Comparison of Waxman-Markey, EU ETS and CPRS Emissions Trading Schemes
A very quick comparison of the proposed Waxman-Markey Cap-and-Trade Scheme, the EU Emissions Trading Scheme and the Carbon Pollution Reduction Scheme in Australia.
|EMISSIONS TARGETS||3% below 2005 levels by 2012.
20% below 2005 levels by 2020.
83% below 2005 levels by 2050.
|21% below 2005 levels by 2020 in absence of global agreement.
30% below 2000 levels by 2020 in event of global agreement.
80% below 2000 levels by 2050.
|108% of 2000 levels by 2012.
5% below 2000 levels by 2020 in absence of global agreement.
15% below 2000 levels by 2020 in event of global agreement.
60% below 2000 levels by 2050.
|COVERAGE||86% of US emissions.
Coverage of both upstream and downstream sources, including electricity, iron & steel, cement, paper, refining, transport fuel, natural gas.
All six GHGs.
|52% of EU emissions from Phase 3.
Covering +12,000 sites.
Covering direct downstream sources, including electricity, iron & steel, cement, paper, aviation (from Phase 3).
CO2 emissions in Phase 1. N2O and PFC emissions from selected sources in Phase 3.
|75% of Australian emissions.
Covering 1,000 sites.
Focus on upstream sources, including coal, natural gas, transport fuel, iron & steel, cement, paper.
Including aviation via upstream fuel use.
All six GHGs.
|ALLOCATION||Gratis allocation of about 20% of allowances to selected liable parties, notably trade exposed industries, declining over time and phased-out by 2035.
Gratis allocation of about 40% of allowances to selected sectors to reduce impact of scheme on consumers, notably electricity, natural gas and heating oil suppliers.
Gratis allocation of about 20% of allowances to selected sectors to encourage development of clean technologies, notably state governments, automakers and CCS pilot sites.
Remaining allowances auctioned, increasing from 18% in initial years to about 70% by 2030.
|Gratis allocation to most liable parties to date with some limited auctioning on a country-by-country basis.
From phase 3 estimate about 60% of allowances will be auctioned and the remainder allocated gratis to worst-affected sectors.
Gratis allocation will be phased out by 2020.
|Majority auctioned with price cap.
Portion reserved for allocation to trade-exposed industries.
|INDUSTRY SUPPORT||Support provided to trade exposed sectors via gratis allocation of allowances.
Support provided to affected industries via gratis allocation of allowances to offset energy price increases.
Financial support provided to low income households and affected workers from revenue from auction of allowances.
|Support provided indirectly via gratis allocation of allowances to energy intensive sectors and new entrant reserves.||Support provided to electricity generators and trade exposed energy intensive industries via gratis allocation of allowances and funding.
Financial support to affected regions and industries from revenue from auction of allowances.
Estimated A$23 billion to be transferred to various support programs over first four years of scheme, including A$750 million for indirect assistance to coal mining sector.
|PRICE CONTROLS||Minimum auction price of US$10, rising at 5% plus CPI each year.
No price cap.
|No price cap.||Price cap of A$40 for first 5 years, rising at twice CPI.|
|COST CONTAINMENT MEASURES||Unlimited banking.
Two-year compliance period with unlimited borrowing within the compliance period.
Borrowing up to 15% of allowances from 2 to 5 years ahead at 8% interest.
Strategic reserve of 5% (rising to 10%) of allowances available for auction if allowance prices exceed 160% of average price over rolling 3 year period.
Five-year compliance period with unlimited borrowing within the compliance period.
Reserve of 5% of allowances will be retained for new entrants.
Price cap of A$40/AEU for first 5 years rising at twice CPI.
|EMISSION OFFSETS||Allow up to 2 billion offsets per year.
Allow up to 1 billion international offsets, rising to 1.5 billion under certain circumstances.
Allow up to 1 billion domestic offsets.
Offsets from forestry, agriculture and landuse changes are eligible.
|Allow use of CERs and ERUs up to 50% of the emission reduction task, equivalent to about 200 million CERs/ERUs per year over 2008 to 2020.
From Phase 3 domestic offsets are eligible but there are no guidelines yet published.
Offsets from forestry, agriculture and landuse changes are not eligible.
|Allow unlimited use of selected Kyoto Instruments (CERs & ERUs).
Provisions exist to expand accepted instruments over time.
Offsets from forestry are eligible; offsets from agriculture are not eligible at the outset, but this will be reviewed in 2013.
|REGULATION OF TRADING||Federal Energy Regulatory Commission responsible for regulation of cash market in allowances and offsets.
Commodity Futures Trading Commission responsible for regulation of derivatives market.
Over-the-counter trading of derivatives prohibited.
|Regulation is the responsibility of individual national regulators, such as the Financial Services Authority in the UK, or the Autorité des Marchés Financiers in France.
Over-the-counter trading of derivatives is permitted.
|Derivatives will be defined as financial instruments and regulated under the Australian Financial Services Act.|
|TRADE MEASURES||In absence of international agreement, obligation to introduce an import credit scheme on imported products, linked to the emission trading scheme.||No trade measures proposed.||No trade measures proposed.|
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Tags: CPRS, Emissions Trading, EU ETS, Waxman-Markey