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Climate Action

Monitoring, reporting and verification

Video explainer: the EU Emissions Trading System and the Social Climate Fund

Visit What is the EU ETS? to learn more on the topic!

Annual compliance cycle

The EU ETS compliance cycle refers to the annual process of monitoring, reporting, and verification (MRV) of greenhouse gas emissions, including associated procedures. For the EU ETS to operate effectively, the MRV process must be robust, transparent, consistent and accurate.

Industrial installations and aircraft operators covered by the EU ETS must get their monitoring plan approved by the competent authority before the start of the monitoring period. The monitoring plan is part of the greenhouse gas (GHG) emissions permit required for industrial installations included in the EU ETS.

For emissions in each calendar year, ETS operators must carry out monitoring procedures and prepare an emissions report. Operators must have their report verified by an accredited verifier and submit it to the competent authority by 31 March of the following year. Then, by 30 September of that year, operators must surrender emission allowances Union Registry.

Rules related to the EU ETS compliance cycle are set out in the following regulations:

Since 2024, emissions from buildings, roads, transport and additional sectors (mainly small industries not included in the EU ETS) are covered by a new emissions trading system named ETS2.

Guidance, support and ETS Reporting Tool (ERT)

To promote the efficient, harmonised and cost-effective application of the above regulations across all countries covered by the EU ETS, the European Commission provides templates to be used for:

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

Guidance, exemplars and other useful tools are also provided to improve understanding of regulatory requirements.

See the Documentation section below to access these tools and find more information, including quick guides summarising key requirements and relevant guidance.

The ETS Reporting Tool (ERT) is a practical, free-to-use resource developed by the European Commission to help operators, competent authorities, and verifiers perform their MRV procedures and comply with regulatory requirements. The above templates can be found in the ERT, which is continuously evolving to incorporate new solutions and features proposed by Member States. Recently, the ERT was expanded to also cover ETS2-related MRV procedures.

Visit the ERT webpage and consult the ERT User Manual for more information.

MRV for aviation operators

Additional tools and guidance have been developed to facilitate MRV procedures for aviation operators covered by the EU ETS.

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

  • Determine their CO2 emissions using Eurocontrol’s simplified monitoring tool, known as Small Emitter Tool (SET).
  • Obtain an automatically generated annual emissions report via Eurocontrol’s Environment Management Information Service (EMIS, previously called ETS Support Facility) and submit it without further verification.

The Commission has also issued:

  • Guidelines to the national authorities on the detailed interpretation of aviation activities within the scope of the EU ETS.
  • An MRR Guidance Document for aircraft operators, which can be found in the Documentation section below.

Visit our webpage on aviation to learn more on the topic.

Aircraft operators and their administering countries: Each European Economic Area (EEA) country – the EU Member States plus Iceland, Liechtenstein and Norway – has appointed a competent authority to manage the inclusion of aviation in the EU emissions trading system (EU ETS).

MRV for maritime transport

The EU ETS annual compliance cycle is slightly different for maritime transport, as detailed by Regulation (EU) 2015/757:

  • Shipping companies must monitor and report their greenhouse gas emissions throughout the year.
  • By 31 March of the following year, the shipping company must submit a verified emissions report at company level to the relevant administering authority of a Member State.
  • By 1 April, the shipping company must have its emissions for the previous year reported and marked as verified in the Union Registry system. 
  • By 30 September, the shipping company must surrender the equivalent number of allowances in the Union Registry system, covering the emissions reported for the previous year.

Visit our webpage on maritime transport to learn more on the topic.

MRV for ETS2: buildings, road transport and additional sectors

As part of the 2023 revisions of the ETS Directive, a new emissions trading system named ETS2 was created, separate from the existing EU ETS. This new system will cover and address the CO2 emissions from fuel combustion in buildings, road transport and additional sectors (mainly small industry not covered by the existing EU ETS).

Visit our webpage on ETS2 to learn more on the topic.

Penalty for excessive emissions

Each year, operators covered by the EU ETS must surrender the corresponding number of allowances to match their emissions in the previous year.

Operators must purchase enough allowances to cover their emissions. If they fail to do so, operators face a €100 penalty for each tonne of excess emissions.

The names of penalised operators are also disclosed to the public.

The €100 penalty per tonne of excess CO2 emissions (or its equivalent amount in N2O or PFCs, other greenhouse gases regulated by the EU ETS) increases every year, based on the EU inflation rate.

This means that the penalty will increase a bit each year to keep pace with rising prices. The European Index of Consumer Prices (EICP) or the Harmonized Index (HICP) published on Eurostat’s database are used to calculate the increase in consumer prices.

Documentation

Click on the + signs for more information.