Desktop version

Home arrow Law arrow EU environmental law and policy

Source

Issuance, surrender, and transfer of allowances

By 28 February of each year, the competent authorities shall issue the quantity of allowances that are to be allocated for that year (Arts 3e and 11). Allowances issued from 1 January 2013 onwards are valid for emissions during periods of eight years beginning on that date.

By 30 April each year each operator is to surrender a number of allowances equal to the total verified emissions from that installation during the preceding calendar year. The allowances are then cancelled by the Member State concerned. (Art 12.)

Since allocation occurs in February while surrendering of allowances takes place in April, operators may borrow allowances from the current year to cover emissions in the previous one.

Any operator who fails to surrender sufficient allowances shall be held liable for the payment of €100 for each tonne of carbon dioxide equivalent emitted for which the operator has not surrendered allowances. Payment of this excess emissions penalty does not release the operator from the obligation to surrender the missing allowances. Member States must also publish the names of operators who fail to surrender sufficient allowances. (Art 16.)

There is hence a strong incentive for operators to surrender the appropriate number of allowances by 30 April each year, if necessary by buying them. The Court of Justice has had reason to make clear that the mere holding of a sufficient number of allowances on 30 April is not enough to escape paying the excess emissions penalty. The allowances must be surrendered in order to have them cancelled in the Community registry, thereby ensuring that an accurate accounting record is kept of the allowances.[1] [2] However, if an operator has surrendered a number of allowances corresponding to its reported and verified emissions the fine may not be imposed on that operator even if additional controls or verifications by the national authorities reveal that the emissions were understated, so that the number of allowances surrendered is insufficient.[3] [4] [5]

There are detailed provisions in the Directive on the use of international credits generated by so-called project-based mechanisms, primarily joint implementation (JI) and the clean development mechanism (CDM), for fulfilling obligations within the EU scheme. With the exception of nuclear energy projects and afforestation or reforestation activities, operators may use almost all categories of credits from the Kyoto Protocol’s CDM and JI mechanism towards fulfilling part of their EU ETS obligations. (Art 11a.)

The Member States are to ensure that allowances can be transferred between persons within the EU, as well as between persons within the EU and those in third countries with which an agreement on mutual recognition of allowances have been concluded (Art 12). This requires that the countries with which an agreement is concluded operate emissions trading systems similar to the EU ETS. Since allowances are transferable, anyone in the EU can take part in the allowance trading. In practice, financial institutions are major participants in the trade.

The Commission monitors the functioning of the European carbon market and annually submits a report thereon to the European Parliament and the Council (Art 10).

  • [1] Regarding these historical emissions and how they have been calculated see 2011/149/EU: Commission Decision on historical aviation emissions pursuant to Article 3c(4) of Directive2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gasemission allowance trading within the Community [2011] OJ L 61/42, and Decision of the EEA Joint Committee No 87/2011 amending Annex XX (Environment) [2011] OJ L 262/59.
  • [2] Case C-203/12 Billerud ECLI:EU:C:2013:664, para 30.
  • [3] Case C-148/14 Nordzucker ECLI:EU:C:2015:287, para 45.
  • [4] On the early developments in this field see Kramer EU Environmental Law (n 1) 290—1.
  • [5] Regulation (EC) No 443/2009 of the European Parliament and of the Council setting emissionperformance standards for new passenger cars as part of the Community’s integrated approach toreduce CO2 emissions from light-duty vehicles [2009] OJ L 140/1.
 
Source
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >

Related topics