Emission trading

date: august 2011

In the field of emission trading it is currently necessary to prepare the third trading period, which will be from the year 2013 up to the year 2030, which contains for the first time a European wide uniform regulation regarding the allocation of emission rights. Background for the national laws and regulations is the decision of the European Commission of 27 April 2011, which the Federal Republic of Germany wants to implement nearly one to one. The necessary amendment of the Greenhouse Gas Emissions Act (TEHG) has been adopted by the Bundesrat on 08 July 2011. Currently it is planned to introduce the Allowance Ordinance 2020 (ZuV 2020) into the Federal Parliament on 17 August 2011.

On 13 July 2011 there was a hearing of the states and the organisations in Berlin, who can bring in proposals until 18 July 2011 in a written way.

After reviewing the draft of the Allowance Ordinance 2020 (ZuV 2020) it is not expected that it will become easier for plant operators to find their way through the jungle of regulations particularly as a start general regulations are subject of the ZuV 2020 according to the decision of the European Commission; the relevant regulations regarding allocation are determined within § 9 ff. As § 2 contains numerous new definitions there is the need to change over the terminology. In addition to the different methods of allocation (§§ 9, 10 and § 18 ZuV 2020 [draft]), there a still numerous other possible combinations. Except for the sectors which are threatened by emigration and therefore should receive of free allocation of 100 % it is planned to reduced the allocation for plants step by step about 10 % yearly. Furthermore, there will be likely again a reduction factor for industrial plants, electricity producers are impaired by a linear reduction about a factor of 1.74 %.

Currently the draft envisions that false information in the scope of the allocation procedure are threatened with signification penalties. It is especially important to know that even negligence is sufficient to fulfil the matter of fact. From the point of view of the verifiers it should be problematic that they shall hold out two reports (an internal and an external one) and that it is required in the future to give a statutory declaration regarding the fact that they did not take part in the data collection. Absolutely not clear – but insofar the damage has been done – is the exposure to the regulation of § 9 section 7 draft of the ZuV 2020 as the German Emission Trading Authority (DEHSt) is obliged to refuse the applied allocation as far as the European Commission complains about the provisional amount of allocation. It could be extremely difficult to override a negative response in the scope of this regulation as finally a proceeding on the European level is necessary.

It remains to be seen how far the current draft of the Allocation Ordinance will be adapted. But it is expected once more that there will be significant problems for the plant operators particularly as – also well known – the time is very short.