European Parliament Approves New Rules for Monitoring GHG emissions, including Forestry and Agriculture

 
On March 12, 2013, the European Parliament approved two new laws to improve EU rules on monitoring and reporting of greenhouse gas (GHG) emissions, including those from forestry and agriculture.  It is expected that the Council will adopt these laws, after which they will be published in the Official Journal and enter into force.

Connie Hedegaard, European Commissioner for Climate Action, said: “These new rules will help Europe develop robust evidence-based climate policies and keep better track of progress towards meeting our emission targets. They improve transparency, coordination and the quality of data reported, and forest and agriculture emissions will now be accounted for in a harmonised way. We hope that these new rules will also set an example in the context of the international climate negotiations and serve as a benchmark for transparency of climate action by other countries.”

Monitoring Mechanism

The Monitoring Mechanism Regulation enhances the current reporting rules on Member States’ GHG emissions in order to meet requirements arising from current and future international climate agreements, as well as the 2009 climate and energy package. In particular, the revised Monitoring Mechanism aims to help the EU and Member States keep track of progress towards meeting their emission targets for the period 2013-2020 and to facilitate further development of the EU climate policy mix. The EU and Member States already cooperate to monitor and report GHG emissions, producing annual GHG inventories which are used to assess progress towards meeting Kyoto Protocol emission targets. In addition, information is compiled on GHG projections and on policies and measures to reduce emissions.

The revised rules aim to improve the quality of data reported and introduce some new elements, such as:

  • reporting of emissions and removals from land use, land use change and forestry (LULUCF);
  • reporting of Member States’ adaptation to climate change;
  • reporting of Member States’ and the EU’s low-carbon development strategies;
  • reporting on financial and technical support provided to developing countries, and commitments arising from the 2009 Copenhagen Accord and 2010 Cancún Agreements;
  • reporting on Member States’ use of revenues from the auctioning of allowances in the EU emissions trading system (EU ETS). Member States have committed to spend at least half of the revenue from such auctions on measures to fight climate change in the EU and third countries.

LULUCF

The second law approved by the European Parliament establishes common rules for accounting for GHG emissions and removals of carbon from the atmosphere resulting from activities related to land use, land use change and forestry (LULUCF).  This represents a first step towards incorporating the forestry and agriculture sectors – the last major sectors without common EU-wide rules on GHG emissions – into EU climate policy. Forests and agricultural lands cover more than three-quarters of the EU territory and naturally hold large stocks of carbon, preventing its escape into the atmosphere. If their capacity to “trap” carbon were improved by just 10 percentage points (for example through improved forest or grassland management), this would remove the equivalent of annual emissions of 10 million cars from the atmosphere.

This decision requires Member States to report on their actions to increase removals of carbon and decrease emissions of greenhouse gases from forests and soils. While the law does not currently include national emission reduction targets for these sectors, such targets may be introduced at a later stage once the accounting rules have proven robust.

More information is available from the European Commission
 

EU and Australia Agree to Link Carbon Trading Schemes

 

On August 28, 2012, the European Union (EU) and Australia announced their agreement to fully link their respective cap-and-trade schemes by 2018.  In addition, Australia announced that it will drop its planned A$15 per tonne carbon credit floor price and it will limit the use of Kyoto Protocol eligible international units under the Australian scheme. Furthermore, Australia will set its price ceiling with reference to the expected 2015-16 price of European allowances.  The combined effect is that cheaper EU carbon credits will be available for Australian emitters.

Under the arrangement, the European Commission will seek a mandate to negotiate a treaty on behalf of the EU by mid-2015 for the full linking of the emission trading systems from July 2018; the Australian Government has an existing mandate to negotiate such a treaty. As an interim arrangement, a partial link will be established to allow Australian businesses to source 50% of their emission allowances from the EU from July 2015. A similar allowance will be available for European emitters once the full link comes into effect no later than July 2018.

This is a welcome development for the EU trading scheme. Oversupply has driven the cost of carbon credits to record lows; currently, EU carbon trades at around US$10 per tonne. The opening of the market to Australian companies should help to alleviate this oversupply and with a carbon tax of A$23 per tonne, Australian emitters are welcoming the integration which will offer them a cheaper alternative.  However, the Australian government continues to project that carbon prices will reach A$29 per tonne by 2015 and 2016.