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Corrected: New ruleboook on phase III EUA allocation ready

10 Sep 2010 15:40:45 | edcm

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Correction: In the article headlined: "New rule book on phase III EUA allocation ready," in the sixth paragraph, please read: "If the benchmark in one sector is set at 0.5 tonnes of CO2 produced per tonne of product, a plant producing 10m tonnes of product per year during the baseline years would get 5m EUAs for free," instead of: "If the benchmark in one sector is set at 0.5 tonnes of CO2 produced per tonne of product, a plant producing 10 tonnes of product per year during the baseline years would get 5m EUAs for free." A corrected story follows.

The European Commission's climate unit has now finished a new rule book on free allocation of emissions allowances (EUAs) in the next trading phase, supplying 6bn credits to companies in 2013 to 2020, an official said on Thursday.

The rule book will list the products to get their own benchmark, the value and definition of these benchmarks and what baseline periods should be used.

Benchmarks

The amount of EUAs companies get for free will be calculated as a benchmark value, multiplied by historic emissions.

The benchmark is set by the 10% most CO2 efficient plants within a sector in the EU.

The historic emissions will be a median of 2005-2010 levels. Companies will be able to scrap one or two years within this five-year period, so that years with unusually low pollution won't drag down their future allocation. This would offset some of the impact of the recession.

As an example, if the benchmark in one sector is set at 0.5 tonnes of CO2 produced per tonne of product, a plant producing 10m tonnes of product per year during the baseline years would get 5m EUAs for free.

The allocation does not take into account the location of the plant or the technology used to produce the product.

Hans Bergman, an official with the Commission's climate unit, told journalists the split between free allocation and auctions was expected to be "at least even", but did not want to narrow it down further. The power sector will get around half of the allowance of the cap and buy all of these at auctions, with industry adding smaller demand.

Bergman also estimated that 75% of the cap would be covered by the benchmarks.

Timeframe

"We are almost there," a Commission spokeswoman said.

The climate unit's decision still needs to gain approval from the full Commission, from EU countries and from the European parliament, so a final version might not be released until next year - after the official deadline of end-2010, Bergman said.

Some member states have told the Commission in informal talks that they believe the benchmarks are too strict.

167 sectors on the carbon leakage list will get 100% of the benchmarks for free in 2013, with this figure falling year by year. Sectors not on the list will get 80% for free to start. IS

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