PROJECT DESCRIPTION
BACKGROUND
As the international community struggles to put global greenhouse gas (GHG) emissions on a trajectory consistent with the main objective of the Paris Agreement, carbon markets represent valuable tools to successfully achieve climate mitigation targets. The growing role of carbon markets is testified by the number of jurisdictions that have adopted or consider adopting an emissions trading system (ETS) to meet their long-term goals. In this context, the EU ETS continues to be the centrepiece of EU climate policy as well as a fundamental element of the global carbon market and a reference model for many governments outside the EU. This crucial exchange model aims to achieve ambitious climate neutrality targets by 2050. The phasing-out of regulated emissions needs to be accomplished by minimising carbon leakage and safeguarding the international competitiveness of regulated industries, a process which should be perceived as fair by European citizens, and involving a call for stronger climate action by other countries. All these expectations call for a solid and comprehensive system to monitor EU ETS functioning, including its environmental end economic effects, interactions with other policies and changes within the carbon market. A comprehensive monitoring of the system should also cover forward-looking analyses, taking into consideration any relevant developments outside the EU so to help policymakers to assess ex-ante the consequences of different policy/regulatory options and to exchange information with experts and representatives of other major carbon markets. To various degrees, activities of monitoring, assessment, and information exchange around the EU ETS are already ongoing, out but there is a strong need for enhancing and implementing them on a more regular basis.
OBJECTIVES
The LIFE COASE project addresses the need for a more coordinated monitoring of the EU ETS by developing new tools for performance assessment, broadening the base of evidence and knowledge, setting up better-informed policy dialogues with other major carbon markets and, last but not least, providing greater political support for the integration of carbon markets.
In particular, the project aims to:
- Make the data from the registry of the EU ETS more useful and usable for the analysis of the EU ETS.
- Produce new data on and analysis of European firms’ climate-related investments and behaviour, both within and outside the EU ETS, by developing an additional section of the European Investment Bank survey on yearly basis dedicated specifically to ETS.
- Monitor the environmental and economic impacts of EU ETS as well as the structural changes within its carbon market by producing two new sets of annual indicators: three to five “impact indicators” for monitoring environmental and economic impacts, and three to five “carbon market indicators” for detecting structural changes.
- Compare both ex-post and ex-ante model-based assessments of the EU ETS and other major ETSs by organising two series of scientific events: three conferences devoted to the presentation of new, high-quality studies assessing ex-post the EU ETS and other ETSs, and three workshops devoted to the comparison of selected macro-economic models for ex-ante assessment of the EU ETS and other ETSs.
- Facilitate international carbon market cooperation between the EU and partner jurisdictions on key topics around “net zero”, regulation, and integration of carbon markets by organising and supporting the Net Zero and Carbon Market Policy Dialogue.
- Build a strong international network of experts on the EU ETS and other carbon markets, benefitting from the collaboration of experts affiliated with LIFE COASE either as members of the project Advisory Board or as occasional contributors to the Net Zero and Carbon Market Policy Dialogue.
- Increase understanding and political support for the EU ETS and carbon markets amongst policymakers, businesses, non-governmental organisations, and researchers, by producing high-quality dissemination outputs and organising events on properly-managed carbon pricing and emissions trading.
RESULTS
Expected results:
- Improved and new data to make the EU ETS more effective, and for the analysis of company’s climate-related investments.
- Production of two new sets of indicators to monitor the environmental and economic impacts of the EU ETS.
- Better knowledge of the EU ETS and other major ETSs.
- Improved international cooperation, and the creation of an international network of experts on the EU ETS and other carbon markets.
- Increased political support for the EU ETS and for carbon markets.
