Denmark’s response to the Commission’s public consultation
on the revision of the rules for the adjustments to free allocation
of emission allowances due to activity level changes
Date
08 July 2019
Denmark appreciates the opportunity to comment on the Commission’s draft on the
revision of the rules for the adjustments to free allocation of emission allowances
due to activity level changes.
Denmark finds it important to maintain and improve the Emission Trading System
as the key instrument for providing a market-based, cost-effective and technology-
neutral greenhouse gas reduction in Europe.
In general, Denmark supports the revised provisions and considers them to be
improved as the draft regulation sets rules for both increases and decreases in the
allocation to follow the same procedure. This approach is more consistent than the
procedure in the current trading period where compensation for production above
the historical production was restricted to when installations had a physical change
and submitted an application for capacity extension.
Staged approach
Denmark supports a staged approach with small intervals. We believe the minimum
interval should be reduced to less than 5 % as the related increase in
administrative burdens would be small compared to the benefits for businesses.
Starting year
As specified in the regulation, the assessment of the rolling average should start in
2021 in order to include any relevant production change occurring between the end
of the baseline period (2018) and the start of the fourth trading period.
Denmark
supports this as it
will take production investments already in place into account
and prevent overcompensation if production is reduced.
Energy efficiency
It is important that the rules for adjusting free allocation provide incentives for
reductions in greenhouse gas emissions and energy efficient techniques. Denmark
therefore welcomes the provisions in the regulation regarding energy efficiency
measures which formalise the practice carried out during phase three.
Reporting deadline
Article 11(2) of the Directive states that by 28 February of each year the competent
authorities shall issue the quantity of allowances that are to be allocated for that
year. Article 5(2) of the regulation requires the operators to annually submit activity
level reports by 31 March. However, Article 5(2) of the regulation also states that
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