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CORRECTED: EU hopes to finalise NIMs before summer break - Delbeke

30 May 2013 19:03:05 | edcm

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The European Commission plans to finalise the long-awaited free allocation of EU allowances (EUAs) for its Emissions Trading System's (ETS) current phase before summer, a high-level EU official said on Wednesday. The allocation was originally due in February.

European Commission Director-General for Climate Action Jos Delbeke told journalists on the sidelines of CarbonExpo in Barcelona, Spain, that technical work on the national implementation measures (NIMs) was only now in final stages after information from member states required "a lot of clarification".

Under the NIMs, member states ask for a preliminary free EUA allocation figure per installation in their territory for phase III. The EU then checks and confirms final free allocation figures.

Proposed figures could differ from the final ones, as the Commission may apply a cross-sectoral correction factor when the sum of the preliminary free allocation exceeds the number of free EUAs available under the EU's cap.

This uncertainty likely leads industrials - the potential sellers in the EU ETS because of their significant sectoral length - to hold onto EUA surpluses until the EU confirms the NIMs figures, analysts say.

Delbeke confirmed that member states had submitted NIMs "roughly" in line with the cap, but that more clarity was needed, for instance on blast furnaces, before finalising figures. He could not comment on the general picture or provide a figure for the total amount. But asked whether any NIM could be cut, he said: "That's not the intention, but again, we are clarifying the details".

Carbon leakage list review

Once the NIMs are confirmed, industrials' free allocation could still change because of the Commission's carbon leakage list review.

A new list covering 2015-2019 will replace the existing list (2013-2014) by the end of next year.

Installations currently labelled at risk of carbon leakage - that is, they may move production outside the EU to incur lower costs from climate policy - could lose this status post-review and as of 2015. This would mean fewer free EUAs too.

Analysts say the Commission will likely change the carbon price used to compile the list, meaning fewer installations are expected to qualify (see EDCM 29 April 2013)

Delbeke said several price options are on the table, ranging from €30.00/tonne of CO2 equivalent (tCO2e) or lower, but that a final decision is still due.

Delbeke said that the EU would consult stakeholders and develop different scenarios before deciding on the price and making a final assessment for the future list.

"We are talking to all industry and all industrial federations to make them prove where and how carbon leakage was happening. So we are building up a factual base together with other services of the Commission. We are at the beginning of this activity and not at the end," he said. Silvia Molteni

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