The benchmarks for the period 2021-2025 have been published for public consultation
10 December 2020 | Trading
The European Commission has published a draft of the Regulation which contains the updated values of the benchmarks that will be applied to calculate the free allocation for the period 2021-2025 (first part of phase 4 of the EU ETS). The new benchmarks reflect the technological developments that have taken place since the benchmarks for Phase 3 were determined. In addition, the draft implementing regulation also presents the average emission factor of the 10% best installations per benchmark.
This draft Regulation will be open for comments from all interested parties for a period of four weeks (until 4 January 2021).
According to Article 10a(2) of the revised EU ETS Directive, the benchmark values are to be updated for phase 4 of the EU ETS using the following methodology:
- obtaining the average emission intensity of the 10% best installations for all 54 benchmarks for the years 2016/2017;
- comparing these values with the phase 3 benchmark values and calculating an annual reduction factor for the 9-years period from 2007/2008 to 2016/2017;
- increasing the annual reduction factor to 0.2% if it is below that value or reducing it to 1.6% if it is above that value;
- calculating the benchmark values to be used from 2021 to 2025 by extrapolating the phase 3 benchmark values to the years 2022/2023 (i.e. by using the annual reduction factor and a period of 15 years);
An analysis of the 54 published proposals for reference values shows that only 9% of the benchmarks have been cut to the minimum expected (3% cut). These correspond to the following products: hot metal, white unsprayed cement (clinker), sintered dolomite, ammonia and steam cracking. Although these products have had a minimum cut, in all cases, the reference value selected to determine the allocation for the period 2021-2025 has been slightly lower than the value obtained after calculating the average value of 10% of the most efficient installations in 2016 and 2017.
The large group of benchmarks is the one that has been cut the most in the published benchmark proposal, with a cut of 26% from the values used for the calculation of the allocation in the period 2013-2020. This group, which represents 72% of the proposed benchmarks, includes the reference values for heat and fuel (47.3 allowances /TJ and 42.6 allowances /TJ, respectively), as well as all pulp and paper and steel products. In most of these cases, the proposed reference value is higher than the average value identified for each product after analysis of the 2016 and 2017 data.
Finally, a set of 10 reference values is detected with proposed reference values in the 3%-26% cut interval compared to the 2013-2020 values established by the European Commission for 2021-2025. In this group, cuts are established in the benchmark ranging from 4% to 22% and products are identified such as aluminium (with a 5% cut), grey unground cement (clinker) (with a 10% cut), float glass (12% cut) or cast iron and stone wool products, both with a 22% cut.
These values, in line with the information that became known over the past months, will lead to a significant decrease in free allocations for facilities in 2021-2025, compared to those approved for the current period.
The benchmarks update is based on the data submitted in the NIMs (National Implementation Measures) submitted by the competent authorities to the Commission and includes verified data on the emissions and production of all installations receiving free allocation under the EU ETS. The detailed assessment of the installation-specific data has resulted in a high-quality dataset for updating the benchmarks.
After the end of the feedback period, the Commission will submit the implementing Regulation to the Climate Change Committee for voting (end of January 2021). The Commission intends to adopt the Regulation by the end of February 2021.
For further information, please contact with:
Iria Flavia Peñalva
Source: European Commission and Factor