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Smart Cash for the Climate: Maximising Auctioning Revenues from the EU Emissions Trading System – Summary

Smart Cash for the Climate: Maximising Auctioning Revenues from the EU Emissions Trading System – Summary

Summary Report

Member States earned close to EUR 12 billion from auctioning in the EU Emissions Trading from 2013 to 2015 with over 80% of the money so far spent on climate action – most of it in the EU. The funding mainly went to renewables, efficiency and cross-cutting programmes. The national reports on the use of auctioning revenues, however, contain mistakes while there seems to be no frequent quality review at present. The summary report is available for download.

The revenues from auctioning were lower than anticipated due to structural surplus that has depressed the carbon price and reduced auction revenue. The new proposal for the EU ETS directive by the Commission represents an additional EUR 120 billion in lost revenue due to keeping free allocation.

Our recommendations:

  1. Smarter spending: mandatory earmarking & a new EU Int’l Climate Finance Fund
    Require earmarking of revenues and that vast majority goes to climate action; and create a sizable new EU International Climate Finance Fund to support developing countries in tackling climate change and its impacts.
  2. Smarter rules: ETS reform could maximise acution revenues
    Reduce the level of free allocation, a higher linear reduction factor, a lower initial starting point for the cap and cancellation of surplus allowances and set a carbon floor price.
  3. Smarter information: reduce deficiencies in the reporting of auctioning revenues and their use
    Improve the reporting template, provide specific details and additional information and install a quality review of the reports.

Citation

Duwe, Matthias and Eike Karola Velten 2016: Smart Cash for the Climate: Maximising Auctioning Revenues from the EU Emissions Trading System. Summary Report. Ecologic Institute: Berlin.

Language
English
Funding
Year
2016
Dimension
24 pp.
Project ID
2596
Table of Contents

EXECUTIVE SUMMARY
I. Smarter spending: ensuring auction revenue is used for climate action
II. Smarter rules: ETS reforms could maximise auction revenue
III. Smarter information: reduce deficiencies in the reporting of auction revenues and their use
INTRODUCTION AND REPORT
Part A. How much auctioning revenue is there and how are Member States handling it?
Part B. How would reforms to the EU ETS affect auctioning revenues and use?
Part C. Recommendations for a smarter ETS design for maximum value of auction revenues
NOTES

Keywords
auctioning, EU ETS, finance, climate action, Europe