Uncertainty as the protagonist of the new phase of the EU ETS, says a Factor expert
06 October 2020 | Trading
On January 1, 2021, phase IV of the European Union Emissions Trading Scheme (EU ETS) begins. This new phase brings new regulations, as well as new formats and adaptations of existing regulations.
In accordance with the Delegated Regulation (EU) 2019/331 of the Commission, of 19 December 2018, in 2019 the installations submitted their applications for allocation together with the methodological monitoring plans. However, despite having made the application for allocation in advance, companies are experiencing moments of uncertainty, as they are unaware of the free allocation to be received, and its publication is planned for the second quarter of 2021, which complicates a correct forecast for the installations.
Actions and deadlines to enter into phase IV
On the other hand, the normative change promoted by the beginning of this new phase brings the need to modify the existing reporting formats, that is, to adapt them to the new regulations, with the objective of gathering all the requirements in the monitoring and reporting of CO2 emissions.
Therefore, in the last semester of 2020, the installations will have to adapt their authorization of greenhouse gas emissions and their emissions monitoring plan to adjust them to the normative changes, to the changes of formats, and to include the novelties. "The installations must have everything approved before 31 December 2020, but are still waiting for the publication of official formats to deliver their monitoring plan, which generates more uncertainty," explains Elena Aguirre, Senior Consultant at Factor Ideas for change and advisory expert within the EU ETS.
Besides, the Commission's implementing regulation (EU) 2019/1842 of 31 October 2019, from 2021 onwards, states that the operators of installations that have been allocated free allowances for the 2021-2030 trading period will report annually on the level of activity of each sub-installation in the previous calendar year. Specifically, in 2021, this report will include the data corresponding to the two years prior to its presentation and the deadline for the presentation of this verified report is February 28th, 2021, as well as the deadline for the presentation of the emissions report. Again, the installations are still waiting for the publication of the formats to be able to comply with this new requirement.
Thus, all these new obligations are added to the management of the annual EU ETS of the installation: monitoring and reporting of CO2 emissions, internal audit of the system, improvement report, etc., which increases the work that the EU ETS generates for the installations.
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Factor Ideas for change
Factor has more than 15 years of experience offering technical consulting services in the areas of climate change adaptation and mitigation, carbon footprint analysis, sustainability, circular economy, renewable energy and carbon markets, amongst other things, undertaken on behalf of governments and international organizations, as well as for over 400 companies, with more than 1,100 projects undertaken within 40+ countries.