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Ten-Year Network Development Plan 2017 Main Report
The EU Emissions Trading System (ETS) has not generated a sufficiently high CO ²
price to favour gas against coal for power generation given the underlying fuel pric-
es. This has seen some countries introducing or proposing national carbon taxes to
encourage the use of less carbon intensive fuels.
ETS Phase 1 (2005–2007)
was characterized by an oversupply of allowances as
real emissions were lower than expected, hence prices fell to almost zero at the end
of the first period.
ETS Phase 2 (2008–2012)
saw the yearly amount of certificates decrease but
prices still remained low.
ETS Phase 3 (2013–2020)
sees yearly allocations decreasing until the end of the
period in 2020. Monthly prices peaked at 8.49 €/EUA
1)
in November 2015, but
have seen a significant decline in 2016 potentially caused by reductions in emis-
sions outstripping the 1.74% yearly cap reduction.
In July 2015 the European Commission presented a legislative proposal to revise
ETS Phase 4 (2021–2030)
in order to deliver the EU target for GHG reductions by
2030 and as part of its contribution to the Paris Agreement
2)
. The overall number of
emission allowances will decline at an annual rate of 2.2% from 2021 onwards,
compared to the current rate of 1.74%.
1) EUA stands for “EU Allowance”. One EUA is the minimum trading unit and enables the owner to emit one ton of CO ²
equivalent (definition of EEX).
2) At the Paris climate conference (COP21) in December 2015, 195 countries adopted the first-ever universal, legally
binding global climate deal. The agreement sets out a global action plan to put the world on track to avoid dangerous
climate change by limiting global warming to well below 2°C. The agreement is due to enter into force in 2020.
(EC Climate Action website)
0
4
6
2
1
3
5
7
8
10
9
€/EUA
Nov 12 Feb 13 May 13 Aug 13 Nov 13 Feb 14 May 14 Aug 14 Nov 14 Feb 15 May 15
May 16
Aug 15 Nov 15 Feb 16
Figure 2.15:
Evolution of European spot prices for emission rights for the period November 2012–July 2016
(Data from EEX, ENTSOG depiction)