Adoption of the Regulation determining benchmark values for free allocation for the period 2021-2025

The Commission publishes the Implementing Regulation determining benchmark values for free allocation to industrial installations in the EU ETS for the period 2021-2025

The Commission has reached an important milestone in the preparation of phase 4 of the EU Emissions Trading System (ETS) with the publication of the implementing Regulation establishing the benchmark values to be used for calculating free allocation in the period 2021 – 2025.

Free allocation is a transitional measure foreseen to address the risk of an increase in global emissions following relocation of industry to third countries with no or limited carbon constraints due to climate policies, an effect known as ‘carbon leakage’.

In the revised ETS Directive (Directive (EU) 2018/410 amending Directive 2003/87/EC) the co-legislators established that the benchmark values shall be updated to reflect the technological progress in industrial sectors from the years 2007/2008 (years used as reference for calculating the benchmarks used in phase 3 of the ETS) to 2016/2017. The benchmarks shall be reduced by an annual rate from a minimum rate of 0.2% to a maximum rate of 1.6%, leading to reductions of the benchmarks between 3% and 24% over the 15 years between 2008 and 2023, the mid-point of the period 2021 -2025.

The updated values are based on third party verified data from all installations under the ETS. Member States submitted the data to the Commission in September 2019 in their National Implementing Measures (NIMs) under Article 11 of the ETS Directive. After thorough analysis of the data in which Member States and stakeholders were consulted, the new values were ready for adoption.

31 out of 54 benchmarks will be updated at the maximum update rate of 24%, reflecting the progress made by most industrial sectors in reducing the greenhouse gas emissions per unit of product during the last years. The Regulation also provides additional transparency and presents the average values of the 10% most efficient installations under the ETS per benchmark which have been used to determine the updated benchmark values.

The Climate Change Expert Group composed by the Commission, Member States and stakeholders discussed the benchmark update in several occasions in 2020. In addition, more than 40 bilateral meetings between the Commission services and stakeholders took place for discussing sector specific issues. Furthermore, the Climate Change Committee and its Working Group 3 discussed the draft Regulation at meetings in December 2020 and January 2021. The Regulation was published for feedback in December 2020 and received the positive vote of the Climate Change Committee on 11 February 2021.

The Commission will now focus on preparing and adopting the decisions determining the free allocation to be received by each installation with the aim that they can be transferred to the operator accounts by June 2021.

Read more:

• Commission Implementing Regulation (EU) 2021/447 determining revised benchmark values for free allocation of emission allowances for the period from 2021 to 2025 pursuant to Article 10a(2) of Directive 2003/87/EC of the European Parliament and of the Council
• Revised EU ETS Directive (Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814