Monitoring, reporting and verification of EU ETS emissions

On 14 July 2021, the European Commission adopted a series of legislative proposals setting out how it intends to achieve climate neutrality in the EU by 2050, including the intermediate target of an at least 55% net reduction in greenhouse gas emissions by 2030. The package proposes to revise several pieces of EU climate legislation, including the EU ETS, Effort Sharing Regulation, transport and land use legislation, setting out in real terms the ways in which the Commission intends to reach EU climate targets under the European Green Deal.

The monitoring and reporting of greenhouse gas emissions must be robust, transparent, consistent and accurate for the EU emissions trading system (EU ETS) to operate effectively.

The annual procedure of monitoring, reporting and verification (MRV), together with all the associated processes, is known as the ETS compliance cycle.

Industrial installations and aircraft operators covered by the EU ETS are required to have an approved monitoring plan for monitoring and reporting annual emissions. This plan is also part of the permit to operate required for industrial installations.

Every year, operators must submit an emissions report. The data for a given year must be verified by an accredited verifier by 31 March of the following year. Once verified, operators must surrender the equivalent number of allowances by 30 September of that year.

The rules related to the compliance cycle are set out in two regulations:

• Monitoring and Reporting Regulation (MRR)
• Accreditation and Verification Regulation (AVR)

To promote administrative efficiency and a harmonised approach across countries, the European Commission provides templates as the basis for:

• monitoring plans
• annual emission reports
• verification reports
• improvement reports.

Guidance, exemplars and further tools are also published to support correct understanding of the requirements of the regulations as well as promote more harmonised and cost-effective application throughout all EU ETS countries.

For more information, including quick guides that provide a summary of the main requirements and relevant guidance, templates, exemplars and tools for each EU ETS responsibility, see the Documentation below.

Additional tools and guidance have been developed for aviation operators.

Small emitters (less than 25 000 tonnes of CO₂ per year) can:

• determine their fuel consumption and CO₂ emissions using Eurocontrol's simplified monitoring tool
• verify their emissions using data from the ETS support facility, without any modification.

The Commission has also issued

• Guidelines to the national authorities on the detailed interpretation of the aviation activities that are within the scope of the EU ETS
• Guidance to verifiers, elaborating on some aviation-specific issues with a particular focus on reports of small non-commercial aircraft operators using Eurocontrol's small emitters’ tool

Operators in the EU Emissions Trading System (ETS) must surrender annually the number of allowances corresponding to their emissions in the preceding year. For each tonne of emissions for which no allowance is surrendered in due time, there is a penalty of EUR 100. This is on top of the cost of surrendering allowances due. Names of the penalised operators are also disclosed to the public.

Since 2012, the penalty of EUR 100 per tonne of emissions of CO₂ or the equivalent amount of N₂O or PFCs (which are greenhouse gases the EU ETS regulates) increases annually in line with the European consumer price index, in accordance with Article 16(4) of the ETS Directive. The reference to the "European index of consumer prices" should be understood as referring to the European Union Consumer Price Index (CPI), to the Harmonized Index of Consumer Prices (HICP) of the European Union or to the Eurozone CPI/HICP.

The index used to calculate the increase in consumer prices since 2012 applied to the €100 penalty for non-compliance in the EU ETS is the HICP (specifically, the European index of consumer prices - EICP).

To calculate the penalty increase, either a cumulative or annual update can be used. The ETS Directive excludes the penalty decreasing below €100 if the HICP change since 2012 were to be a decrease.

You may use the HICP published in the Eurostat database "HICP (2005 = 100) - annual data (average index and rate of change) (prc_hicp_aind)".

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