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Corvinus Research letter 2021/3– REKK highlights

  • The Future of Carbon Pricing – Regional Conference

REKK has organised a regional conference on the 8th of June, with 151 participants. 

An effective pricing mechanism for carbon is fundamental to achieving the 1.5°C goal outlined by the Paris Agreement. The European Commission’s Emissions Trading Scheme (EU ETS) has set a precedent worldwide but has also faced some criticisms. At the online webinar we discussed with our distinguished speakers about the future of carbon pricing. In the morning session we focused on the impacts of a possible extension of the EU ETS, both as regards the sectors covered and its geographical outreach. We addressed also advantages and challenges of a Carbon Border Adjustment Mechanism (CBAM). In the afternoon session we analysed which factors will drive future carbon prices and had a look at possible reforms of the carbon market, and global carbon schemes as well.  

Speakers:  

  • Barbara Botos, Deputy Secretary of State for Climate Policy, Hungarian Ministry for Innovation and Technology  
  • Tom Howes, Head of Energy and Environment Division, IEA 
  • Espen Andreassen, Head of the Long-term Reports at Volue Insight 
  • Michael Grubb, Professor of Energy and Climate Change at University College London  
  • András Mezősi, Senior Research Associate, REKK 
  • Karsten Neuhoff, Head of Climate Policy Department at the German Institute for Economic Research (DIW Berlin) 
  • Marissa Santikarn, Climate Change Specialist at World Bank 
  • Peter Vis, Senior Research Associate, European University Institute 

Moderators of the event were Gabriella Szajkó, senior researcher and László Szabó director of REKK. 

  • Presentation of Attila Steiner, State Secretary for Development of Circular Economy, Energy and Climate Policy, Ministry for Innovation and Technology 

Attila Steiner opened the postgraduate course on Energy Economics of the University. He presented the Hungarian draft position on the EU Fit for 55 package. This new package presented by the European Commission this summer will transform the whole policy landscape of the EU energy and climate policy. The proposals in the package will enable the acceleration of greenhouse gas emission reductions in the next decade. The package covers the following actions: apply emissions trading to new sectors and a tightening of the existing EU Emissions Trading System; increased use of renewable energy; greater energy efficiency; a faster roll-out of low emission transport modes and the infrastructure and fuels to support them; an alignment of taxation policies with the European Green Deal objectives; measures to prevent carbon leakage; and tools to preserve and grow our natural carbon sinks. 

  • Balázs Felsmann co-authored a Climate Policy article, titled A green COVID-19 recovery of the EU basic materials sector: identifying potentials, barriers and policy solutions 

This paper explores climate-friendly projects that could be part of the COVID-19 recovery while jump-starting the transition of the European basic materials industry. Findings from a literature review on technology options in advanced development stages for climate-friendly production, enhanced sorting, and recycling of steel, cement, aluminium, and plastics, are combined with insights from interviews with 31 European stakeholders in these sectors about the practical and economic feasibility of these technology options. Results indicate that with an estimated investment of 28.9 billion Euros, up to 20% of EU’s basic materials could be produced through low-emission processes or additional recycling by 2025 with technologies that are commercially available or at pilot scale today. However, our stakeholder consultation also shows that in order to make these short-term investments viable, six main barriers need to be addressed, namely: (i) the lack of effective and predictable carbon pricing, (ii) the limited availability of affordable green electricity, (iii) the lack of a regulatory framework for circularity, (iv) low technology market readiness and funding, (v) the lack of infrastructure for hydrogen, CO2 and power, and (vi) the lack of demand for climate-friendly and recycled materials. Based on these insights, the paper proposes elements of a policy package that can create a framework favourable for investments in these technologies; these policies should ideally accompany the recovery package to give credibility to investors that the business case will last beyond the recovery period. 

Authors: Olga Chiappinelli, Timo Gerres, Karsten Neuhoff, Frederik Lettow, Heleen de Coninck, Balázs Felsmann, Eugénie Joltreau, Gauri Khandekar, Pedro Linares, Jörn Richstein, Aleksander Śniegocki, Jan Stede, Tomas Wyns, Cornelis Zandt & Lars Zetterberg  

Journal: Climate Policy, DOI: 10.1080/14693062.2021.1922340; AI:79 

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GEN.:2024.07.19. - 08:02:53