At the end of April this year, the EU Commission adopted a resolution on the question of subject to which conditions the operators of industrial plants may receive CO2 emission rights free of charge even after 2013, or rather in which way the remaining free emission certificates are to be distributed among the industrial plants which are subject to the EU Emission Trading Scheme ("EU ETS").
The decision contains, inter alia, benchmarks regarding the performance of plants as regards greenhouse gas emissions which are to be applied by the Member States when calculating the certificates to be allocated in specific branches of industry.
Despite the fact that the allocation of certificates will generally be carried out by auction sales as of 2013, a share of the certificates can still be distributed to specific companies free of charge until 2020. Pursuant to the EU ETS Directive, the most efficient 10 percent of the industrial plants of a sector or sub-sector are intended to still be allowed to receive all necessary emission rights free of charge even after 2013, provided that their line of business is exposed to particularly stiff global competition. The respective exemptions from being included in the auctioning procedure is intended to give plants from economic sectors considered to be particularly exposed to competition from non-member countries the opportunity to further tap any available cost reduction potential. This especially applies to plants located in sectors and sub-sectors which face the danger of sources of CO2 emissions being shifted to a non-member country due to the fact that they are exposed to the competition of companies in non-member countries, which do not have comparable stipulations regarding CO2 emissions. The list of respective sectors and sub-sectors was created already at the end of 2009 in the course of a corresponding resolution by the Commission.
This resolution by the Commission sets technical standards for 52 product groups, on the basis of which it is decided how many CO2 emission rights a manufacturer will be allocated free of charge even after 2013. Companies which do not manufacture any of these products, but are still taken into consideration for receiving CO2 rights free of charge due to harsh global competition, are intended to be evaluated on the basis of a general benchmark for the use of heat and energy in the manufacturing process.
According to corresponding statements by the EU Commissioner-in-charge, who considers the decision to be a milestone regarding the reform of the European CO2 market, the benchmarks are intended to give the industry clear indications regarding what possibilities are given in the respective sectors of industry in the field of CO2-low production as well as to create benefits for the plants with the lowest CO2 emissions. The benchmarks are indicated in tons of carbon dioxide (CO2) per manufactured ton of the respective product.
In 2012, such plants, with regard to which no danger of a shift of CO2 emission sources is at hand, will receive certificates in the amount of the average percentage of the respective benchmark, which will be continuously reduced until 2020. The respective plants may balance the difference from their actual emission levels by either improving their emission balance, buying additional certificates, using certificates which are assigned from current trading period running until 2012, or by using international offsets.
However, according to corresponding statements, the European Confederation of Iron and Steel Industries, Eurofer, intends to take legal action against the resolution of the Commission. From the Confederation's point of view, the yardstick regarding the free allocation of CO2 emission rights was set so high for the steel industry that the conditions cannot be met even by the best plants.