Page 24 - Lawtext Environmental Law & Management Journal Sample

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PROPOSED MODIFICATIONS TO THE EMISSIONS TRADING DIRECTIVE : POCKLINGTON :: :: : (2008) 20 ELM 135
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and an explicit list in Annex I covering a range of activities. 17 for 2013 will be based upon the average annual quantity
Furthermore, the Commission announced that it intends of allowances with which they were issued during the
to end the inconsistent application of the directive to period of their inclusion, adjusted by the linear factor
combustion activities by Member States. However, since referred to in Article 9.
the Phase III allocation to installations will be based upon For new entrants, post-2012, data are to be submitted
that of Phase II, it will be necessary to make some to the relevant competent authority by 30 April 2010 at
adjustments to account for the new definition. the latest, and if duly substantiated, the competent
authority is to notify the Commission by 30 June 2010
To reduce the administrative burden of operating the and the quantity of allowances to be issued will be adjusted
18
scheme on smaller installations, the 20MW threshold by the linear factor referred to in Article 9.
provision is to be changed so that combustion installations A problem in assessing the implications of these
with a rated thermal input of more than 20 but less than provisions is the lack of cross-referencing between
25 MW and an annual emission of less than 10,000 tonnes absolute Community-wide emission targets and the
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of CO can be excluded from the EU ETS, provided there allocations made at the installation level in each of the
2
are measures such as taxation that will achieve an Member States. Article 9a(1) could be interpreted as
‘equivalent contribution’ from these installations. either reducing the total number of allowances to
About 4200 installations could be affected, installations within Phase II by the linear factor (1.74 per
accounting for approximately 0.7 per cent of total ETS cent reduction), or reducing the allocations to each
emissions, to which further very small installations will be installation by the linear factor. The absence of any
added as a result of excluding installations with less than reference in the proposals to emission caps related to
3MW rated thermal input from the scope of the sector definitions compounds this uncertainty.
aggregation clause. The European Commission is to publish the adjusted
quantities referred to in para 1, Article 9a(3), but there
Allocation of allowances: national caps are no details of the timing, which also adds to the
uncertainty.
There was never much logic in the current system, with
27 different national caps implemented through 27 Allocation of allowances: auctioning
national allocation plans each based upon different
criteria. The proposal envisages its replacement with an Under Phases I and II of the EU ETS, the allocation of
EU-wide cap set by the Commission that would allow the allowances within each Member State was undertaken
EU to reach its goal of 20 per cent reduction in according to the individual methodology developed by
20
greenhouse gases by 2020. However, some Member the country concerned. Generally this was based upon
23
States may oppose the loss of subsidiarity inherent in the ‘grandfathering’. During Phase I, the reliance on emissions
centralised setting of national caps. projections led to excessive allocation of allowances in
The absolute quantity of allowances for 2013 will be some Member States and sectors.
published by the Commission by 30 June 2010, and this The Commission states that auctioning is the best
will be based upon total quantities of allowances issued mechanism for ensuring efficiency of the ETS,
by Member States in their national allocation plans for transparency, and simplicity of the system, and avoids
Phase II. The total amount will decrease by 1.74 per cent undesirable distributional effects. It is also claimed to
per year through the eight years of Phase III in order to comply with the polluter-pays principle and rewards early
arrive at a reduction of 21 per cent below reported 2005 action to reduce emissions.
21
emissions by the end of this period. This linear reduction This latter assertion is questionable since the
will continue into Phase IV and be reviewed by 2025. proposed change of reference year from 1990 to 2005 24
Importantly, the gradient of this trajectory will be reviewed disregards the significant reductions that many
and tightened in light of an international agreement. 22 installations have made in this period.
For installations within Phase II of the scheme, ‘the Nevertheless, auctioning is to be adopted as the basic
incumbents’, the calculation of the Community-wide cap principle for allocation during Phase III, and the relevant
provisions are included in Articles 10 and 11 of the
proposal. The timing, administration and other aspects
of auctioning will be defined in a regulation which the
17 All kinds of boilers, burners, turbines, heaters, furnaces, incinerators, Commission will adopt by 31 December 2010. 25
kilns, ovens, dryers, engines, flares, and thermal or catalytic afterburning.
18 The largest 7 per cent of installations accounts for 60 per cent of the The total quantity of allowances to be auctioned by
total emissions, while the 1400 smallest installations (approximately each Member State is to be composed of:
14 per cent) account for only 0.14 per cent.
19 Excluding biomass emissions, in each of the three-year period preceding
the year of application.
20 Proposal for a Directive amending Directive 2003/87/EC (n 2) art 9. 23 That is allocation based upon previous performance.
21 21 per cent reduction on 2005 (Recital 4) approximately equates to 24 Phase II of the Emissions Trading Directive was aligned with the EU
1.74 per cent reduction in each of the eight years of Phase III plus the Kyoto commitment of an 8 per cent reduction in GHGs by 2008–
6.5 per cent reduction achieved in Phase II National Allocation Plans 2012 compared with 1990 levels. The proposed change to the directive
on the Phase I Allowances. is aimed at a reduction of 21 per cent below reported 2005 emissions.
22 Proposal for a Directive amending Directive 2003/87/EC (n 2) art 25 Proposal for a Directive amending Directive 2003/87/EC (n 2) art
28(2). 10(5).

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