Phase III
For Phase III (2013–20), the European Commission has proposed a number of changes, including (CCC, 2008, p. 149):
- the setting of an overall EU cap, with allowances then allocated to EU members;
- tighter limits on the use of offsets;
- limiting banking of allowances between Phases II and III;
- and a move from allowances to auctioning.
Projections to 2020
CCC (2008, p. 151) made projections of the expected cap for the EU ETS out to 2020. For a 20% cut in EU economy-wide emissions relative to 1990 levels, the reduction in total emissions was projected to be around 36 million tonnes per annum. CCC (2009, p. 68) projected a carbon price in 2020 of around 22 Euro/tCO2. Most market commentators project a price around or below 30 Euro/tCO2. These carbon price projections are subject to great uncertainty, e.g., over future fossil fuel prices, and predicting business-as-usual emissions (p. 69). Thomson Reuters Point Carbon estimates that because of massive over-allocation, without intervention to reduce the supply of certificates, the price of certificates will fall to four Euros for the period.
Read more about this topic: European Union Emission Trading Scheme
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