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EU Emissions Trading Scheme–

New System to allocate free Allowances from 2013 onwards

IFIEC Energy ForumBrussels, 9 June 2011

Hans BergmanDG Climate Action/ B2European Commission

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Harmonised allocation rules: Art. 10a ETS-

Directive

• Fully harmonised allocation rules for all ETS installations across the EU & EEA

• In principle no free allocation for electricity production

• Free allocation for industrial activities and heat production/ consumption

• Maximum amount of free allocation determined by cap and historical share of industrial emissions

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Harmonised allocation rules: Art. 10a ETS-

Directive

• Free allocation based on benchmarks, determined by average performance of 10% most efficient installations

• Allocation for ‘carbon leakage‘ sectors: 100% of the benchmark level

• Free allocation for other sectors: 80% of the benchmark level in 2013, to 30% in

2020 and 0% in 2027• Carbon leakage list. Updated once. To be revised as

from 2015

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Commission Decision of 27/4/2011

• Implements Article 10a of the ETS Directive• Comitology measure• Preparation since 2008 (studies, discussions with

Member States experts)• Intensive stakeholder consultations and MS

discussions• Positive vote in Climate Change Committee on

15/12/2010• Passed scrutiny in European Parliament• Adopted by European Commission on 27/4/2011• Published in the OJ on 17/5/2011

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Commission Decision of 27/4/2011

• Determines the allocation rules• 52 product benchmarks• Allocation rules for non-benchmarked products:

3 generic fall-back approaches• Allocation formula:

Allocation = Benchmark x historical activity level x correction

• Special rules for significant capacity changes• Rules for new entrants and closures

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Cross-boundary heat flows

• Introduction of new principle: Allocation in principle to heat consumer and not to the emitter…

• …if possible (allocation to heat producer if consumer is not within the ETS)

• Allocation via product benchmark or heat benchmark approach

• Best possible option to prevent ‘carbon leakage’: The heat consumer is facing international competition

• Consistent with benchmarking approach

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The ‘road’ to allocation

1. Operators apply for free allocation by providing Verified data (data collection template) Information on the way the data has been obtained

(methodology report)2. Member States prepare National Implementation

Measures (‘NIMs’)3. Commission evaluates NIMs and ensures they are in

accordance with the rules4. Commission determines the need for a cross-sectoral

correction factor5. Member States determine final allocation

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Documents related to national

implementation

Instal-lation data

Instal-lation data

Methodology report

Methodology report

Verification report

Verification report

Operators Verifiers

Member States

Commission

NIMs list

NIMs list

NIMsMethodology report

NIMsMethodology report

Decision on NIMs

Decision on NIMs

National implementation: Next steps

Member States’ activities:

• Creation of legal basis for data collection/ national implementation of Commission Decision (national choice)

• Assessment of data and Methodology Reports submitted by operators

• Determination of the preliminary amounts of free allocation

• Public consultation (national choice)

• Preparation and submission of ‘NIMs lists’ and accompanying ‘NIMs Methodology Reports’

• Deadline for submission: 30 September 2011

• Calculation of final amounts of free allocation after acceptance of NIMs list by the European Commissions and publication of the cross-sector correction factors

National implementation: Next steps

Operators’ activities:• Preparation of data collection: Division of installation

into sub-installations• Data collection using data collection template (national

or common template)• Preparation of Methodology Report• Preparation of verification of data and Methodology

Report• Submission of application for free allocation to

Competent Authority (prior to national deadline)

National implementation: Next steps

Commission’s activities from October 2011:• Completeness checks of NIMs lists and NIMs

Methodology Reports• Conformity checks of NIMs lists and NIMs

Methodology Reports (correct application of rules, plausibility checks, etc.)

• Conformity checks of individual allocation decisions based on data submitted by operators

• Decisions on NIMs

• Calculation of the cross-sector correction factors 2013 - 2020

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Support for the national

implementation

• 8 guidance documents (after discussion & endorsement by Member States on 14/4/2011): explanation and interpretation of the allocation rules

• Data collection template and of template for additional information to be provided by operators (Methodology report)

• Workshops for Member States‘ experts

• Publication of additional material (case studies, presentations, FAQs, etc.)

• ‚Helpdesk‘ for specific questions on the allocation rules

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1. General Guidance Document

2. Allocation methodologies

3. Data collection

4. Verification

5. Carbon leakage

6. Cross-boundary heat flows

7. New entrants and closures (not yet finalised)

8. Waste gases

9. Sector specific guidance

…available at DG CLIMA’s website: http://ec.europa.eu/clima/documentation/ets/benchmarking_en.htm

Guidance documents

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National implementation (‘NIMs

process’)

Fall-back allocation:

• allocation

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Thank you for your attention

Any comments, questions?