The Ministry of Infrastructure & Environment intends to make two amendments to the Emissions Trading Scheme, which has been in force since 5 December 2012. The scheme implements the European system of greenhouse gas emission allowance trading, laid down in EU directives, regulations and decrees, and the Environmental Management Act. Via this internet consultationInterested parties have the opportunity to respond to the draft amendment until November 6, 2017. In particular, ETS companies and traders in emission allowances (such as large, energy-intensive companies in the electricity sector, refining industry, chemical industry or metal sector), verification bodies and the Accreditation Board will be affected by these changes and, therefore, interest in speaking. We will be happy to clarify the changes below.
Trading in greenhouse gas
emission allowances The EU emissions trading scheme (EU-ETS), a European directive, is a market instrument for which EU emissions trading aims to reduce greenhouse gas emissions in a cost-effective manner. This is in order to achieve the EU objectives and the Kyoto Protocol. The Paris Climate Convention also underscores greenhouse gas reduction as one of its main objectives and specifically applies to the Netherlands that ambitions in this area have been laid down in the Energy Agreement, the Energy Agenda and not to mention the new Regeringsakkoord. The Government Agreement calls for a national Climate and Energy Agreement with a 49% reduction target in 2030.
Companies participating in the EU scheme receive an annual allocation of emission allowances for free. For the number of tonnes of greenhouse gas that the company has expelled, it must deliver an equal amount of emission allowances. If emissions are lower than the free rights package and the company's rights, they are traded on the market to companies that issue more than they are entitled to. A financial incentive to prioritize (investing in) emission-reducing technology, such as electrification in the chemical industry and the use of power-to-gas for energy storage, converting electricity into the CO2-free fuels hydrogen and synthetic natural gas. In addition, by decision of the European Commission, the ceiling established by the EU will be reduced over time, so that overall emissions will eventually decrease. This mechanism aims at contributing to the ambitious Kyoto goals with regard to sustainability, together with other instruments.
The proposed changes: twofold
The first change in the Scheme allows independent accreditation of verifiers for a new category of activities: Verification of data that support the submission of applications to the Dutch Emission Authority (NEa) for allocation of free emission allowances.
Validation / Verification Settings perform an objective assessment of the underlying data. The amendment aims to create an accreditation obligation, thus expanding the scope of the existing accreditation obligation (for verification of emission reports) for these institutions. Accreditation must demonstrate the authenticity, impartiality and independence of the verifier. Enhancement of the accreditation requirement should therefore lead to (yet) more certainty about the reliability of this data and, therefore, the accuracy of the final allocation. The quality of this data is of great importance, now that the free allocation of allowances in the Netherlands is estimated to be 1.5 to 3 billion euros. Until July 1, 2018, a transitional period has been introduced in which verifiers can apply for an extension of their accreditation and in which the accreditation process can be carried out. After that period, the verifier has been accredited for this work, as for the verification of emission reports.
The second amendment concerns the fee payable to the NEa for holding a trading account, personal credit or Kyotorekening account. These are bills with which voluntary allowances can be dealt with. The compensation of 200 euros per year is, according to the Minister, on the low side compared with other Member States, and in view of the fact that the strengthening of NEA's work to be done is not cost-effective. With the proposed change, this contribution will be increased to 400 euros per year. Incidentally, there is no evidence of these figures and price increases in the consultation document.