Evaluation of Policy Options to Reform the EU Emissions Trading System - Effects on Carbon Price, Emissions and the Economy

A minimum price for emission allowances offers the best opportunity for the EU Emissions Trading System (ETS) to function as a key policy instrument in reducing CO2 emissions. Such a price floor will create a steady and higher CO2 price, which will stimulate corporations to reduce their CO2 emission and invest in low-carbon technologies. When the price of CO2 is too low, it is often more efficient for companies to buy emission rights rather than to invest in emission reduction

Designing an ICT tooling platform to support SME business model innovation: Results of a first design cycle

Business model innovation (BMI) is becoming increasingly relevant for enterprises as they are faced with profound changes like digitalization. While business model thinking in academia has advanced, practical tooling that supports business model innovation for small and medium sized enterprises (SMEs) is still lacking. In this paper, we design, implement and evaluate an online platform with ICT-enabled tooling that supports business model innovation by SMEs. Based on interviews with ten SMEs and SME helpers, we define requirements for the BMI tooling platform. The implemented platform offers downloadable tools, decision support for finding the proper tooling, and interactive features for building communities of SMEs. Evaluation through log data analysis and informal interviews shows that the platform is usable and provides a relevant overview of BMI tooling, although several improvements are still suggested. As next steps, we will (1) create prefilled tools and templates to speed up the process of BMI; (2) create educational videos on how to use the tooling; (3) define paths on how to move from one tool to another; and (4) enhance the community features on the platform. The paper contributes to understanding how academic conceptualizations of BMI can be transferred into practically valuable artefacts for SMEs

Comparing ambition of EU companies with science-based targets to EU regulation-imposed reductions

Companies can support countries in closing the emissions gap between current policies and the Paris goals by implementing pledged voluntary greenhouse gas (GHG) emission reduction targets that are more stringent than the national climate policy regulation requires. For this purpose, we assessed the potential impact of EU companies with 2030 emission reduction targets approved as 2/1.5 °C-consistent by the Science Based Targets initiative (SBTi) in the sectors that are regulated by the Emissions Trading System (ETS) and Effort Sharing Regulation (ESR). To verify potential additionality, company targets were compared to a current policies scenario based on ETS and ESR trends set under the then applicable 40% by 2030 reduction target, and two scenarios that include the voluntary SBTi targets excluding or including flanking measures to materialise additional reductions in ETS. Depending on the assumption of these flanking measures, EU companies with SBTi-approved targets are projected to result in a 4% or 14% reduction by 2030 relative to the EU current policies scenario. Our results illustrate that SBTi-approved companies are not significantly more ambitious than the rest of the emitters in the EU without flanking measures. However, it does show that companies regulated by ETS show higher estimated reductions by 2030 compared to those only regulated by ESR. This analysis shows that more policy detail is important in assessing the additionality of voluntary targets, resulting in zero additional emissions for ETS if a conservative estimate is required

Beyond national climate action : the impact of region, city, and business commitments on global greenhouse gas emissions

This article quantifies the net aggregate impact in 2030 of commitments by individual non-state and subnational actors (e.g. regions, cities and businesses, collectively referred to as ‘NSAs’) to reduce greenhouse gas (GHG) emissions. The analysis was conducted for NSAs operating within ten major emitting economies that together accounted for roughly two-thirds of global GHG emissions in 2016. Our assessment includes 79 regions (e.g. subnational states and provinces), approximately 6,000 cities, and nearly 1,600 companies with a net emissions coverage of 8.1 GtCO2e/year, or a quarter of the ten economies’ total GHG emissions in 2016. The analysis reflects a proposed methodology to aggregate commitments from different subnational (i.e. regional and city government) and non-state (i.e. business) actors, accounting for overlaps. If individual commitments by NSAs in the ten high-emitting economies studied are fully implemented and do not change the pace of action elsewhere, projected GHG emissions in 2030 for the ten economies would be 1.2–2.0 GtCO2e/year or 3.8%–5.5% lower compared to scenario projections for current national policies (31.6–36.8 GtCO2e/year). On a country level, we find that the full implementation of these individual commitments alone could result in the European Union and Japan overachieving their nationally determined contributions (NDCs), while India could further overachieve its unconditional NDC target. In the United States, where the national government has rolled back climate policies, NSAs could become a potential driving force for climate action. Key policy insights Full implementation of reported and quantifiable individual commitments by regions, cities and businesses (NSAs) in ten major economies could reduce emissions by 3.8%–5.5% in 2030 below current national policies scenario projections. National governments’ mitigation targets could be more ambitious if they would take NSA commitments into account. With full implementation of such action, the European Union and Japan would overachieve their NDC targets. For the United States such action could help meeting its original 2025 NDC target in spite of rollbacks in national climate policies. The full universe of NSA climate action expands far beyond the subset of commitments analysed in this study; NSAs could become a strong driving force for enhanced action towards the Paris climate goals.</p

Reducing stranded assets through early action in the Indian power sector

Cost-effective achievement of the Paris Agreement's long-term goals requires the unanimous phase-out of coal power generation by mid-century. However, continued investments in coal power plants will make this transition difficult. India is one of the major countries with significant under construction and planned increase in coal power capacity. To ascertain the likelihood and consequences of the continued expansion of coal power for India's future mitigation options, we use harmonised scenario results from national and global models along with projections from various government reports. Both these approaches estimate that coal capacity is expected to increase until 2030, along with rapid developments in wind and solar power. However, coal capacity stranding of the order of 133–237 GW needs to occur after 2030 if India were to pursue an ambitious climate policy in line with a well-below 2 °C target. Earlier policy strengthening starting after 2020 can reduce stranded assets (14–159 GW) but brings with it political economy and renewable expansion challenges. We conclude that a policy limiting coal plants to those under construction combined with higher solar targets could be politically feasible, prevent significant stranded capacity, and allow higher mitigation ambition in the future

Updated nationally determined contributions collectively raise ambition levels but need strengthening further to keep Paris goals within reach

By January 2022, 156 countries had submitted new or updated nationally determined contributions (NDCs) under the Paris Agreement. This study analyses the greenhouse gas (GHG) emissions and macroeconomic impacts of the new NDCs. The total impact of the updated unconditional and conditional NDCs of these countries on global emission levels by 2030 is an additional reduction of about 3.8 and 3.9 GtCO2eq, respectively, compared to the previously submitted NDCs as of October 2020. However, this total reduction must be about three times greater to be consistent with keeping global temperature increase to well below 2 °C, and even seven times greater for 1.5 °C. Nine G20 economies have pledged stronger emission reduction targets for 2030 in their updated NDCs, leading to additional aggregated GHG emission reductions of about 3.3 GtCO2eq, compared to those in the previous NDCs. The socio-economic impacts of the updated NDCs are limited in major economies and largely depend on the emission reduction effort included in the NDCs. However, two G20 economies have submitted new targets that will lead to an increase in emissions of about 0.3 GtCO2eq, compared to their previous NDCs. The updated NDCs of non-G20 economies contain further net reductions. We conclude that countries should strongly increase the ambition levels of their updated NDC submissions to keep the climate goals of the Paris Agreement within reach

Reducing stranded assets through early action in the Indian power sector

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