Climate Change Committee approves proposed Regulation on international credit entitlements for 2013-...

The EU Climate Change Committee today approved draft legislation on international credit entitlements for operators during phase 3 of the EU ETS (2013-2020).

The draft Regulation, submitted by the European Commission in early June, specifies the limits for EU ETS operators on use of eligible credits from the Kyoto Protocol's project-based mechanisms (Clean Development Mechanism and Joint Implementation).

Use of these credits increases the cost-effectiveness of achieving Europe's 2020 emission reduction goals. During phase 2 of the EU ETS (2008 to 2012) operators used 1.058 billion international credits for compliance.

Under the proposed rules, EU ETS participants operating stationary installations will be entitled to use international credits during the 2008-2020 period up to the higher of two limits:

• The international credit entitlement specified in the national allocation plan for the phase 2; OR
• 11% of the free allocation of EU allowances granted to them in that period

Operators of stationary installations who were new entrants in phase 2 and operators of stationary installations newly included in the scope of the EU ETS in phase 3, which did not receive free allocations nor entitlements for international credit use in phase 2, will be able to use international credits up to a maximum of 4.5% of their verified emissions in phase 3.

The proposed Regulation also sets out special provisions for operators of stationary installations with a significant capacity extension. These will receive the highest of:

• The international credit entitlement specified in the national allocation plan in phase 2; OR
• 11% of the free allocation of EU allowances granted to them in phase 2; OR
• 4.5% of their verified emissions in phase 3.

For operators of stationary installations which received a free allocation in phase 2 which carry out activities newly included in the EU ETS in phase 3 will receive the highest of:

• The international credit entitlement specified in the national allocation plan in phase 2; OR
• 11% of the free allocation of EU allowances granted to them in phase 2; OR
• 4.5% of their verified emissions in phase 3.

Finally, aircraft operators are entitled to use international credits beyond those allowed in 2012, up to a maximum of 1.5% of their verified emissions in phase 3.

The Commission will now submit the draft Regulation to the European Parliament and the Council for their scrutiny. Provided that they raise no objections within three months, the Commission will adopt and publish the Regulation, after which it will directly enter into force. Member States will then have one month to notify to the Commission the international credit entitlement for each of their operators in accordance with the limits set in the Regulation.

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