IP/07/667

Brussels, 15 May 2007

Emissions trading: Commission adopts decision on Italy's national allocation plan for 2008-2012

The European Commission today concluded the assessment of Italy's national plan for allocating carbon dioxide (CO₂) emission allowances for the 2008-2012 trading period of the EU Emissions Trading Scheme (EU ETS). The Commission accepted Italy's national plan on condition that certain changes are made, including a reduction in the total number of emission allowances proposed. The cleared annual allocation is 195.8 million tonnes of CO₂ allowances, 6.3% less than Italy had proposed. The Emissions Trading Scheme ensures that greenhouse gas emissions from the energy and industry sectors covered are cut at least cost to the economy, thus helping the EU and its Member States to meet their emission commitments under the Kyoto Protocol.

Environment Commissioner Stavros Dimas said: "Europe is fully committed to achieving its Kyoto target and to making the Emissions Trading Scheme a successful weapon for fighting climate change. Today's decision, like our previous ones, sends a strong signal of that commitment. The Commission is assessing all national plans in a consistent way to ensure equal treatment of Member States. This is how we have assessed Italy’s plan, and we will apply the same standards to the remaining plans.”

Assessment of the NAPs

Following the Commission's decisions in November 2006, January 2007, February 2007, March, April and May 2007 (IP/06/1650, IP/07/51, IP/07/136, IP/07/247, IP/07/412, IP/07/415, IP/07/459, IP/07/501 and IP/07/613), Italy's is the 21^st national allocation plan (NAP) for the 2008-2012 period to be assessed by the Commission.

NAPs determine for each Member State the 'cap,' or limit, on the total amount of CO₂ that installations covered by the EU ETS can emit, and specify how many CO₂ emission allowances each plant will receive.

The Commission is responsible for assessing Member States' proposed NAPs against 12 allocation criteria listed in the Emissions Trading Directive.^[1] The Commission may accept a plan in part or in full.

The assessment criteria seek, among other things, to ensure that plans are consistent (a) with meeting the EU's and Member States' Kyoto commitments, (b) with actual verified emissions reported in the Commission's annual progress reports, and (c) with technological potential for reducing emissions. In this context, the Commission is requiring Italy to reduce its proposed cap by 13.2 million tonnes of CO₂ equivalent per year, to 195.8 million tonnes.

Other assessment criteria relate to non-discrimination, EU competition and state aid rules, and technical aspects. In this regard, the Commission is requiring further changes to Italy's plan concerning the following issues:

• More information needs to be provided on how Italy will treat new entrants to the emissions trading scheme.
• Italy needs to include combustion installations (e.g. chemical crackers) covered by all other Member States in their allocation plans.
• Several intended ex-post adjustments must be eliminated.
• The maximum overall amount of Kyoto project credits – credits from emission-saving projects carried out in third countries under Kyoto Protocol rules - which may be used by operators for compliance purposes may not represent more than approximately 15 % of its annual allocation.

The Commission's approval of the plan will become automatic once Italy has made the appropriate changes.

See also:
http://ec.europa.eu/environment/climat/emission.htm
http://ec.europa.eu/environment/climat/2nd_phase_ep.htm

Summary information on the 21 plans assessed to date:

Approved allowances for 2005-2007, verified emissions in 2005, proposed caps for 2008-2012, approved caps for 2008-2012, additional emissions covered in 2008 to 2012 and limit on the use of credits from emission-saving projects in third countries.

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^[1]. Directive 2003/87/EC, as amended by Directive 2004/101/EC.

^[2] The figures indicated in this column comprise emissions in installations that come under the coverage of the scheme in 2008 to 2012 due to an extended scope applied by the Member State and do not include new installations entering the scheme in sectors already covered in the first trading period.

^[3] The JI/CDM limit is expressed as a percentage of the member state’s cap and indicates the maximum extent to which companies may surrender JI or CDM credits instead of EU ETS allowances to cover their emissions. These credits are generated by emission-saving projects carried out in third countries under the Kyoto Protocol’s project-based flexible mechanisms, known as Joint Implementation (JI) and the Clean Development Mechanism (CDM).

^[4] Including installations which Belgium opted to exclude temporarily from the scheme in 2005

^[5] Italy has to include further installations. The amount of additional emissions is not known

at this stage.

^[6] Additional installations and emissions of over 6 million tonnes are already included as of 2006.

^[7] Verified emissions for 2005 do not include installations which the UK opted to exclude temporarily from the scheme in 2005 but which will be covered in 2008 to 2012 and are estimated to amount to some 30 Mt.

^[8] The sum of verified emissions for 2005 does not include installations which the UK

opted to exclude temporarily from the scheme in 2005 but which will be covered in 2008 to 2012 and are estimated to amount to some 30 Mt.