Following an evaluation of the Dutch emission trading legislation conducted in 2007 by the Dutch Emission Authority (the NEa), the Dutch authorities have now proposed several changes to the law that, among other objectives, aim to secure the independence of NEa from the Dutch State as well as the inclusion of CCS in the EU ETS.
The following is a brief summary of the key amendments contained in the draft proposal for an amendment act (concept-wetsvoorstel aanpassingswet handel in emissierechten II) (the Amendment Act) that will amend the Environmental Management Act (the EMA), particularly the clauses on emissions trading and related issues.
Key proposed amendments
- The NEa will change its status. The NEa is currently an agency of the Ministry of Housing, Spatial Planning and the Environment (VROM), but will be become an independent governmental entity without legal personality (Zelfstandig bestuursorgaan zonder rechtspersoonlijkheid). By awarding the NEa this new status, NEa is granted independence from VROM, which is responsible for policy decisions regarding emissions trading. The NEa’s new independence is also notable as the Dutch State is an active trader of emission rights, whereas the NEa is the entity responsible for regulating emissions trade and maintaining the registry for emission rights transactions.
- CCS will be included in the emissions trading scheme. Under the amended EMA, stored carbon can be deducted from the emission ceiling of individual producers. The current proposed amendments also envisage extending the legislation to include transportation activities for CCS projects and in particular transportation activities from the emitting facility to the storage. For CCS projects developed before 2013, a special opt-in procedure will be introduced by the Amendment Act and will also include provisions to facilitate the development of pilot projects that have opted-in, although details on the criteria for eligibility for the opt-in procedure are currently not included in the Amendment Act.
- The public preparation procedure (openbare voorbereidingsprocedure) will no longer be applied to the emission permit request or the request for allocation of carbon allowances. According to VROM, the obligation to seek the views of the public for an emission permit request is being rescinded due to the limited added value of the procedure: in recent years, no third parties have exercised the option to submit their views (zienswijzen). The requesting party will have other means of objecting or appealing the emission permit. As a direct consequence, the officially stated time needed to process an emission permit will be reduced from six months to four months, although in practice the processing time already tends to be shorter than six months. The public preparation procedure for requests for allocation of carbon allowances is being rescinded for similar reasons, and the official time needed to process a request for the allocation of allowances is expected to be shortened to 12 weeks starting from the submission of the request.
- Certain mandatory requirements that are currently included in the individual permits (for example, with regard to monitoring and annual emission reports), will be inserted into the EMA itself. As a consequence, changes in law can be introduced more easily, without the need to amend individual permits after every amendment of the EMA.
- The obligation to submit a request for the allocation of allowances before 1 September of every year will be removed from the EMA. As such, project developers can submit such requests as soon as their facility is ëoperational’. The Amendment Act refers to actual operation, although it is not clear whether this refers to the start date as referred to in the National Allocation Plan for Phase II (the Phase II NAP). This amendment should lead to a shorter period of uncertainty with regard to the actual amount of allowances allocated to the facility and will give the NEa better insight into the exact amount of allowances available for new entrants. The updated amount of allowances available for allocation to new entrants will be published on the internet (currently 16.5 Mt are still available).
- However, the possibility for project developers to reserve a certain amount of allowances before actual operations start was not included in the Amendment Act. This possibility was announced in the Phase II NAP due to the vast amount of new projects that are planned to be realised before the end of this planning period, and was envisaged to create more (financial) certainty for market parties planning to invest in the Netherlands.
- Arrangements for post-2012 banking of allowances and other emission rights such as ERUs and CERs are also included in the Amendment Act. Allowances from this period will be transferable to the next period, although only licensees (ie, ETS compliance buyers) under the EMA will be able to transfer ERUs and CERs and neither tCERs nor lCERs can be banked and used for compliance in the post-2012 period. An additional Governmental Decree (Algemene maatregel van bestuur) will be drafted that will include additional criteria for the banking of CERs and ERUs.
It is currently unclear when the proposed Amendment Act will be discussed in the Dutch Parliament and passed as law or whether all of the envisaged improvements to the current scheme will actually be implemented.