Mais conteúdo relacionado Semelhante a Preparing for EU Carbon Regulations - A Practical Guide by Evolution Markets & Climate Connect (20) Preparing for EU Carbon Regulations - A Practical Guide by Evolution Markets & Climate Connect1. Preparing for EU Carbon
Regulations: A Practical Guide
Overview, Current Status &
Position of Airlines
Presented By
Lenny Hochschild, Evolution Markets
&
Prashant Kulshrestha, Climate Connect
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© Evolution Markets Inc. | Climate Connect Limited 1
2. About Climate Connect – Specialist News & Data
provider in emerging Post 2012 Environmental
Markets
London
Kentucky Beijing
New Delhi
Fast and accurate news helps in making informed decisions impacting your bottom-line
© Evolution Markets Inc. | Climate Connect Limited 2
3. Our expertise in EU ETS Aviation
I. Latest News
Published over 100 news stories on EU ETS Aviation
July 20, 2012 AirAsia signs deal with GE Aviation to cut carbon emissions, fuel consumption
July 19, 2012 Etihad plans to cut emissions using Rolls Royce's fuel optimization...
July 16, 2012 EU ETS will cost €10 million to Emirates
July 10, 2012 EU ETS Aviation may impact production says Airbus; proposes reforms
July 9, 2012 VerifAvia expands operations to cover airport emissions
July 9, 2012 UN calls for $25 per tonne carbon tax in developed countries
July 6, 2012 South African Airways eyeing voluntary carbon offset project
July 5, 2012 NATS partners with Royal Jet to achieve environmental goals
June 21, 2012 European Commission activates single EU Emission Trading registry
II. Dedicated Monthly Aviation Newsletter – Aviation focus
To be launched on first week of August 2012
II. Global Newsletter
Published Monday to Friday with a section on Aviation
III. Post-2012 Carbon Markets Report
Published every Tuesday with a section on Aviation Climate Connect interviewed Paul Steele, Executive
Director, Air Transport Action Group at COP 17, Durban
Click here to see the interview
© Evolution Markets Inc. | Climate Connect Limited 3
4. About Evolution Markets – the carbon markets’
leading brokerage firm
Evolution Markets provides strategic financial and industry-leading transactional services to
participants in global environmental markets and the clean energy sector
Unique approach called EvoFinance™, a single source for innovative financial services solutions
Market Pioneer
First Trade of Kyoto Allowances (Green-AAUs) (Dec. 2002)
First Brokered EU ETS Trade (Apr. 2003)
First EU ETS Trades Using the ISDA Contract (Jun. 2004)
First Large-Scale EUA Transaction (400K EUAs) (Nov. 2004)
First EUA Trade for Settlement in 2008 (Nov. 2004)
First Brokered EUA Option (Sep. 2005)
First Indexed CER Trade (Mar. 2006)
First “Phase Three” (post-2012) EUA Trade (Mar. 2007)
First RGGI-Compliant Offset Trade (Jun. 2007)
First CER Option (Sep. 2007)
First RGGI Allowance Trade for Physical Settlement (Mar. 2008)
First Brokered EUA Spot Trade (Jun. 2009)
First Quarterly EUA Options Trade (Jul. 2009)
First Brokered ERU Cleared Trade (Jul. 2010)
First Guaranteed California Compliant Offset Trade (Dec. 2010)
First GreenEx-Cleared California Carbon Allowance Trade (Sep. 2011)
Evolution Markets Inc. and Climate Connect, JV that provide comprehensive advisory and
transaction services to assist aircraft operators and their partners around the globe with
services and strategies to comply with the European Union's carbon reduction mandates
© Evolution Markets Inc. | Climate Connect Limited 4
5. Presentation Structure
Introduction to EU ETS Trading allowances under EU ETS
Aviation under EU ETS & its significance Associated Risks with the Trading
Opposition by other states – Why? EUA/EUAA/CERs – Historical prices/trend
Important Timelines Compliance efforts -Current Scenario
Financial implications – Compliance/Non- Future forecast
compliance
Evolution & Climate Connect – Snapshot of
Special issues faced by airlines our Services
Mitigating the Compliance – Data needed Thank You
EU ETS Registry Q&A
Documentation, Monitoring, Reporting &
Verification
© Evolution Markets Inc. | Climate Connect Limited 5
6. Introduction to EU ETS
Launched in 2005 with ‘cap-and-trade’ as its principle
Covers 30 countries (the 27 EU Member States plus Iceland, Liechtenstein and
Norway), 40% of total GHG emissions
Covers 11,000 power stations and industrial plants in 30 countries
Inclusion of Aviation from Jan 1st,2012, others from 2013
Phase I Phase II Phase III
2005-2007 2008-2012 2013-2020
Emissions rose 1.9% Allowance cap: 2.8 billion tons EU-wide emissions cap
Increase of 37.88 million tons Average cut of 7% from 2005 levels Reduce emissions to 1.7 Bn tons
Various European Commission
documents
© Evolution Markets Inc. | Climate Connect Limited 6
7. Aviation under EU ETS & its
significance
Global emissions of carbon dioxide (CO2) rose by 3%
Worldwide, flights produced 676 million tonnes of CO2
CO2 emissions from EU international aviation increased by 110% between 1990 and 2008
On 2 February 2009, EU legislation incorporated aviation into the EU Emissions Trading Scheme (ETS)
as from 2012
Airlines operating into and out of the EU are required to immediately begin purchasing emissions
allowances, but are only expected to remit the sums in 2013
Non compliance, leads to fines of up to EUR100 (USD122) for each tonne of carbon dioxide emitted
© Evolution Markets Inc. | Climate Connect Limited 7
8. Opposition by other states –
Why?
A group of 26 countries including China, the United States and India jointly
denounced the ETS as "illegal“
EU ETS breaches the Chicago Convention, which prohibits taxation of international
aviation
BASIC (Brazil, South Africa, China & India) nations showed deep concern about
the unilateral action by the EU to include international aviation in the EU-ETS
EC estimates the ETS will cost Chinese airlines less than €2.5m a year and Indian
airlines €1m a year, which is an "insignificant amount"
© Evolution Markets Inc. | Climate Connect Limited 8
9. Important Timeline
Identify requirements and resources
July 2012 for Carbon Registry Account
Allowance allocation in 2012 application
Submit Carbon Registry
Free allowances: 180.95 Mn tons Aug 2012 Account application
Allowance auction: 31.93 Mn tons Submit new Monitoring Plan for
Sept 2012 next trading period (if required)
Activate Carbon Registry
Oct 2012 account
Obtain approved plan and
approval letter from Competent
Authority
Nov 2012 QA assessment validating
internal process
Jan 2013 Submit report and supporting
documentation to a third-party verifier
Mar 2013 Submit verified report to
Competent Authority
Various resources available
at European Commission
© Evolution Markets Inc. | Climate Connect Limited 9
10. Financial implications –
Compliance/Non-compliance
$719 million by 2020
$0.5 - $1 billion by 2020
€3.1 billion by 2020
Cost Estimates
Reuters estimates: $2.8 billion by 2020
To comply: Airlines that do not have
Bloomberg estimates: 844 million offset deficit enough allowances will have to buy
by 2020 them in the carbon market or face a
€100 / ton fine.
IATA estimates: $17.7 billion by 2020
EC estimates: $20 billion profits by 2020
© Evolution Markets Inc. | Climate Connect Limited 10
11. Special issues faced by the
Small Airlines
Difficulty to directly access to international carbon market in Europe
Inability to qualify or meet stringent Know your customer (KYC) requirements of big
carbon traders or exchanges
Inadequate access to regulatory and market information
Inability to find qualified staff in country of origin with adequate carbon market
knowledge
Administrative expenses could be higher relative to compliance obligation
No avenues for carbon market education in country of origin
© Evolution Markets Inc. | Climate Connect Limited 11
12. Mitigating the Compliance – Data needed
All the airlines will have to
Monitor tonne-kilometers and CO2 emissions begins 1 January each calendar year for EU-
ETS
Report tonne-kilometer data to your Member State's regulatory authority no later than 31
March of each calendar year
Report CO2 emissions data to your Member State's regulatory authority no later than 31
March of each calendar year
Surrender allowances for 2012 emissions by 30 April 2013
Emission factors for aviation fuels
DETERMINATION OF CO2 EMISSIONS
Emission factor
CO2 emissions = Fuel consumption x emission factor Fuel
(tCO2 /tfuel)
Aviation gasoline (AvGas) 3,10
Jet gasoline (Jet B) 3,10
Jet kerosene (Jet A1 or Jet A) 3,15
© Evolution Markets Inc. | Climate Connect Limited 12
13. Documentation, Monitoring,
Reporting & Verification
What is a monitoring plan?
Aircraft operators will be required to submit two monitoring plans to their administering Member State:
How the aircraft operator intends to monitor and report fuel consumption (the emissions monitoring plan) and
Tonne-kilometre data (the tonne-kilometre monitoring plan)
Data required in emissions monitoring plan
Data identifying the aircraft operator, contact details of the aircraft operator
A list of aircraft types in the fleet, the number of aircraft per type and the fuel calculation method per aircraft type.
An indicative list of the additional types and numbers expected to join the fleet.
A description of the procedures used to monitor the list of flights operated.
A description of the methods used for monitoring (and transmitting, storing and retrieving) fuel consumption data,
including:
The chosen methodology for the calculation of fuel consumption.
The procedures for measurement of fuel uplifts and fuel in tanks.
The procedure to ensure the total uncertainty of fuel measurement will comply with the monitoring and
reporting requirements.
The procedure for measurement of fuel density, and the emission factors used for each fuel type used
© Evolution Markets Inc. | Climate Connect Limited 13
14. Continue…
tonne-kilometre monitoring plan
A list of aircraft types in the fleet, the number of aircraft per type and the fuel calculation method per
aircraft type.
An indicative list of the additional types and numbers expected to join the fleet.
A description of the procedures, systems and responsibilities used to update the list over the
monitoring year.
A description of the procedures used to monitor the list of flights operated.
A description of data acquisition and handling activities, and quality control and assurance activities,
including maintenance and calibration of measurement equipment.
A description of the methods used for determining tonne-kilometre data per flight, including:
The procedures, responsibilities, data sources and calculation formula for determination and
recording of distance per aerodrome pair (=GCD + 95km).
Description of the procedures or method used to determine the mass of freight and mail and the
mass of passengers and checked baggage.
Description of the measurement devices used for measuring mass of passengers, freight and mail
as applicable.
© Evolution Markets Inc. | Climate Connect Limited 14
15. EU ETS Registry
The Union registry or EU ETS Registry is a secure web-based application that
records:
Allowances allocated and held in registry accounts
Annual verified emissions
The transfer of allowances between accounts
Annual compliance status
Each Aircraft operator have to open an Aircraft operator holding account (AOHA) for
the transaction of allowances in the Union registry
Documents Required (Any one)
• A certified copy of Certificate of Incorporation or registration of the Applicant
evidencing the full name of the Applicant
• The company registration number and VAT registration number
Important • The names of all Directors
• A statement signed by the individual or Authorised Representative confirming
the full name, permanent residential address, place & date of birth, email
address etc.
© Evolution Markets Inc. | Climate Connect Limited 15
17. Trading allowances under
EU ETS
Exchange Traded:
Margining implications
Clearing
Access to real time pricing
Access to live quotes on screen
Bilateral/Non-Exchange Traded
Credit Approval
Pre-Trade Bilateral Documentation
Counterparty Risk
Access to wholesale pricing
© Evolution Markets Inc. | Climate Connect Limited 17
18. Associated Risks with the
Trading Carbon Credits
Insufficient Risk Management Controls
Counterparty Performance Risk / Credit Risk
Price Volatility
Political/Regulatory Uncertainty
Reputational Risk
© Evolution Markets Inc. | Climate Connect Limited 18
19. EUA/EUAA/CERs – Historical prices/trend
EUA & CER: Price Action
31.00
Pre -2012 Strip EUA
27.00 Pre-2012 Strip CER
11-'14 EUA Strip
23.00
11-'13 CER Strip
19.00
€
15.00
11.00
7.00
3.00
Mar08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12
EUAA Dec 12: Price Action
10
9
8
7
6
5
2/28/2012 3/28/2012 4/28/2012 5/28/2012 6/28/2012
© Evolution Markets Inc. | Climate Connect Limited 19
20. Compliance efforts -Current
Scenario
Biofuel Alaska Airlines launched its maiden biofuel-powered flight, from Seattle to Washington D.C.
Australia's Qantas airline makes first commercial biofuel flight
Azul Airlines announces plans to test Amyris sugarcane-based jet fuel
United Airlines, Boeing, Honeywell’s UOP, the Chicago Department of Aviation and the Clean Energy
Trust announced the formation of the Midwest Aviation Sustainable Biofuels Initiative (MASBI)
KLM Royal Dutch Airlines became the first airline in the world to operate flight on aviation biofuels
Boeing, Airbus team up on EU carbon charge, biofuels
Emission Air Berlin concluded first trade of EU aviation allowances
Trading SAA to Raise Surcharge to comply with EU Emissions Trading Scheme
major airlines Deutsche Lufthansa AG, AirFrance-KLM and others buying or plan to buy carbon
permits
Virgin will receive nearly 3.6 million EU aviation allowances for the year 2012, and a total of 27 million
for the period 2013-2020
Efficiency United Airlines orders 150 Boeing 737s, 15% more fuel-efficient per seat
Etihad Airways chooses Rolls-Royce to help cut emissions and save fuel
Boeing, American Airlines 737-800 ecoDemonstrator Airplane Prepares for Flight Test Program
ANS EU prepares for common air traffic management
LATAM Airlines eyes wider use of RNP navigation tools
Royal Jet colloborate NATS, air navigation service provider to improve the environmental
performance of its flights in UK airspace
Regulatory IATA Welcomes ICAO Progress on a CO2 Standard for Aircraft
Canada launches its own GHG reduction plan for aviation
© Evolution Markets Inc. | Climate Connect Limited 20
21. Current & Future regulatory
developments
EU ETS inspired other countries and regions to launch cap and trade
schemes
ICAO establishing a worldwide CO2 Standard for aircrafts, a system,
which characterizes the CO2 emissions for aircraft types with varying
technologies
Aviation industry looks for other ways of reduction of CO2 emissions e.g.
South African Airways exploring the implementation of voluntary carbon
offset project
Carbon Leakage
New sectoral market mechanisms in the EU ETS
© Evolution Markets Inc. | Climate Connect Limited 21
22. Evolution & Climate Connect – Snapshot of our
Services
Aviation Advisory Services: Knowledge Services:
Sustainability Consulting: A comprehensive report on the Carbon Workshops: On-site workshops or Webinars to
Aviation ETS program, inclusive of compliance obligations, stay on top of market and regulatory developments.
allowance allocation, auction structures and frequency, and News Broadcasts: News and regulatory updates on
carbon offset programs. carbon markets designed specifically for the aviation
Compliance and Reporting: Support in fulfilling EU ETS industry. Carbon Market Research: Research reports on
obligations, including analysis of emissions data, reporting, carbon pricing and market liquidity, focused on your
and timely submission of data to the respective authorities. specific risk profile and information needs.
Governance and Risk Management: Development of a Intelligence Reports: Aviation industry business
comprehensive and strategic risk management program. intelligence reports and case studies on aircraft operator
Sustainability Reports: Reports and analysis of Aviation strategies to meet carbon compliance obligations.
Allowances, Carbon Emissions, and market trends. Allowances and Carbon Credit Reports: Reports
Registry Services and Documentation: Acting as your detailing EUAs and CERs issuance and surrender rates.
appointed representative, allowing you to cost- Carbon Price Data: Access to industry-leading market
effectively outsource coordination with the appropriate data services.
registry for the delivery of compliance units.
Monitoring and Verification: Assessment and procurement
of the services of a third-party verifier to complete the
monitoring and verification of emission data.
Carbon Trading: Accessing the carbon market for
allowance and offset procurement and sale, as well as
execution of various hedging strategies.
© Evolution Markets Inc. | Climate Connect Limited 22
23. Privileged Information Seeker
Thank You
www.climate-connect.co.uk | www.evomarkets.com
To find out more about Evolution Markets’ and Climate
Connect’s advisory services for the aviation sector
Call: +1 415.963.9138 (US), +44 207.193.8996
(UK/Europe), +91 11.4505.6713 (India)
or email: aviation@evomarkets.com
Disclaimer: Climate Connect Ltd has taken due care and caution in compilation and reporting of data as has been obtained from various sources including
which it considers reliable and first hand. However, Climate Connect Ltd does not guarantee the accuracy, adequacy or completeness of any information and it
not responsible for errors or omissions or for the results obtained from the use of such information and especially states that it has no financial liability whatsoever
to the users of this report. This research and information does not constitute recommendation or advice for trading or investment purposes and therefore Climate
Connect Ltd will not be liable for any loss accrued as a result of a trading/investment activity that is undertaken on the basis of information contained in this report.
Climate Connect Ltd does not consider itself to undertake Regulated Activities as defined in Section 22 of the Financial Services and Markets Act 2000 and it is
not registered with the Financial Services Authority of the UK.
Evolution Markets Inc. and its suppliers believe the information or data contained herein was obtained from reliable sources. Nevertheless, Evolution Markets Inc.
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