PODCAST on replicating LIFE DICET 1/3 – The extension of new sectors under the EU ETS2

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A post by the LIFE DICET Project team

Project replication consists of a set of activities aimed at making tangible use of a project’s approaches and results in contexts other than the original project. Among its core skeleton, the LIFE DICET project has offered a governance platform where to identify and discuss policy topics needed to align international Emission Trading Systems (ETS). Its method includes seven backbone components that can be replicated partly or totally and include 1. identifying a diversity of stakeholders to discuss the barriers and opportunities to solve a given problem (e.g., ETS alignment), 2. defining key research topics that influence the implementation (e.g., ETS alignment needs to deal with carbon leakage and free allocation). These topics (Assessments) are then 3. analysed in reports developed after Technical Workshops, 4. discussed and enriched in Policy Dialogues to 5. produce final reports with recommendations (e.g., how to solve carbon leakage under ETS alignment). These outputs are then promoted through 6. Capacity building and 7. Dissemination activities.

The LIFE DICET project foresees three replicability options:

  1. Replicability within the EU ETS to extend the sectoral scope of carbon pricing,
  2. Replicability towards linking ETS in other geographical areas,
  3. Replicability in other policy areas to support international cooperation on climate policies.

We here present a case study of LIFE DICET’s replicability that focuses on its use to expand to new areas within the European Union Emission Trading System (EU ETS). Based on an interview with Michael Pahle (PIK), a member of DICET’s Core Expert Group, the podcast above leverages long-term interaction between the LIFE DICET team and German researchers. Recorded in 2022, it shows an example of how the approach of the DICET project and lessons learned can be applied to expand ETS towards other sectors like road transport and buildings. Relying on the experience of the national ETS that Germany has developed for these new sectors, the podcast discusses the challenges of setting up a second EU Emissions trading system (ETS-2) that includes them under the Fit for 55 package and the Green Deal. To expand the current EU ETS, Dr. Pahle argued that research is needed around social justice challenges (e.g., how the inclusion of these two sectors will affect households) and taxing redistribution (e.g., how to support most vulnerable households affected by this new taxing). Following DICET’s governance platform, selecting a core group of stakeholders and organizing a Policy Dialogue was considered very relevant for the ETS2 assignment. The extension of emissions was foreseen to be a heavily complex exercise covering technical, political, legal, and social aspects. Therefore, the fair and coherent representation of all relevant stakeholders was a prerequisite for a successful dialogue around emergent problems and potential ways to solve them. LIFE DICET offers a great governance platform where to start discussing ETS2 needs. Not so much to look for solutions but to structure the participation and requirements from the diverse stakeholders, test different implementation models, and reflect on associated impacts and plausible solutions for fair and ambitious carbon pricing.

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The views and opinions expressed in this post are solely those of the author(s) and do not reflect those of the editors of the blog of the project LIFE DICET.