Carbon Pulse’s Post

🔔 EU climate change action update! 🔔 Climate change is a global issue that demands global solutions and as the EU ramps up its climate goals, there's a growing concern about 'carbon leakage'. This happens when companies located within the EU, move their carbon-intensive production to countries with, shall we say, more vague climate policies, or when carbon-heavy imports replace EU products. So with that being said, the 'transitional phase' of the Carbon Border Adjustment Mechanism (CBAM) comes into play - TODAY, October 1st 2023. This framework places a fair price on the carbon emissions associated with imports, levelling the playing field for cleaner industrial production worldwide, here are a few key points... 🏭 Initially focusing on carbon-intensive sectors like cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen, CBAM aims to cover over 50% of emissions in these areas. 📈 The gradual implementation of CBAM allows businesses and authorities time to adapt, ensuring a smooth transition. During the initial phase, importers will report greenhouse gas emissions but won't make payments. Indirect emissions will be included later. 💡 Companies will have reporting flexibility in the first year, choosing between different methods. Starting in 2025, only the EU method will be accepted. 🔧 To assist importers, the EU has developed IT tools, guidance, and training materials. 🗓️ The permanent CBAM system starts in 2026. Importers will declare the quantity of goods and their embedded GHG, surrendering CBAM certificates whose price depends on the EU ETS auction. 🔄 A review during the transitional phase will refine CBAM's workings, and the product scope may expand to cover more goods produced in sectors linked to the EU ETS by 2030. To find out more, read the legislative documents, or watch a webinar on the topic, click here >> https://lnkd.in/e6iznpU2 #ClimateAction #CBAM #EUClimatePolicy #carbonneutral #netzero #EuropeanUnion #EU

What’s the Article 6 market? Article 6 is an article under the Paris Agreement, which is a legally binding international treaty on climate change, under which countries pledged self-defined GHG emissions goal, i.e. Nationally Determined Contributions (NCD). The Article 6 market thus refers to the potential carbon market that Article 6 allows with the aim of helping countries to achieve their NDCs efficiently and channelling green finance to developing countries. There are mainly two potential markets, mandated by Article 6.2 and 6.4 respectively as shown in the graph. It is noteworthy that the Article 6 markets are still undergoing mechanism development, and no trade has taken place yet. https://lnkd.in/grNs8iRy ACX is an efficient global exchange for voluntary carbon credits. For more information on ACX’s services, visit us at www.acx.net or drop us an email at info@acx.net. #carboncredit #carbontrading #carbonmarket #vcm #voluntarycarbonmarket #netzero #esg #sustainability #article6 #compliancecarbon #parisagreement

What is the European Emission Trading System (EU ETS)? The EU ETS is a flagship policy tool for the European Union's climate action, playing a crucial role in the transition to a more sustainable and low-carbon economy. Here are some additional details about the EU ETS: 1. ⚡Scope and Sectors Covered: The EU ETS covers various industrial sectors, including power generation, energy-intensive industries, and aviation. These sectors are responsible for a significant portion of the European Union's greenhouse gas emissions. 2.🏷Cap-and-Trade Mechanism : The system operates on a cap-and-trade principle. A cap is set on the total amount of greenhouse gas emissions allowed within the covered sectors. This cap is gradually reduced over time to achieve emission reduction targets. 3. 💲Allocation of Allowances : EU Allowances (EUAs) represent the right to emit a specific amount of greenhouse gases. These allowances are allocated or auctioned to companies within the covered sectors. Companies that emit below their allocated limit can sell surplus allowances, while those exceeding their limit must purchase additional allowances. 4. 💹Market-Based Approach : The trading of allowances takes place in a market, creating a financial incentive for companies to reduce their emissions. This market-based approach encourages cost-effective emission reductions, as companies can choose between reducing emissions or buying allowances. 5. 🎯Emission Reduction Targets : The EU ETS is a key tool for achieving the European Union's climate goals. The system contributes to the EU's commitment to reducing greenhouse gas emissions by 55% by 2030 compared to 1990 levels and achieving net-zero emissions by 2050. 6. 🌐 Linking with International Systems: The EU ETS is designed to be compatible with other emissions trading systems around the world. The European Union seeks to collaborate and link its system with similar systems in other regions, promoting a more global approach to addressing climate change. #europeanunion #euets #carbonneutral #sustainabilitygoals #marineindustry

The US and the EU have different views on the use of international carbon credits to achieve their emissions goals under the Paris Agreement.  The US and the EU have stated that they do not intend to rely on international carbon credits to achieve their emissions goals.  However, other countries, including Canada, Japan, New Zealand, Norway, South Korea, and Switzerland, have said they will apply carbon credits. Moreover, the EU and the US have also clashed over President Joseph Robinette Biden Jr.’s US$370 billion climate plan under the Inflation Reduction Act, which EU officials say will hurt European companies selling into the US market.   These disagreements highlight the complexities and challenges in establishing a global carbon market.  It is a delicate balance between ensuring the integrity and effectiveness of carbon credits, and fostering a market that can help drive the transition to a low-carbon economy.  It is clear that more discussions and negotiations are needed to align the different views and interests of various countries. Terence Nunis Terence K. J. Nunis, Consultant President, Red Sycamore Global

𝐂𝐁𝐀𝐌 𝐍𝐄𝐖𝐒 𝐔𝐏𝐃𝐀𝐓𝐄 On December 2023, the European Commission published the default values that can be used to determine embedded emissions in imported goods (except electricity) covered by Carbon Border Adjustment Mechanism (CBAM) during its transitional period which lasts until the end of 2025. Default values play a specific role in CBAM implementation during the transitional period, in particular when importers do not have all the necessary information: During the three first quarterly reports (Q4 of 2023 and Q1&2 of 2024), declarants may report embedded emission based on default values made available and published by the European Commission without quantitative limit; From Q3 of 2024 and until the end of 2025, declarants can still report emissions based on estimations but only for complex goods and with a limit of 20% of the total embedded emissions. Using default values would qualify as ‘estimation’. First importers report will only have to be submitted by 31 January 2024 at the latest. These reports can be amended until 31 July 2024. 👉 CBAM 👈 is the EU's landmark tool to fight carbon leakage and one of the central pillars of the EU's ambitious Fit for 55 Agenda. CBAM has two goals: to contribute to the EU achieving its ambitious climate policies and to encourage industry worldwide to embrace greener technologies, particularly in countries with less ambitious green standards. for more information 👉 https://lnkd.in/ddr-rmMx

Here comes part 5 of 6! #euets #carbonemissions #maritimeindustry #maritimelaw #regulatorychanges #emissionsmanagement

Our Senior Policy Manager Mark Preston Aragonès spoke at a Stakeholder Roundtable on “Future of the EU ETS – Carbon removals ", organised by ERCST - European Roundtable on Climate Change and Sustainable Transition.    🌍 By 2026, the Commission will explore if carbon removal activities could be covered by emissions trading. The roundtable explored the potential interaction of carbon removal technologies within the EU ETS framework.    In his intervention, Mark referred to our report 'Who Should Use NETPs?'. He highlighted that we should explore alternative means of financing CDR rather than betting on the ETS. Furthermore, the allocation of CDR to counterbalance residual emissions is contingent on multiple conditions, and there are numerous questions and principles that need to be taken into consideration for this purpose.    In case you missed it, read more in our report 🔗 https://lnkd.in/dzgxW_eU    #ETS #CDR #EUETS #CarbonRemovals #EUCarbonRemovals #netzero #negativeemissions #ClimateAction 

Key milestones in the history of Carbon Credit Trading: ▶ Kyoto Protocol (1997): The international climate agreement introduced emissions trading to mitigate greenhouse gas (GHG) emissions. Developed countries were allowed to trade emission allowances while working towards binding reduction targets. ▶ Clean Development Mechanism (CDM): Established under the Kyoto Protocol, the CDM facilitated investments by developed countries in emission reduction projects in developing nations. These projects generated Certified Emission Reductions (CERs) or carbon credits, helping meet reduction targets. ▶ European Union Emissions Trading Scheme (EU ETS) (2005): Launched as a prominent carbon trading scheme, the EU ETS imposed emission caps on various industries in EU member states and enabled the trading of allowances. ▶ Regional and National Carbon Markets: Many countries and regions implemented their own carbon markets, such as the California Cap-and-Trade Program, the Regional Greenhouse Gas Initiative (RGGI), and the Chinese Emissions Trading Scheme (ETS), the world's largest carbon market. ▶ Voluntary Carbon Markets: Beyond regulatory compliance, voluntary carbon markets emerged, enabling organizations and individuals to offset emissions by purchasing carbon credits, taking additional responsibility for their carbon footprint. ▶ Paris Agreement (2015): Building upon the Kyoto Protocol, the Paris Agreement emphasized market and non-market approaches, including carbon markets, to strengthen global efforts in combatting climate change and achieving emission reduction targets. #carbonneutrality #carbonemissions #carbonmarkets

The EU is determined to fight global warming, aiming for carbon neutrality by 2050 (#greendeal) and a 55% reduction in greenhouse gas emissions by 2030 (#fitfor55). 🌏 Key to this effort is the EU Emission Trading System (ETS). Here's how it works: Industrial companies exchange one emission allowance in ETS for every ton of CO2 they emit. These allowances are tradable, creating a market where companies pay for their emissions. It operates on a "cap and trade" scheme: 🧢 A maximum (cap) is set on the total amount of greenhouse gases that can be emitted by companies inside the EU area within a given year. 📉 Companies subject to EU ETS have to buy allowances (quotas) based on the amount of greenhouse gases they emit (1 ton of CO2 = 1 ETS allowance). What about shipping? From January 1st, 2024, the EU ETS will cover shipping. It applies to all maritime services with at least one call within the EU. For EU routes, 100% of emissions count, while for EU and non-EU routes, it's 50%. Shippers must report emissions and buy allowances based on a schedule: 📆 2024: 40% of emissions must be converted into allowances. 📆 2025: 70% must be converted. 📆 2026: 100% must be converted. Stay tuned for more updates on EU ETS law, including the list of transshipment ports to be published by the end of 2023. 🚢🌍 #euets #climateaction #greenshipping #emissionreduction