The European Union (EU), under the Kyoto Protocol, Has Committed to Reducing Its GHG Emissions...

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c69268) has announced the addition of Emissions Trading in Europe 2007 to their offering.

Over the last few decades, there has been growing concern about global warming and climate change caused by greenhouse

gases (GHG) - emissions from human activities that involve fossil fuel combustion. In 1992, the United Nations Framework Convention on Climate Change (UNFCCC) adopted the Kyoto Protocol, signed by 84 countries, under which all the major industrialized nations must limit their GHG emissions and bring them back down to 1990 levels. One approach to mitigating global warming is emissions trading - the trading of permits to emit carbon dioxide and other greenhouse gases, calculated in tons of carbon dioxide equivalent (tCO2e). Emissions trading has emerged over the last two decades as a preferred environmental policy tool. One key advantage to emissions trading is that it gives countries and firms flexibility in meeting their emissions targets, rather than imposing predetermined technologies or standards.

The European Union (EU), under the Kyoto Protocol, has committed to reducing its GHG emissions by 8 percent from 1990 levels between 2008 and 2012. The European Union's Emissions Trading Scheme or EU-ETS was enacted in January 2005 as one of the policy measures to enable the EU to meet its Kyoto targets. EU-ETS is a landmark environmental policy, representing the world's first large-scale GHG trading program, covering approximately 12,000 installations in 25 countries and six major industrial sectors. The EU-ETS offers an opportunity for critical insights into the design and implementation of a market-based environmental program of significant size and complexity. The EU-ETS grants allowances to companies for their GHG emissions in accordance with their government's environmental objectives. The program permits a company to emit more than its allowance of GHGs as long as it has reached an agreement to buy allowances from other companies that emit less than they are permitted to.

Within the EU, the supply of allowances is initially determined by individual member states, which develop National Allocation Plans showing the allowances they plan to allocate over a given period and the methods to be used for granting allowances to various facilities. The total quantity of allowances made available by each member state must correspond to the target assigned to it under the Kyoto Protocol. The member state must therefore ensure that the allowances it grants will enable it to reach its target. In 2005, the EU member states issued allowances for 2.2 billion tons of CO2. These amounts make the European allowance the leading CO2 unit of value in the world, with a potential market of more than 50 billion Euros. Considering that the market is young and has encountered delays in getting up to speed, this trading volume is noteworthy and encouraging.

The rise in market prices for allowances reflects a growing recognition of the effect of carbon constraints on industries and of the European Commission's authority to enforce these limits. It is the ability of public authorities to enforce compliance with emissions reductions that creates scarcity of allowances on the nascent carbon market and determines their value. Despite the challenges and some flaws in the EU-ETS and regardless of developments in the European exchanges over the next few years, Europe is developing a real financial industry for carbon allowances that will ultimately have its own specialized professions and institutions.

Content Outline:

Executive Summary
Introduction
Concerns about Global Climate Change
The Kyoto Protocol
GHG Emissions
Emission Reduction Targets
Progress towards Kyoto Targets
GHG Emissions in Europe
EU-25 Member States
EU-15 Member States
New Member States
European Kyoto Protocol Targets
Emission Trade to Tackle Climate Change
International Emissions Trading
Green Investment Schemes
Clean Development Mechanism (CDM)
Joint Implementation (JI)
Domestic Emissions Trading
European Union Emissions Trading Scheme
EU Emissions Trading Scheme (EU-ETS)
Background
Scheme Coverage
National Allocation Plans
Emission Allowances
Monitoring and Verification
Compliance
Transaction Registries
Effect on JI and the CDM
Impact of Policies and Measures
National and Common EU Policies
Energy Supply and Use
Transportation
Agriculture
Waste Management
Trends
Manufacturing
Agriculture
Households
Transportation
Renewable Energy
Combined Heat and Power
Auctioning of Emission Allowances
Overview
Initiatives in Phase I
Auctioning Methods
Static Auctions
Dynamic Auctions - Ascending Clock
Other Elements in Auctioning
Advantages and Disadvantages
Efficient Allowances Distribution
Allocation of Auction Revenues
Environmental Effectiveness
Opportunity for New Entrants
Role of Smaller Players
Chances of Market Distortion
Auctioning versus Sale
Impact of Auctioning
Compliance Costs
Transaction Costs
Harmonization versus Competitiveness
New Entrants
Comparison with Other Trading Programs
SO2 Trading Program
NOx Trading Program
Outcome of Phase I
Emissions Levels
Prices and Other Market Activities
Issues and Uncertainties
Tightening of Emission Caps
Harmonizing NAPs
New Entrants
Coverage Expansion
Lessons for Phase II
Outlook for EU ETS
Prospects for EU Phase II and Post-2012
Dynamic Targets
Temporal Flexibility
Non-Binding Targets
Price Caps
Sectoral Approaches
Linking Emission Trading Systems
Assessment of Key EU Member States
Bulgaria
Denmark
France
Germany
Italy
The Netherlands
Poland
Portugal
Slovak Republic
Spain
United Kingdom
Case Studies
Norway's Emission Trading System
Aviation Sector
Power Intensive Industries
UK's Cement Sector
Major Factors Influencing Sector
Appendix
Glossary

List of Figures
List of Tables

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