How an enhanced EU ETS can push industrial innovation A possible - - PowerPoint PPT Presentation

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How an enhanced EU ETS can push industrial innovation A possible - - PowerPoint PPT Presentation

Sep 15, 2023 205 likes •343 views

How an enhanced EU ETS can push industrial innovation A possible compromise #cop18 #Doha Tomas Wyns, Director European Commission s 2050 low-carbon roadmap 110 100 90 Reference Scenario 80 70 -40% 60 50 40 30 Reduction Scenario

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Tomas Wyns, Director

How an enhanced EU ETS can push industrial innovation

A possible compromise

#cop18 #Doha

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2050 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

10 20 30 40 50 60 70 80 90 100 110

Reference Scenario

Reduction Scenario

  • 40%
  • 80%

European Commission’ s 2050 low-carbon roadmap

  • 80 to -95% by 2050

Reductions Investments Savings €270 Bn p.a. €170-320 Bn p.a.

Fuel cost

€88 Bn in 2050

Air quality and health

  • 80% = domestic, ref. 1990

in EU economy: jobs infrastructure R&D

EU Member States agree on targets but not on interim milestones

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0% 25% 50% 75% 100%

1990 2005 2030 2050

100% 80% 66% 17%

Low-end Industrial sectors scenario E.C. 2050 low-carbon roadmap High-end scenario 0.8% pa efficiency improvement as from 2005 (fixed production)

D e p l

  • y

m e n t

  • f

N e w T e c h n

  • l
  • g

y

56% 60% 13%

2050 projections for Industry

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0% 25% 50% 75% 100%

1990 2005 2030 2050

Deployment of New Technology

60% 13%

!! 10-15 years time left to develop & make breakthrough technologies market ready

2050: The challenge for EU industry

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2030 2005 2010 2015 2020 2025 120 20 40 60 80 100 Year the mentioned technologies likely become operational on commercial scale Relative CO2 emission Reference level (average EU blast furnace) New blast furnace Fastmelt Top gas recycling with CCS Fastmelt with CCS HIsarna with CCS Electrolysis (using renewable electricity)

Reduction Potential in some industrial sectors

2030 2005 2010 2015 2020 2025 120 20 40 60 80 100 Year the mentioned technologies likely become operational on commercial scale Relative CO2 emission Reference level (average EU cement kiln) New Cement kiln (using biomass) Oxy-fuel technology with CCS Magnesium Oxide Cement

Steel Cement

Deep reductions are possible In cement, steel, paper and chemical sectors (over time)

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  • EU ETS is valuable carbon pricing instruments (cost-effective

reductions driven by opportunity cost)

  • but EU ETS will not bring about break-through technologies

(e.g. ULCOS type). Costs and risks are too high.

  • Complementary policy/support required
  • There is a precedent (NER300) but that was “mainly” aimed at

the energy sector

Will the EU ETS bring about these breakthroughs?

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  • immediate intervention in ETS through set-aside/delayed

auctioning of EU allowances followed by

  • permanent scarcity through changing ETS caps as soon

as possible (but only auctioning part)

  • recycle part of delayed auctioning into EU industrial low

carbon innovation fund [similar to NER 300 approach]

  • Free allowances remain untouched up to 2020
  • Carbon leakage list frozen until 2020

Enhancing the EU ETS for innovation: a policy compromise

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total cap in 2013-2020

Free

auctioning Set Aside auctioning (remainder) Delayed auctioning

Permanent cap reduction

Free

“The revenues from the delayed auction go to new EU fund for industrial modernisation. The goal of this fund is to bring low-carbon product and process breakthroughs to the market by 2025-2030. This type of industrial policy has the goal to ensure both the survival and the sustainability of Europe’s manufacturing industry”

The policy compromise

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15,000

total cap in 2013-2020

(million allowances)

Free 7,500

auctioning

(million allowances) assuming 50/50 split between free and auctioned allowances

1,200

set aside

6,000

auctioning (remainder)

900 million 600 600 300 Free

Auctioned later and recycled to industrial Innovation fund

Cancelled at later date (e.g. phase IV)

less allowances in 2013-2020

Permanent cap adjustment through linear correction factor from 1.74% to 2.5% as from 2015 continuing beyond 2020

10-24 EUR/t

average carbon price in 2013-2020

10 Bn EUR

Support for industrial modernisation

Results in

≈ EU ETS compromise concept: an example (!)

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Spire

R&D into higher value added products

10 Bn EUR (2015-2020)

SILC II

Bio-based i ppp Horizon 2020

Products contributing to EU low carbon roadmap Diversification into new products, services and/or production/supply chains Social transition, Education & Entrepreneurship

Process Innovation Product Innovation

ULCOS II

Social Innovation

Suggestions for industrial innovation policy/funding

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1.1 Trillion EUR

by 2020 (*) Chinese public/private investments in 7 strategic emerging industries:

Energy Saving & Environmental protection Next gen IT Biotech High end equipment manufacturing New Energy systems New Materials New Energy vehicles

(*) http://mobile.reuters.com/article/idUSTRE7AK0MT20111121?irpc=932

“The wall, the writing”

EU

130 Bn EUR

part of EU MFF 2014-2020 Horizon 2020: 80 Bn CEF: 50 Bn best case scenario

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Thank You

“Innovation distinguishes between a leader and a follower”

Steve Jobs

Tomas Wyns twyns@ccap.org