What are the differences between cap and trade and offsetting schemes? Explain the differences between EUA and CER
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Cap and trade schemes allow governments around the world to set a limit on emissions whereas offsetting schemes permit to exceed it (Carbon Trade Watch, 2016). EUA gives a right to “release one tonne of carbon dioxide” (Carbon Retirement, n.d., para. 1) while CER allows offsetting emissions in developing countries.
Explain what the “Stop the Clock” EU ETS Regulation involved and explain the current scope of the EU ETS system for aircraft operators.
‘Stop the Clock’ EU ETS regulation is needed for deferring the surrendering of emission allowances for aviation (European Commission, 2016). The current scope of the EU ETS system covers only flights between destinations in EEA.
What are the reasons for the current low EUA price levels in the EU ETS?
Main reasons for the sudden reduction in EUA price levels: renewable regulations, economic recession, and reliance on international credits (Koch, Fuss, Grosjean, & Edenhofer, 2014).
Please, present all the measures/reforms the European Commission proposed to make the EU ETS effective.
The Council of the EU has proposed to review the EU trading scheme for emissions and created market stability reserve (MSR) (European Council, 2015).
Explain the key design elements of future CORSIA scheme and calculate the offsetting obligations for an aircraft operator in 2018, given the following data:
- CORSIA sector baseline: 600MT C02
- Sector global emissions covered in 2028: 880MT CO2
- Operator’s baseline: 3000t CO2
- Operator’s emissions in 2018: 3800t CO2
The scheme will use the average level of carbon emissions for the period from 2019 to 2020 for the calculation of the sector’s offsetting obligations (ICAO, n.d.). It will be implemented in three phases: the pilot phase (2021-2023), the first phase (2024-2026), and the second phase (2027-2035) (ICAO, n.d.; Norton Rose Fulbright, 2016). The offsetting requirements for an aircraft operator will amount to 106, 400t.
Carbon Trade Watch. (2016a). Cap and trade. Web.
European Commission. (2016). The EU Emissions Trading System (EU ETS). Web.
European Council. (2015). Reform of the EU emissions trading scheme. Web.
ICAO. (n.d.). What is CORSIA and how does it work? Web.
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Koch, N., Fuss, S., Grosjean, G., & Edenhofer, O. (2014). Causes of the EU ETS price drop: recession, CDM, renewable policies or a bit of everything? – New evidence. Energy Policy, 73(1), 676-685.
Norton Rose Fulbright. (2016). ICAO’s new Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and what it means for airlines. Web.