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IP/09/ 1907

Brussels, 11 December 2009

Emissions trading: Commission takes new decisions on Estonian and Polish national allocation plans for 2008-2012

The European Commission today took new decisions on the national allocation plans (NAPs) submitted by Estonia and Poland for distributing carbon dioxide (CO 2) emission allowances for the 2008-2012 trading period of the EU Emissions Trading System (EU ETS). It rejected both plans on several grounds, but the principal reason was that the total quantity of allowances that these countries proposed to allocate to their operators was too high. The EU ETS ensures that greenhouse gas emissions from the energy and industry sectors it covers are cut in a cost-efficient manner, thus helping the EU and its Member States to meet their emission commitments. The Commission's previous decisions, which also rejected the plans, were annulled by the Court of First Instance on 23 September 2009. Appeals are pending before the European Court of Justice.

Environment Commissioner Stavros Dimas said: "These new decisions take into account the court rulings. The onus is now on Poland and Estonia to prepare new plans. In order to minimise the regulatory uncertainty created by the court ruling, I would encourage Estonia and Poland to proceed swiftly and prepare new plans on the basis of the most recent data."

Reasons for taking new decisions

In 2007 the Commission decided that certain aspects of the Estonian and Polish National Allocation Plans (NAPS) were not compatible with the EU ETS Directive (see IP/07/412 and IP/07/613 ). Both Member States brought an action for annulment against these decisions before the Court of First Instance.

On 23 September 2009, the Court annulled in their entirety the Commission's first decisions. The Court's rulings are primarily concerned with procedure and not with the material assessment of NAPs carried out by the Commission. The Court considered that the Commission had exceeded its powers by replacing the data contained in the two NAPs with more robust data, without giving sufficient reasons why original data were considered to be of insufficient quality. The Court found the Commission had also exceeded its powers by fixing a maximum level for the total quantity of allowances to be allocated by Poland and Estonia. Additionally, in the Polish case (T-183/07), the Court of First Instance (CFI) found that the Commission had infringed the obligation to state reasons, and in the Estonian case (T-263/07) that the Commission had infringed the principle of sound administration.

On 3 December 2009, the Commission appealed against these judgements on a number of legal grounds ( see Questions and Answers relating to the Commission's appeals ).The appeals are pending before the European Court of Justice.

Reasons for rejecting original plans

In the decisions adopted today the Commission rejected the original NAPs because they violate several of the criteria defined in the EU ETS Directive (see details in annex). Taking into account the CFI's judgments, the new decisions do not indicate what changes to the original NAP would be acceptable to the Commission.

As a result of these decisions Estonia and Poland will have to submit new NAPs to be assessed by the Commission.

See full text of the decisions at: http://ec.europa.eu/environment/climat/emission/2nd_phase_ep.htm

Assessment of national allocation plans

National allocation plans (NAPs) determine for each Member State the 'cap' or limit on the total amount of CO 2 that installations covered by the EU ETS can emit, and set out how allowances will be allocated to individual installations.

The Commission's task is to scrutinise Member States' proposed NAPs against the 12 allocation criteria listed in the EU ETS Directive. 1 The criteria seek, among other things, to ensure that plans are consistent with meeting the EU's and Member States' Kyoto commitments, with actual verified emissions reported in the Commission's annual progress reports and with technological potential to reduce emissions. Other criteria relate to non-discrimination, EU competition and state aid rules, and technical aspects. The Commission may reject a plan in part or in full.

Annex

Poland

Estonia

Verified emissions in 2008

Proposed allocation

Cap in the annulled decision

Verified emissions in 2008

Proposed

allocation

Cap in the annulled decision

204.1

284.6

208.5

13.5

24.4

12.7

Notes:

  • The "Verified emissions" data were taken from the Community Independent Transaction Log (CITL) on 23 September 2009.

  • The "Proposed allocation" is the annual average allocation proposed in the notified NAPs.

  • The "Cap in the annulled decision" is the annual average cap resulting from the Commission's decisions on the Polish and Estonian NAPs annulled by the CFI.

  • All figures are in million tonnes of CO2 equivalent.

Information about individual decisions:

Estonia – the national allocation plan has been rejected as a whole for the following reasons:

  • The total quantity of allowances to be allocated is too high.

  • The allocations to installations benefiting from bonuses for early action exceed expected needs.

  • The plan does not contain enough information on how Estonia will treat new entrants to the EU ETS.

Poland – the national allocation plan has been rejected as a whole for the following reasons:

  • The total quantity of allowances to be allocated is too high.

  • The allocations to installations benefiting from bonuses for early action, biomass and co-generation exceed expected needs.

  • The plan does not contain enough information on how Poland will treat new entrants to the EU ETS.

  • The plan contains ex-post adjustments (the possibility of changing the allocations during the trading period).

  • The overall maximum amount of Kyoto project credits which may be used by operators for compliance purposes is too high.

1 :

. Directive 2003/87/EC, as amended by Directive 2004/101/EC.


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