towards a low-carbon future. Response measures will have impacts, both in the countries implementing them and across borders.

ERCST not only organizes the 'Informal dialogue on Response measures’ project, but has been working intensely on developing a methodology that countries can use to report to the UNFCCC (under Biennial Update Reports and, starting in 2024, Biennial Transparency Reports) on the impacts of response measures and the tools and support necessary to address and manage those impacts.

Two reports were produced in light of this effort:

  1. The methodology describing in detail how a country could assess and report on the impacts of response measures
  2. The Chile country case study, which ERCST developed to test the practical implementation of the methodology.

Author(s): Maria Antonia Reis Teixeira da CostaWijnand StoefsAndrei Marcu and Aaron Cosbey

Unlocking Article 6 of the Paris Agreement

20/11/2019

Looking ahead to COP 25 in Madrid, this paper puts forward three key issues that are blocking a successful outcome on the Article 6 rulebook.

While there are many operational issues which are contentious, the issues that are truly blocking a positive outcome are" issues of principle" or "political issues” that will need to be addressed at the political or Head of Delegation level.

After these issues are addressed, addressing operational matters will become possible. The first condition to solve problems is to recognise them and take steps to address them in a negotiating, dispassionate spirit.

 

Author(s): Andrei Marcu

Preparing the review of the EU ETS Market Stability Reserve

18/11/2019

The MSR became operational in 2019, and its first review is scheduled in 2021. This review should include two elements: i) the track-record of the MSR; ii) the future impacts of the Reserve. The decision whether to change the MSR parameters or not, and if so, how, will need to be based on this analysis, as well as a discussion on what the MSR ought to achieve.

This report aims to promote a debate on:

  • The components of the MSR review,
  • The structure of the review,
  • The parameters and data that should be monitored, leading to the 2021 scheduled review.

Implementation of the funding mechanisms in the fourth phase of the EU ETS: state of play

18/10/2019

The revision for the fourth phase of the EU Emission Trading System (ETS), covering the period 2021 - 2030, introduced a number of changes concerning the funding mechanisms for climate and transition purposes in the system. Last year, ERCST and CEEP produced a paper on these funding mechanisms, which discussed their respective functioning, eligibility, size, explained how they are related to each other, and highlighted a number of issues and questions that should be addressed during the implementation phase. Since then, a number of new developments have taken place that are worth discussing.This paper:

  • provides an update on the state of play of the implementation process of the four funding mechanisms;
  • highlights some of the main takeaways from the stakeholder sentiment analysis; and
  • sheds light on the decisions made by eligible Member States regarding the use of Article 10c Derogation and the flexibility mechanism.

Author(s): Andrei Marcu, Maciej Jakubik, Domien Vangenechten and Michal Dlugosz

Reflection note on "Strategic challenges to the EU ETs in the long-term" brainstorm session

16/10/2019

This reflection note should be read as general reflections from ERCST to the brainstorm session organised on September 27, which was intended to discuss, and discover key issues which need to be explored, as well as possibly identify work that may need to be done in the mid to long-term to help the EU ETS to remain resilient, relevant and acceptable.

Author(s): Andrei Marcu, Jean-Yves Caneill, Domien Vangenechten

Summary note on "incentivising carbon dioxide removal technologies" brainstorm session

2/10/2019

There is a current lack of incentives for Carbon Dioxide Removal Technologies (CDRTs), with clear financial and/or regulatory frameworks missing in some cases. This is despite the vital need for developing these nascent CDRTs in order to remain within the 1.5-degree goal, as highlighted by multiple scenarios from the IPCC, European Commission and other key actors. This summary note, following the brainstorm session organised on September 24 focuses on the questions and issues surrounding the enabling regulatory and financial framework necessary for deploying these technologies at scale.

Author(s): Andrei Marcu, Federico Cecchetti and Maria Antonia Reis Teixeira da Costa 

Linkages between Cooperative Approaches, Transparency and Compliance (Articles 6, 13 and 15 of the Paris Agreement)

19/08/2019

This Policy Brief identifies linkages between cooperative approaches provided for in Article 6 (in particular guidance for Article 6, paragraph 2, and the rules, modalities and procedures for Article 6, paragraph 4), the modalities, procedures and guidelines for the Transparency Framework, and the Modalities and Procedures for the committee established by Art. 15.

Author(s): Christina Voigt

Appeal Procedure for the Mechanism Established by Art. 6.4 of the Paris Agreement

19/08/2019

This Policy Brief gives a brief overview for the reasons advocating for an appeal procedure to be included in the governance structure for the mechanism established in Article 6.4 of the Paris Agreement, including lessons learned from the Clean Development mechanism (CDM). It will then assess different possible options for such an appeal procedure.

Author(s): Christina Voigt

Feedback on the draft implementing regulation laying down arrangements for the adjustments to free allocation of emission allowances due to activity level changes

04/07/2019

This paper represents ERCST's feedback to the European Commission's draft implementing regulation regarding free allocation adjustments due to activity level changes. 

Author(s): Domien Vangenechten

Flow of tracking ITMOs & performing, reporting, recording and review of corresponding adjustments

08/05/2019

This reflection paper aims to explore these differences in understanding and interpretation of the flow of tracking of ITMOs and performing, reporting, recording, and review of corresponding adjustments, and tries to capture what they imply by these different views, when looking from the perspective of practical implications. The paper is not intended to advocate any particular position.

Author(s): Andrei Marcu & Supanut Chotevitayatarakorn, TGO

2019 State of the EU ETS Report

07/05/2019

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.” This report discusses the current state of play in the EU ETS while abstaining, to the extent possible, from providing solutions. 

This report is undertaken by ERCST, ICIS, I4CE, EcoAct and the Wegener Center

Author(s): Andrei Marcu, Emilie Alberola, Jean-Yevs Caneill, Matteo Mazzoni, Stefan P. Schleicher, Wijnand Stoefs, Charlotte Vailles, Domien Vangenechten and Federico Cecchetti

The 'Article 15 Committee' to Facilitate Implementation and Promote Compliance

15/04/2019

This policy brief outlines the modalities and procedures for the operation of the 'Article 15 committee', as set up by Article 15 of the Paris Agreement, looking at the nature, composition, competences and decision-making of the Committee. It gives an overview of the ways in which issues will be brought before the Committee, how the Committee could respond and possible further steps in its development.

Author(s): Christina Voigt

Corresponding Adjustments: Interpretation of the “Buffer Account"

15/04/2019

This paper aims to address a reoccurring issue in the Article 6 "corresponding adjustments" negotiations for further elaboration: namely, what is to be adjusted under the "buffer account approach". It provides a brief overview of this approach, providing an example formula and an illustrative example, in order to help clarify any remaining confusion.

Author(s): Andrei Marcu

Possible Interpretation of Discussions on Article 6.4 and Corresponding Adjustments

20/03/2019

This paper offers our interpretation and understanding of the discussion surrounding these issues. It gives a brief overview of the following topics and issues: First Transfer for Article 6.4 units; Corresponding adjustments; What is meant by beyond NDC; and NDC Accounting vs. Inventory Accounting.

Author(s): Andrei Marcu & Chandra Sinha 

Reflections Post-Katowice

18/03/2019

This paper offers key insight into some of the pivotal issues and reflections surrounding the  negotiations and outcomes of Article 6 of the Paris Agreement from the COP 24 in Katowice.

Author(s): Andrei Marcu

Rulebook for Article 6 of the Paris Agreement - Takeaway from the COP 24 outcome

25/02/2019

In order to better understand the Article 6 outcomes from COP 24 in Katowice, this paper examines and compares the different versions of text that emerged at key moments in the two weeks of negotiations, and tries to identify evolution and changes in key issues in the text, and discuss and analyse these changes.

Author(s): Andrei Marcu and Mandy Rambharos

Position Paper - Free allcoation adjustments due to activity level changes in Phase 4 of the EU ETS

22/02/2019

This position paper accompanied ERCST's response to the European Commission's public consultation regarding the implementing act on free allocation adjustments due to activity level changes. 

Author(s): Andrei Marcu, Wijnand Stoefs and Domien Vangenechten

The EU's NDC after the Talanoa Dialogue - Options paper

21/01/2019

This paper explores a number of major options that the EU could consider if the decision is made to enhance the EU NDC. It shows that the options are varied, with significant differences in terms of additional mitigation effort, political will and environmental impacts.

Author(s): Andrei Marcu, Simone Borghesi, Wijnand Stoefs, Isabella Alloisio, Francesco Nicolli, Domien Vangenechten

The EU's NDC after the Talanoa Dialogue - Policy paper

26/11/2018

This paper accompanies the 'Options paper' on ways to enhance the EU's NDC after the Talanoa Dialogue. It was released right before COP 24 in Katowice. It draws a number of overall conclusions based on discussions held with stakeholders, both through a survey as well as through workshops organised in Bratislava, Brussels, Bucharest, Florence, Prague and Warsaw.

Author(s): Andrei Marcu and Simone Borghesi

Funding Mechanisms in the fourth phase of the EU ETS: Exploring what is known and identifying issues for clarification and discussion

19/09/18

This paper has two objectives: Firstly, it aims to lay out the components and provide an understanding of the functioning of these different funding mechanisms embedded within the EU ETS, and explore how they are articulated to one another. Secondly, it tries to identify issues that need to be further understood and clarified in terms of the operationalisation of the four funding mechanisms.

Author(s): Andrei Marcu, Jean-Yves Caneill, Wijnand Stoefs,  Domien Vangenechten

Article 6.2 Advanced Options Paper

15/08/18

This advanced options paper on article 6, paragraph 2 of the Paris Agreement is an update of the option paper (Straw Man) jointly produced by Reed Smith and ICTSD in February 2018.

Author(s): Andrei Marcu, Peter Zaman

Feedback paper - draft implementing regulation on the EU ETS Modernisation Fund

16/03/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s draft implementing regulation laying down detailed rules for the operation of the Modernisation Fund

Author(s): Domien Vangenechten

Feedback paper - proposal for a regulation establishing the Just Transition Fund

12/03/2020

This position paper accompanied ERCST's response to the feedback opportunity regarding the Commission’s proposal for a regulation establishing the Just Transition Fund.

Author(s): Andrei Marcu & Dariusz Dybka

Northeast Asia Carbon Market and Trade Connections

03/07/18

This Asia Society Policy Institute (ASPI) and ICTSD report focuses on carbon pricing and the linking of carbon pricing systems as a potential catalyst for increased trade relationships.

Author(s): Andrei Marcu, ASPI

Decoding Article 6 of the Paris Agreement

30/04/18

This publication examines the options for establishing guidance, rules, and modalities for the key elements of Article 6, decoding main issues.

Author(s): Andrei Marcu for the Asian Development Bank

What is standing in the way of a happy ending? Reflections on Art 6 before SBSTA 48

26/04/2018

This paper is intended as a reflection on some of the issues that need to be recognised, and may need attention, if we are to deliver at the COP in Katowice.

Author(s): Andrei Marcu

Glossary of Terms for Article 6.2

26/04/2018

This Glossary of Terms is meant as a starting point for discussion and will be improved as we get comments and as negotiations progress.

Author(s): Andrei Marcu

Developing the EU Long-Term Strategy. Technical paper

18/04/18

This technical paper is the outcome of a year-long effort, which included a series of stakeholder engagements in five EU capitals at the beginning of 2018.

Author(s): Andrei Marcu, Georg Zachmann, Samuel Gonzalez Holguera, Wijnand Stoefs

Developing the EU Long-Term Strategy. Policy paper

18/04/18

This policy paper seeks to develop a series of consistent choices upon which the new European Long-Term Climate Strategy can be built. It is produced under the project “Developing the EU Long-Term Climate Strategy". 

Author(s): Andrei Marcu, Georg Zachmann

2018 State of the EU ETS Report

17/04/18

The EU Emissions Trading System (EU ETS) is important through its role as the “cornerstone” of EU climate change policy as well as a “role model” and “pioneer” for carbon markets. 

Author(s): Andrei Marcu, Emilie Alberola, Jean-Yevs Caneill, Matteo Mazzoni, Stefan P. Schleicher, Wijnand Stoefs, Charlotte Vailles, Domien Vangenechten

Managing a Sustainable Transition to a Low-carbon Society: The Socio-economic Impacts of Mitigation

15/04/18

This policy brief looks at how to identify and manage the expected and unintended socio-economic impacts of greenhouse gas (GHG) mitigation policies. 

Author(s): Andrei Marcu, Domien Vangenechten

"Straw Man" for Article 6.2

13/02/18

This paper seeks to capture some of the issues that need to be addressed in the rulebook for article 6 of the Paris Agreement, and unpack the options for each issue, with the intention of catalyzing a discussion among Parties.

Author(s): Andrei Marcu, Peter Zaman

Issues and Options: elements for text under Art. 6

20/10/17

This paper seeks to capture some of the issues that need to be addressed in the rulebook for article 6 of the Paris Agreement, and unpack the options for each issue, with the intention of catalyzing a discussion among Parties.

Author(s): Andrei Marcu, Wijnand Stoefs, Domien Vanegenechten, Oliver Martin-Harvey, Samuel González Holguera

Addressing policy overlaps through the governance of the Energy Union

21/09/17

This paper addresses what the Governance proposal does not currently include, specifically, provisions to address interactions between elements of the Energy Union. 

Author(s): Andrei Marcu, Wijnand Stoefs and Samuel González Holguera

2017 State of the EU ETS Report

07/05/17

This report discusses the current state of play in the EU ETS while abstaining, to the extent possible, from providing solutions.

Author(s): Andrei Marcu, Emilie Alberola, Jean-Yves Caneill, Matteo Mazzoni, Stefan Schleicher, Wijnand Stoefs and Charlotte Vailles

Issues for discussion to operationalise Article 6 of the Paris Agreement

02/05/17

This paper focuses on the issues that emerged from previous discussions and submissions and which the author believes will require further examination as part of the effort to make Article 6 operational. 

Author(s): Andrei Marcu

Article 6 of the Paris Agreement Reflections on Submissions by Parties before Marrakech

02/05/17

This paper examines submissions made prior to COP 22 on views related to guidance for the Article 6 items. It highlights the many important issues covered in them and discusses implications of the various interpretations. 

Author(s): Andrei Marcu

Views on Mitigation Value and its Application

02/05/17

This paper analyses the concept of mitigation value and its application, and the relationship between mitigation value and compliance value. 

Author(s): Andrei Marcu