Reforming the EU Emissions Trading Scheme
International Sustainable Finance Centre (ISFC)
Apolitical, expertise-led think tank with an advisory practice focused on #sustainablefinance in finance and business
On 18 December 2022, EU negotiators reached agreement to reform the EU’s Emissions Trading Scheme (EU ETS) . Briefly, the Commission proposal to amend the directive concerns the following elements between 2021-2030 :
By 2030, about 50% of free allowances will disappear. This poses a great challenge for hard-to-abate industries, like chemicals, cement, and steelmaking. In parallel, the so called Carbon Border Adjustment Mechanism (CBAM) will be introduced to protect these sectors from imports of cheaper products coming from countries with lower environmental standards - to address what is called carbon leakage .
Check out this infographic for more information: Fit for 55: reform of the EU emissions trading system .
What future is envisioned for the EU heavy industry?
"The overhaul is geared towards rewarding the first movers and penalising the worst performers" - writes Michal Hruby , ISFC's Economist in this brief analysis on the on-going debate.
How about the industrial heritage in the CEE region?
The following reports discuss the pathway to decarbonise the industrial sectors in Czechia, Poland, and Hungary - and how sustainable finance could be used to increase the region's competitiveness:
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In the news?
Spanish green subsidies under scrutiny: Madrid’s decision to end the subsidy scheme for renewable energy investments raised eyebrows in Brussels - the European Commission loses bid to join the legal battle , writes Financial Times .
Changes in EU ETS: Forecasts expect rising costs on EU carbon permits after a sharp fall in energy costs across Europe, writes Susanna Twidale on Reuters.
Climate-related losses: The Bank of England delays addressing the mounting financial risks posed by climate change, putting on hold its plans to release new guidance , writes Green Central Banking .
Slovak climate law: Dana Marekova from Klimatická koalícia posted on LinkedIn about the draft of the new climate law and why it matters.
Riots and coal mines: Did protests against the expansion of an open-cast lignite mine cause backlash against the German Green party? This article by The Economist discusses pragmatism and shades of green.
Automotive industry in EU: For our Slovak readers, the latest article by Michal Hruby on EURACTIV Slovensko discusses the US industrial policy for the transition to low-carbon production, the IRA package, and the risk it poses on the EU's competitiveness.
Czech elections: The newly elected President of the Czech Republic, Petr Pavel, shared his views on sustainability topics on Ekonews , such as ending coal mining, renewables, and climate neutrality.
Climate-neutral banking in Hungary: Tibor Schaffhauser from Green Policy Center writes about the Hungarian banking sector and how it generally lags behind in terms of climate neutrality efforts, while the “pioneer” institutions drive transition on the market.
Satellites & carbon monitoring: Later this year, the world's first commercial satellite will be launched aimed at monitoring carbon emissions.
Critical materials - copper: Discussions about critical minerals are ongoing, with Alessandro Blasi , Advisor to International Energy Agency (IEA) posted on LinkedIn about copper and its key role for a transition to more renewable energy. Wood Mackenzie had written about the issues exploring the copper demand with an accelerated transition scenario.
Sustainability Officers: With the rise of sustainability as a topic for business, more sustainability-focused corporate roles have emerged. Peter Vanham from Fortune has outlined the four emerging types of Chief Sustainability Officers or CSOs.
JP Morgan and forests: Fortune has an article about how and why J.P. 摩根 is investing in forests, and why it is not focusing on timber anymore.
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Recommended readings
Briefly on the competition: "The US’ Inflation Reduction Act (IRA) has put the finger on some sore spots in Europe. Suddenly weaknesses of the EU Green Deal became apparent" - starts the thread by Claudio Baccianti :
Sustainable finance in 2023: Climate Bonds Initiative has published its 2022 Market Snapshot , exploring the five big directions for sustainable finance in 2023, including different debt instruments.
Applying mainstream economics thinking to ESG: Alex Edmans , Prof at 英国伦敦商学院 , has published a great article on "Applying Economics – Not Gut Feel – To ESG Issues", which shows how conventional thinking on ten key ESG issues is overturned when applying the insights of mainstream economics.
Quality data for climate: European Central Bank published the first set of climate-related statistical indicators that should help analyse climate-related risks in financial sector and monitor the green transition.
First set of ESRS: European Central Bank published an opinion on the first set of European Sustainability Reporting Standards (ESRS), submitted by EFRAG in November 2022. It focuses predominantly on the general requirements and disclosures, and other environmental standards. Similarly, the opinion of the European Securities and Markets Authority (ESMA) is available here .
领英推荐
Consultation open till 10/02: OECD - OCDE has opened a public consultation on the Guidelines for Multinational Enterprises open to all interested stakeholders from all countries. The Guidelines set out recommendations to ensure responsible business conduct in all areas where business interacts with society.
Certified hydrogen: International Renewable Energy Agency (IRENA) looks at the potential certification schemes for the cross-border trade of renewable hydrogen, their associated carbon footprints, and other sustainability criteria.
Toxicity in Europe: Measuring 33,000 facilities in Europe from 2001 to 2017, Erhart Szilard and Kornél Erhart presented a methodology to develop the integrated toxicity and climate change risk assessment of Europe based facilities, industries, and regions.
One rating to rule them all: Does it make sense to focus a sustainability strategy on ESG rating optimisation? If you are serious about sustainability, then the answer is no - writes Broc Romanek in this briefing on different ratings.
Energy geopolitics: What triggers global energy transition - is it political will, economic incentives, structural factors or something else? In this publication , Andreas C. Goldthau examines the geo-economic effects of decarbonisation.
State of ESG: "Acronyms may change, and political agendas will continue to create debate among market participants, but sound investment management will always prevail" - highlights this publication from Close Group Consulting Inc. on the ESG debate.
Transition tipping-point: Climate Bonds Initiative looks at 5 expected trends and developments this year in sustainable finance.
Decreased dependency: How did Germany diversify its?natural?gas?imports? Check out this?animated infographic?by?James Eagle , posted by Markus Krebber with interesting insight:
Systemic aspects of climate risk: Grantham Research Institute on Climate Change & the Environment , Luca Taschini et al. developed a way to use Credit Default Swap spreads to identify a company's exposure to carbon risk and how it will affect their creditworthiness.
Should we swipe right? ISFC Visiting Fellow, Paula Singliarova in her newest article investigates the ESG data of the most famous dating app: Tinder .
Nobody wants to work these days: 彭博资讯 short video talks about why CEOs at Davos can’t stop talking about Gen Z:
Carbon footprint calculation: 玛泽咨询 Slovakia held a webinar on the GHG Accounting & Reporting Standards issued by the Partnership for Carbon Accounting Financials (PCAF) with the ambition to do a qualified estimate of emissions related to financial products.
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Podcasts
Gold standard of green bonds: "We are lucky. We can see what is?coming, and it looks like we can do something to contribute to the change” shared Sean Kidney , the CEO of Climate Bonds Initiative in the newest Sustainability in Finance podcast?episode . This 35-minute discussion looks into the deeper meaning of value creation across our societies and?how it relates to green bonds and other?sustainability-linked financial instruments.?
Trading emissions: For our Hungarian readers - check out this podcast episode about the EU and Chinese emission systems and their impact on climate change with Daniel Muth and Pogátsa Zoltán.
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Events?
Slovakia: Only one day to go for the Climate and sustainability risks and opportunities, a special one-day event hosted by the Národná banka Slovenska (National bank of Slovakia) in partnership with International Sustainable Finance Centre (ISFC) , happening on 7 February in Bratislava.
Online: On 10 February, join GreenWatch SFDR meets SEC webinar.
Online: On 15 February, United Nations Environment Programme Finance Initiative (UNEP FI) hosts an open webinar on the 2023 Climate Risk Programme.
Online: Climate Change Committee hosts a webinar on 27 February launching its report called Investment for a well-adapted UK.
Online: Simmons & Simmons is hosting series of online sessions titled "Global legal and business outlook 2023: future + ESG" on 28 February.
Luxembourg: On 27 and 28 February, European Investment Bank (EIB) will host its annual EIB Group Forum : "Adapting to a Changing World" in Luxembourg.
Belgium: Between 28 February and 1 March CEPS (Centre for European Policy Studies) organises the 2023 edition of CEPS Ideas Lab focused on EU resilience.
Hybrid: Starting from 1 March, United Nations Environment Programme Finance Initiative (UNEP FI) will host a series of Regional Roundtables on Sustainable Finance.
Course: April this year, the Joint Vienna Institute ,?Oesterreichische Nationalbank ?and?Národná banka organises a Course on Macrofinancial Stability in Central, Eastern and Southeastern Europe , application deadline by 6 February.
Postgraduate diploma in sustainable finance (in Polish): Wydzia? Prawa i Administracji Uniwersytetu Warszawskiego (WPiA UW) in Warsaw has launched a postgraduate diploma in sustainable finance - a fantastic opportunity to obtain skills in Polish. Kudos to Agnieszka (Aga) Smoleńska, PhD and colleagues for a fantastic curriculum!
ESG & non-financial reporting workshops, Prague, Czechia: 德勤 in Prague is organising a series of workshops on sustainable finance topics in the Czech language, starting with real estate, featuring Antonín Weber , ?těpán Pekárek , Kristína ?erná amongst others.
In-person course: Between 20 and 24 March, the School of Transnational Governance at European University Institute has a unique course for practitioners: "Becoming an All-round Net-Zero Investor: Integrating Climate Finance, Technology and Policy". Participants will have a deep dive with experts such as Jos Delbeke , Cornillie Jan , Peter Vis , Ingo Ramming , Jules Besnainou , Peter Coveliers , and Rebecca Lamas . Information is available on the course website and the deadline for applications is 27 February. The participants will learn the following:
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