A recently published Deutsche Bank report disagrees with the European Commission’s analysis relating to greenhouse gas emission reduction targets on certain key points. While the report accepts that it is cheaper now (because of the crisis) to reach the 20% GHG reduction target and that, therefore, the 3% reduction scenario is more realistic than it was in the past, it disagrees with the assumption that the EU’s 2020 renewables and energy-efficiency targets will be fully reached.
As a result, the report predicts that EU ETSi firms must make carbon cuts even with the current 2020 emission target. Within the 20% scenario, the need for domestic abatement amounts to 18Mt/year, while under the 30% scenario, this amounts to 85Mt/year. The report also says that restrictions on the use of certain kinds of CERs in the ETS beyond 2012, as envisaged by the Commission’s Communication, would be counterproductive.
Overall, the report, entitled ‘Hard to Credit: ETS Offset Use Again in the Spotlight’, finds that the European Commission has significantly overestimated the emission reduction effects of its renewable energy and energy efficiency policies. It estimates that participants in the EU ETS will emit 183Mt of CO2 more per year over the 2008-2020 period than the Commission predicted last month.
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