Federal Government Adopts Ordinance on Allocation of Free Emission Allowances

After the amendment of the Greenhouse Gas Emission Trading Act (TEHG) in July, the federal government submitted a draft ordinance on the Allocation of Greenhouse Gas Emission Allowances for the Trading Period 2013 to 2020.

The draft transposes the EU Commission Decision 2011/278/EC of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances. Besides, it names the data required for the allocation process pursuant to Section 9 TEHG and further eleborates the requirements under Sections 8, 24 and 27 TEHG. This will create the legal basis for the free allocation of emission allowances to operators of roughly 2,000 installations that will participate in the EU emission trading scheme in Germany in the trading period 2013 to 2020, the Federal Ministry for the Environment points out.

As of 2013, the EU emission trading scheme will be further harmonised by including more industries, introducing a centralised EU-wide cap on emissions and a fully harmonised European allocation system for emission allowances. Auctioning of emission allowances will be the rule for the power generation sector.

For industry and heating sectors, allowances will be allocated for free if greenhouse gas performance-based benchmarks are met, forcing inefficient plants to increasingly having to buy emission allowances. Industries susceptible to carbon leakage will receive the full amount of allowances, while the amount of allowances for all other sectors will be reduced in a staggered manner from 2013 to 2020 to 30% of the original amount.

The ZuV 2020 draft still needs to be approved by parliament.

The Federal Association of the Energy and Water Industry (BDEW) welcomed the ZuV 2020 draft and asked parliament to speedily debate it so as to conclude the legislative procedure in September. This would give companies concerned enough time to collect and verify the necessary data for the complex application procedure. The legal application deadline of just three months was very short, especially for suppliers of heat, BDEW said. This as well as the extensive requirements relating to the data that have to be submitted should be reviewed with respect to their necessity, BDEW recommended.

Source: Federal Ministry for the Environment, Nature Protection and Nuclear Safety, BDEW

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