Benchmarking as key for allocation of CO2-allowances

 

The right choice of allocating emission permits is crucial for the environmental and economic success of the upcoming EU emissions trading scheme. One of the big challenges is to take care that the national allocation methods stays within the rules of EU competition law safeguarding therefore the environmental integrity as well as the competitiveness of the European companies. Especially the energy sector can easily be distorted due to strongly differing allocation schemes, because of the fact that most European energy companies are linked through the European electricity grid and that the liberalization of the European energy markets is consolidating.

e5 organized on 23rd April a expert roundtable in Maastricht in order to discuss these topics. The objective of the Expert Meeting was to provide building stones for a feasible and usable approach for the transition to a Emissions Trading Scheme. In other words a transition road map for the allocation of CO2 allowances in the carbon constrained economy -which is of course a challenging objective!

Presentations from the Expert Roundtable on 23th of April 2003 in Maastricht:

In the follow-up to the Workshop in Maastricht e5 has prepared a position paper on allocation , which will now be submitted to the ongoing decision making process in the EU and in the Member States. We clearly favour a stringent solution that is environmentally beneficial, economically feasible, provides the basis for domestic action to reduce GHG emissions and provides for a transition towards a sustainable energy system. Of the methods left to discuss, this leads to an efficiency benchmarking solution.

 

The project continues and was up to now a full success. On 3rd of June e5 organized in Strasbourg a round table dinner on the subject:

Allocating emission permits – the business approach to a viable solution for climate protection.

 

A larger group of European parliamentarians discussed there with international experts and representatives of relevant players in European energy, chemical and cement industry the implications of different allocation methods for the business world and the environment. On various other European conferences and meetings representatives of several national authorities and members of the EU-Parliament signalled understanding.

Some of the amendments adopted by the EU-Parliament (02 July 2003) consider important requests of the e5 position paper. The accepted directive gives the recommendation that “benchmarks derived from reference documents concerning the best available technologies may be employed by Member States in developing their National Allocation Plans, and these benchmarks can incorporate an element of accommodating early action.” The directive encourages the member states to ”having regard when allocating allowances to the potential for industrial process activities to reduce emissions.” The EU-Commission is obliged to prove “the practicality of developing Community-wide benchmarks as a basis for allocation, taking into account the best available techniques and cost-benefit analysis.” See here.

The initiative was supported by the e5-member Essent Duurzaam .

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