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Exploring Strategic Options for the Expansion and Contraction of the EU Emissions Trading Scheme

This document outlines critical considerations for the review of the EU Emissions Trading Scheme (ETS), focusing on criteria for potential expansion or contraction, the implications of full harmonization versus flexibility, and the comparison of de minimis levels at EU and national levels. It also addresses the length of trading periods, the relationship to UK and international targets, and key criteria for linking transition mechanisms. Furthermore, it evaluates the most viable options for the EU scheme, encompassing costs, benefits, necessary changes to directives, and the impact of auctioning and benchmarking within the context of compliance and enforcement.

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Exploring Strategic Options for the Expansion and Contraction of the EU Emissions Trading Scheme

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  1. Defra/Dti workstreams on EU ETS Review What criteria for expansion/contraction? EU Scope Full harmonisation or flexibility? De minimus level EU vs national cap Cap Length of trading periods Relationship to UK/international targets Key criteria Linking Transition mechanisms? Strategic Options What are the best (and most viable) options for the EU scheme? What are the costs and benefits of these options? Changes required to Directive? Harmonisation vs national Allocation Auctioning extent Benchmarking impact Heat UK scope Expansion (transport, other GHGs) Harmonisation or national Compliance and enforcement Streamlining procedures

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