Slide 1: Driving Decarbonization with ETS2
Driving Decarbonization with ETS2 George von Waldburg, Director Environmental Markets, ICE (Moderator) 29 April 2025 1
Slide 2: The remaining carbon budget to limit global warming
The remaining carbon budget to limit global warming from 2024 235Gt (2024: 235Gt) Michael Greenstone Milton Friedman Distinguished Service Professor in Economics, University of Chicago 2 4 4
Slide 3: What is net zero?
What is net zero? Global carbon budget | emissions and sinks Sou rce : Glob al Carb on Project 3
Slide 4: Carbon pricing and carbon tonnes at risk
Carbon pricing and carbon tonnes at risk Annual emissions and net zero pathway Annual anthropogenic CO2 emissions = 40 billion tonnes Only 23% @ risk EUA CCA RGA UKA WA Other ETS Crediting mechanisms Tax Not priced directly 4
Slide 5: ICE host to the world's largest energy & environmental markets
ICE host to the world’s largest energy & environmental markets >50% of world’s annual emissions footprint equivalent traded on ICE >115 billion tonnes >350 million RECs of allowances equal to the annual World 33,622 equivalent to 3x per capita energy ICE Total 18,255 world’s annual CO2 consumption o
Slide 6: ICE host to the world's largest energy & environmental markets
ICE host to the world’s largest energy & environmental markets Connect to a global environmental portfolio to price climate risk 6
Slide 7: Today's speakers
a Today’s speakers: Jennifer McIsaac, Chief Market Intelligence Officer, ClearBlue Markets Egis Breshani, Manager EU Market Intelligence, ClearBlue Markets 7
Slide 8: At what price level do you think ETS2 will trade on Day 1?
At what price level do you think ETS2 will trade on Day 1? a a. < €55 (€45 adjusted for inflation) b. €55-65 (German National Scheme price corridor) c. Same price as ETS1 d. > €65 (Cost of biogas upgrade €50-200/tonne) 8
Slide 9: EU ETS2 Expanding the Scope of EU Carbon Markets
EU ETS2 Expanding the Scope of EU Carbon Markets Jennifer McIsaac Chief Market Intelligence Officer Egis Breshani Manager EU Market Intelligence
Slide 10: Market Intelligence
Market Intelligence Market Intelligence subscriptions provide independent and transparent insights into supply, demand, and pricing trends, with customizable options to match clients' unique market coverage needs. All research is easily accessible via the ClearBlue Vantage carbon intelligence platfo
Slide 11: Point of regulation
Point of regulation Scope & coverage • EU ETS 2: Covers buildings, road transport, and small industrial fuel use • EU ETS 2 encompasses approximately 7,000 tax warehouses for oil, 1,400 regional and local gas suppliers, and 3,000 coal suppliers • The EU ETS 2 places the regulatory point “upstream,”
Slide 12: ETS2 in action
ETS2 in action Implementation • EU ETS2 set to launch in 2027 after a s emissions three-year preparatory phase 500 (reporting started in 2024) • Possible postponement to 2028 if gas 000 and oil prices remain high 0 e • Fuel suppliers must monitor & report 500 emissions • From 2027, allowances must b
Slide 13: Use of revenues
Use of revenues SCF & fund distribution • Social Climate Fund (SCF): Start in 2026, funded initially by 50 million allowances from EU ETS 1 • EU ETS2 Revenue Allocation (2027- 2032): Up to EUR 65 billion for SCF; reduced to EUR 54.6 billion if delayed • Fund Distribution: Based on CO₂ emissions per
Slide 14: EU ETS2 model structure and balances
EU ETS2 model structure and balances Emission reduction pathway • Extra 30% of allowances in 2027 will be auctioned but then will be reduced accordingly between 2029 and 2031 • The EU Commission has set a cap of 1,036,288,784 allowances for 2027 • The number of allowances each year from 2028 will de
Slide 15: MSR & prices
MSR & prices EU Commission Impact Assessment lead to price projections between EUR 45 and EUR 80 ri e ore as • 100 million of allowances will be released 00 when TNAC falls below 210 million (2028- 2030) 50 • When ETS 2 price exceeds EUR 55** ase ase (2027-2029), 20 million of allowances will 00 be
Slide 16: Road transport decarbonization
Road transport decarbonization Impact of policies on EV adoption • Challenges from biofuel competition ro e ed ales of s • Ban on ICE vehicles and market 000 000 readiness • Tariffs and trade barriers on EVs 500 000 • Incentives and market growth trends 000 000 0 500 000 0 5 0 0 000 000 0 5 500 000
Slide 17: Buildings decarbonization
Buildings decarbonization Impact of policies on heat pump adoption • Market challenges from Imports and Manufacturing • Subsidy changes and incentives • Regulatory and political uncertainty • Long-term growth outlook
Slide 18: Timeline: Key events to watch
Timeline: Key events to watch • Germany has postponed the April 2024 emissions reporting deadline for Review: EU ETS2 202 8 cap is p ublished Assessment of the companies due to delays in national Social Clima te Fund laun ch to sup port sta rt can be delayed by a year if energy alon g with any adju
Slide 19: Market and strategies
Market and strategies ICE will launch EU ETS2 futures contracts on 6 May 2025 Who will purchase EU ETS2 allowances? • The EU ET 2 places the regulatory point “upstream,” targeting entities that release fuel for consumption rather than the end users. • ETS2 includes a large number of smaller emitters
Slide 20: Questions?
a Questions? 20