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Sectoral expansion of the EU ETS

A Nordic perspective on barriers and solutions to include new sectors in the EU ETS with special focus on road transport

image of Sectoral expansion of the EU ETS

The European Emissions trading Scheme (EU ETS) was launched in 2005. The scheme started off with a limited scope, but has gradually expanded, in terms of geographical, sectoral and gas coverage. This report analyses the possibilities for further sectoral expansion in the Nordic countries. The analysis is done in terms of barriers and solutions for inclusion of four major sectors currently outside the scope of the scheme: transport, heating, agriculture and fisheries, and waste. Focus is on the road transport sector, which is a major source of greenhouse gas emissions in the Nordic countries. The main barriers identified for inclusion of road transport are related to the overlap with existing policy instruments, high administrative costs of downstream inclusion, and potential loss of fiscal revenue. Experiences from other trading schemes show that the barriers can be overcome.

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Prospective candidates for inclusion

This section explores the possibilities for expanding the Nordic coverage of the EU ETS in the existing regulative framework, which is a combination of EU and national regulation. Subsection 2.1 discusses the EU perspective, specifically the process of expanding the EU ETS, the Effort Sharing Decision (ESD) and the EU-wide policies targeted at the non-ETS sectors. Subsection 2.2 discusses the Nordic perspective, specifically the national circumstances relevant for GHG emissions and their regulation, and the mix of instruments currently used to regulate the non-ETS sectors. Subsection 2.3 discusses barriers to inclusions of four major sectors currently outside the EU ETS: transport, heating, agriculture and fisheries, and the waste sector.

English

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