欧盟碳市场运作报告（2020）（英文版）VIP专享VIP免费

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EN EN

EUROPEAN

COMMISSION

Brussels, 18.11.2020

COM(2020) 740 final

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND

THE COUNCIL

Report on the functioning of the European carbon market

Table of Contents

List of acronyms and abbreviations ........................................................................................... 2

1. INTRODUCTION ................................................................................................................. 4

2. EU ETS INFRASTRUCTURE .............................................................................................. 6

2.2 Union Registry and the European Union Transaction Log (EUTL) .................................... 8

3. FUNCTIONING OF THE CARBON MARKET IN 2019 .................................................... 9

3.1. Supply: allowances put in circulation ........................................................................... 10

3.1.1. Cap .......................................................................................................................... 10

3.1.2. Issued allowances ................................................................................................... 13

3.1.2.1.Free allocation ................................................................................................... 13

3.1.2.2. Auctioning of allowances ................................................................................ 15

3.1.2.3. Derogation from full auctioning for electricity and heat production ............... 19

3.1.2.4. NER 300 programme ....................................................................................... 23

3.1.2.5. The Innovation Fund ........................................................................................ 24

3.1.2.6. The Modernisation Fund .................................................................................. 25

3.1.2.7. Compensation of indirect carbon costs ............................................................ 26

3.1.3. International credits ................................................................................................ 28

3.2. Demand: allowances taken out of circulation ............................................................... 29

3.3. Balancing supply and demand ....................................................................................... 30

4. AVIATION .......................................................................................................................... 33

5. MARKET OVERSIGHT ..................................................................................................... 36

6. MONITORING, REPORTING AND VERIFICATION OF EMISSIONS ........................ 38

7. OVERVIEW OF ADMINISTRATIVE ARRANGEMENTS ............................................ 40

8. COMPLIANCE AND ENFORCEMENT .......................................................................... 41

9. CONCLUSIONS AND OUTLOOK .................................................................................... 43

ANNEX.................................................................................................................................... 44

List of acronyms and abbreviations

AVR Accreditation and Verification Regulation

CA Competent Authority

CCS Carbon Capture and Storage

CCU Carbon Capture and Utilisation

CDM Clean Development Mechanism

CERs Certified Emission Reductions

CORSIA Carbon Offsetting and Reduction Scheme for International Aviation

CSCF Cross-Sectional Correction Factor

EA European Cooperation for Accreditation

EEA European Economic Area

EEX European Energy Exchange

EIB European Investment Bank

ERUs Emission Reduction Units

ESMA European Securities and Markets Authority

EU ETS European Union Emissions Trading System

EUTL European Union Transaction Log

GHG Greenhouse Gas

ICAO International Civil Aviation Organization

ICE InterContinental Exchange Futures Europe

InnovFin EDP InnovFin Energy Demonstration Projects

JI Joint Implementation

MAR Market Abuse Regulation

MiFID2 Directive on Markets in Financial Instruments

MiFIR Regulation on Markets in Financial Instruments

MRR Monitoring and Reporting Regulation

MRVA Monitoring, Reporting, Verification and Accreditation

MSR Market Stability Reserve

NAB National Accreditation Body

NER New Entrants Reserve

OTC Over-the-counter

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ENENEUROPEANCOMMISSIONBrussels,18.11.2020COM(2020)740finalREPORTFROMTHECOMMISSIONTOTHEEUROPEANPARLIAMENTANDTHECOUNCILReportonthefunctioningoftheEuropeancarbonmarket1TableofContentsListofacronymsandabbreviations...........................................................................................21.INTRODUCTION.................................................................................................................42.EUETSINFRASTRUCTURE..............................................................................................62.2UnionRegistryandtheEuropeanUnionTransactionLog(EUTL)....................................83.FUNCTIONINGOFTHECARBONMARKETIN2019....................................................93.1.Supply:allowancesputincirculation...........................................................................103.1.1.Cap..........................................................................................................................103.1.2.Issuedallowances...................................................................................................133.1.2.1.Freeallocation...................................................................................................133.1.2.2.Auctioningofallowances................................................................................153.1.2.3.Derogationfromfullauctioningforelectricityandheatproduction...............193.1.2.4.NER300programme.......................................................................................233.1.2.5.TheInnovationFund........................................................................................243.1.2.6.TheModernisationFund..................................................................................253.1.2.7.Compensationofindirectcarboncosts............................................................263.1.3.Internationalcredits................................................................................................283.2.Demand:allowancestakenoutofcirculation...............................................................293.3.Balancingsupplyanddemand.......................................................................................304.AVIATION..........................................................................................................................335.MARKETOVERSIGHT.....................................................................................................366.MONITORING,REPORTINGANDVERIFICATIONOFEMISSIONS........................387.OVERVIEWOFADMINISTRATIVEARRANGEMENTS............................................408.COMPLIANCEANDENFORCEMENT..........................................................................419.CONCLUSIONSANDOUTLOOK....................................................................................43ANNEX....................................................................................................................................442ListofacronymsandabbreviationsAVRAccreditationandVerificationRegulationCACompetentAuthorityCCSCarbonCaptureandStorageCCUCarbonCaptureandUtilisationCDMCleanDevelopmentMechanismCERsCertifiedEmissionReductionsCORSIACarbonOffsettingandReductionSchemeforInternationalAviationCSCFCross-SectionalCorrectionFactorEAEuropeanCooperationforAccreditationEEAEuropeanEconomicAreaEEXEuropeanEnergyExchangeEIBEuropeanInvestmentBankERUsEmissionReductionUnitsESMAEuropeanSecuritiesandMarketsAuthorityEUETSEuropeanUnionEmissionsTradingSystemEUTLEuropeanUnionTransactionLogGHGGreenhouseGasICAOInternationalCivilAviationOrganizationICEInterContinentalExchangeFuturesEuropeInnovFinEDPInnovFinEnergyDemonstrationProjectsJIJointImplementationMARMarketAbuseRegulationMiFID2DirectiveonMarketsinFinancialInstrumentsMiFIRRegulationonMarketsinFinancialInstrumentsMRRMonitoringandReportingRegulationMRVAMonitoring,Reporting,VerificationandAccreditationMSRMarketStabilityReserveNABNationalAccreditationBodyNERNewEntrantsReserveOTCOver-the-counter3PFCsPerfluorocarbonsRESRenewableEnergySourcesSARPsCORSIAStandardsandRecommendedPracticesTNACTotalNumberofAllowancesinCirculation41.INTRODUCTIONTheEuropeanEmissionsTradingSystem(EUETS)hasbeenthecornerstoneoftheEU'sstrategyforreducinggreenhousegas(GHG)emissionsfromindustry,electricityandheatproductionsince2005.ItcontributessignificantlytoachievingtheoverallEUtargetofcuttingGHGemissionsby20%from1990levelsby2020,whichtheEUisontracktosurpass.ThisReportonthefunctioningoftheEuropeancarbonmarketispresentedinaccordancewiththerequirementsofArticles10(5)and21(2)ofDirective2003/87/EC1(EUETSDirective).TheobjectiveofthereportistoprovideasnapshotofdevelopmentsintheEuropeancarbonmarketonanannualbasis.Thereportcoverstheyear2019,butalsopresentsdevelopmentsinthefirsthalfof2020.Lookingtowardsthenextdecade,theCommission’sCommunicationonthe2030ClimateTargetPlan2proposedtoincreasetheEU’s2030GHGemissionsreductionstargetfrom40%toatleast55%comparedwith1990levels.Todeliveronthishigherambition,theCommissionwill,byJune2021,reviewandproposetorevisewherenecessary,allrelevantclimate-relatedpolicies.AspartofthebroaderpackageoflegislationundertheEuropeanGreenDeal3,theEUETSwillalsoberevised,includingapossibleextensionofthesystemtonewsectors.FollowingtherevisionoftheETSDirective4,theworkonimplementationforphase45hasbeenactiveandisprogressingswiftly.Overthepastyear,implementinglegislationontheadjustmentoffreeallocationbasedonactivitylevelchanges6andontheoperationoftheModernisationFund7hasbeenadopted,andthesecondrevisionoftheAuctioning1Directive2003/87/ECoftheEuropeanParliamentandoftheCouncilof13October2003establishingasystemforgreenhousegasemissionallowancetradingwithintheUnionandamendingCouncilDirective96/61/EC,OJL275,25.10.2003,p.32.2COM(2020)562final–CommunicationfromtheCommissiontotheEuropeanParliament,theCouncil,theEuropeanEconomicandSocialCommitteeandtheCommitteeoftheRegions–SteppingupEurope’s2030climateambition,Investinginaclimate-neutralfutureforthebenefitofourpeople–The2030ClimateTargetPaln3COM(2019)640final–CommunicationfromtheCommissiontotheEuropeanParliament,theEuropeanCouncil,theCouncil,theEuropeanEconomicandSocialCommitteeandtheCommitteeoftheRegions–TheEuropeanGreenDeal4Directive(EU)2018/410oftheEuropeanParliamentandoftheCouncilof14March2018amendingDirective2003/87/ECtoenhancecost-effectiveemissionreductionsandlow-carboninvestments,andDecision(EU)2015/1814,OJL76,19.03.2018,p.35TheEUETSisregulatedinphases.Phase3coverstheperiod2013-2020,whilephase4coverstheperiod2021-2030.6CommissionImplementingregulation(EU)2019/1842of31October2019layingdownrulesfortheapplicationofDirective2003/87/ECoftheEuropeanParliamentandoftheCouncilasregardsfurtherarrangementsfortheadjustmentstofreeallocationofemissionallowancesduetoactivitylevelchanges,OJL282/,4.11.2019,p.207CommissionImplementingRegulation(EU)2020/1001of9July2020layingdowndetailedrulesfortheapplicationofDirective2003/87/ECoftheEuropeanParliamentandoftheCouncilasregardstheoperationoftheModernisationFundsupportinginvestmentstomodernisetheenergysystemsandtoimproveenergyefficiencyofcertainMemberStates,OJL221,10.7.2020,p.1075Regulation8toimplementphase4requirementshasbeencompleted(seechapters3.1.2.1,3.1.2.2,and3.1.2.6).Theremainingimplementingprovisionsarecurrentlybeingfinalised,withtheaimofhavingthemadoptedbeforeJanuary2021.Sincethepublicationofthelastcarbonmarketreport9,theMarketStabilityReservesurplusindicatorwaspublishedforthefourthtime,showingthatin2019thesurplusofallowancesdecreasedfrom1.65billionin2018toaround1.39billionallowances10.BasedontheindicatorandtherevisedEUETSlegislation,theauctionsupplyin2020willbereducedbyaround375millionallowances(nearly35%)(seechapter3.3).In2019,therewasasignificantdecreaseofemissionsfromstationaryinstallationsof9.1%comparedto2018(seechapter3.2).Thedecreasewasmainlydrivenbythethepowersector,whereemissionsfellbycloseto15%asaresultofcoalbeingreplacedbyelectricityfromrenewablesandgas-firedpowerproduction.Withthislatestdecrease,overallemissionsfromstationaryinstallationssincethestartofphase3oftheEUETShavedecreasedbycloseto20%.Intheaviationsector,emissionscontinuedgrowing,markingaslightincreseof1%comparedto2018(seechapter4).TherewerealsoimportantETS–relatedpoliticaldevelopmentssuchastheentryintoforceoftheagreementonthelinkingoftheEUETSwithSwitzerland’sETSon1January2020,andtheliftingofthesuspensionofUKauctioningandfreeallocationprocessesfollowingtheentryintoforceoftheAgreementonthewithdrawaloftheUnitedKingdomfromtheEU(seechapter2.2).Last,butnotleast,theCOVID-19crisisledtoasignificantshort-termdipinthecarbonpriceinMarch/April2020.Inspiteofthat,thecarbonpricesignalremainedstableataroundEUR2411onaveragebetweenJanuary2019andtheendofJune2020.RevenuesfromtheauctioningofETSallowancesexceededEUR14billionin2019alone,andEUR7.9billionforthefirstsixmonthsof2020.BasedondatasubmittedbyMemberStates,overthecourseof2019,atotalof77%oftheserevenueswerespent(orwereplannedforspending)onspecifiedclimateandenergyrelatedpurposes(seechapter3.1.2.2).Unlessotherwiseindicated,datausedforthisreportweretheonespubliclyavailableandatthedisposaloftheCommissionbyJune202012.GeneralanddescriptiveinformationontheEUETSisincludedinboxesthroughoutthereport.8CommissionDelegatedRegulation(EU)2019/1868of28August2019amendingRegulation(EU)No1031/2010toaligntheauctioningofallowanceswiththeEUETSrulesfortheperiod2021to2030andwiththeclassificationofallowancesasfinancialinstrumentspursuanttoDirective2014/65/EUoftheEuropeanParliamentandoftheCouncil,OJL289,8.11.2019,p.99The2019carbonmarketreportcanbefoundhere:https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52019DC0557R(01)10C(2020)2835final,https://ec.europa.eu/clima/sites/clima/files/ets/reform/docs/c_2020_2835_en.pdf11Source:ICE12Thecut-offdateusedwas30June2020.62.EUETSINFRASTRUCTURE2.1Coverageofactivities,installationsandaircraftoperatorsTheEUETScurrentlyoperatesinthe27MemberStatesoftheEU,Iceland,LiechtensteinandNorway,aswellasintheUnitedKingdomuntiltheendof2020.Asof1January2020,theEUETSisalsolinkedtotheSwisscarbonmarket(seechapter2.2).From2021,besidestheEUandEEA/EFTAcountries,theEUETSwillcoverelectricitygeneratinginstallationsinNorthernIreland.Itregulatesemissionsfromnearly11000powerplantsandmanufacturinginstallationsaswellasaround600aircraftoperatorsflyingfrom/toEEA'sairports.Itcoversaround38%oftheEU'sGHGemissions.Inphase3oftheEUETS(2013-2020),thesectorswithstationaryinstallationsregulatedbytheEUETSareenergyintensiveindustries,includingpowerstationsandothercombustionplantswith>20MWthermalratedinput(excepthazardousormunicipalwasteinstallations),oilrefineries,cokeovens,ironandsteel,cementclinker,glass,lime,bricks,ceramics,pulp,paperandboard,aluminium,petrochemicals,ammonia,nitric,adipic,glyoxalandglyoxylicacidproduction,CO2capture,transportinpipelinesandgeologicalstorageofCO2.TheaviationscopeoftheEUETSwaslimitedtoflightswithintheEuropeanEconomicArea(EEA)intheperiod2013-2016,tosustainmomentumintheInternationalCivilAviationOrganization(ICAO)foraninternationalagreementtocontrolgreenhousegasemissionsfromaviation.TocontinuetopromotemomentumandtofacilitatetheoperationalisationoftheICAO’sCarbonOffsettingandReductionSchemeforInternationalAviation(CORSIA)andtofacilitatethescheme’soperationalisation,in2017thelimitationtointra-EEAflightswasprolongeduntil2023(seechapter4).TheEUETScoverscarbondioxide(CO2)emissions,nitrousoxide(N2O)emissionsfromnitric,adipic,glyoxylicacidandglyoxalproduction,andperfluorocarbons(PFC)emissionsfromaluminiumproduction.EventhoughparticipationintheEUETSismandatory,insomesectorsonlyinstallationsaboveacertainsizeareincluded.Moreover,participatingcountriescanexcludesmallinstallations(emittinglessthan25000tonnesofCO2e)fromthesystemifalternativeandequivalentmeasuresareinplace.Inphase4(2021-2030),verysmallemitters(withreportedemissionsoflessthan2500tonnesofCO2einthelastthreeyears)canbeexcludedfromtheEUETSsubjecttotheexistenceofsimplifiedmonitoringarrangementstoassessthequantityoftheiremissions.ParticipatingcountriesmayalsoaddmoresectorsandGHGstotheEUETS(thesocalled“opt-in”).Informationonphases1and2oftheEUETScanbefoundhere:https://ec.europa.eu/clima/policies/ets/pre2013_en7AccordingtotheArticle21reportssubmittedbyparticipatingcountries13in2020,therewereatotalof10569installationsin2019coveredbytheETS,withthenecessaryETSpermit.EmissionsfrombiomassusedbyETSinstallationsincreasedby4%in2019comparedtothepreviousyear,whileemissionsfromcoaldeclinedby19%,contributingtothesignificant15%reductioninemissionsfromthepowersector.Regardingonlyfuels,andaswasthecaseinpreviousyears,thefuelscombustedwithintheEUETSin2019remainedoverwhelminglyfossil.However,29countriesalsoreportedbiomassuseinconnectionwith2197installations(20.8%ofallinstallations).ThehighestpercentageofemissionsfrombiomasscomparedtoemissionscoveredbytheEUETSpercountrywasreportedbyLithuania:68%.Twocountries(LIandMT)didnotreportanyuseofbiomass.Totalemissionsfrombiomassin2019amountedtoapproximately170milliontonnesCO2(11%comparedtoETSreportedemissions),aclearincreasefromthe145milliontonnesCO2in2018(8%comparedtoETSreportedemissions).Outofthese,99.2%werezero-rated14.In2019,forthefirsttimeasmallamountofbiofuelwasreportedtobeused.Twoaircraftoperators(oneinDEandoneinSE)reportedcovering0.01%ofthe2019ETSaviationemissions.Withintheinstallationcategoriesbasedonannualemissions15,thedatafor2019showsthat,asinpreviousyears,72%ofinstallationsarecategoryA,21%arecategoryBand7%arecategoryC.6053installationswerereportedas“installationswithlowemissions”16(57%ofthetotal).RegardingEUETSactivitiesadditionallylistedfornon-CO2emissions,permitsarereportedasissuedin13countriesforprimaryaluminiumandperfluorocarbons(PFCs)(DE,FR,EL,ES,IS,IT,NL,NO,RO,SE,SI,SKandUK),whilefornitricacidproductionandN2Opermitsarereportedasissuedin21countries(allexceptCY,DK,EE,IE,IS,LI,LU,LV,MTandSI).TheotherN2Osectors–adipicacidproductionandglyoxalandglyoxylicacidproductionarereportedinthree(DE,FRandIT)andtwo(DEandFR)countries,respectively.OnlyNorwayandAustriadeclaredCO2captureandstorageactivities.Aslastyear,sevencountries(ES,FR,HR,IS,IT,SIandUK)havemadeuseofthepossibilitytoexcludesmallemittersfromtheEUETSinlinewithArticle27oftheEUETSDirective.Emissionsexcludedfor2019amountedto3.81milliontonnesCO2(some0.25%oftotalstationaryEUETSemissions,comparedto0.17%theyearbefore).13“Article21reports”refertoreportssubmittedbyMemberStatesbasedonrequirementsintheArticle21oftheETSDirective,Inthiscontext,"participatingcountries"orsimply"countries"includethe27EUMemberStates,theUK,andtheEEAcountries(Iceland,NorwayandLiechtenstein).14IntheEUETS,theemissionfactorofbiomassissettozeroifthedefinitionoftheterm“biomass”isfulfilledand–wherebiofuelsorbio-liquidsareconcerned–thesustainabilitycriteriapursuanttoArticle17(1)ofDirective2009/28/EC(theRenewableEnergyDirective)aremet.Noallowanceshavetobesurrenderedforzero-ratedemissions.Inthe2020Article21submissions,twoparticipatingcountries(LVandDK)onlyreportedtheenergycontentofzero-ratedbiomass,andnottheactualemissions.Theiremissionsarethereforenottakenintoaccountinthetotalprovided.15CategoryCinstallationsemitmorethan500000tonnesCO2eperyear,categoryBinstallationsemitbetween500000and50000tonnesCO2eperyear,andcategoryAinstallationsemitlessthan50000tonnesCO2eperyear.SeeCommissionRegulation(EU)No601/2012of21June2012onthemonitoringandreportingofGHGemissionspursuanttoDirective2003/87/ECoftheEuropeanParliamentandoftheCouncil,OJL181,12.7.2012,p.3016Installationswithlowemissionsareasub-setwithincategoryAinstallations,whichemitlessthan25000tonnesCO2eperyear(seeArticle47(2)ofRegulation(EU)No601/2012).8AccordingtoArticle21submissionsin2020,justasinpreviousyears,eightcountries(BE,DK,FR,HR,HU,LI,LTandNL)havetakenadvantageoftheprovisionofferedbyArticle13oftheMonitoringandReportingRegulation(MRR)17toallowuseofsimplifiedmonitoringplansinlowriskcasesforstationaryinstallations.Inthecaseofaircraftoperatorswithlowemissions,twocountriesreporteduseofthisprovisionfor2019(BEandIS).In2019,611aircraftoperatorswerereportedashavingamonitoringplan(7%fewerthanin2018).50%(308)ofthereportedoperatorswerecommercial,whiletheother50%(303)werenon-commercial.18Atotalof262(43%)qualifiedassmallemitters(comparedto287(44%)in2018).2.2UnionRegistryandtheEuropeanUnionTransactionLog(EUTL)TheUnionRegistry,theEUTL,andthepublicwebsiteoftheEUTLwerefullyoperationalfor365daysaroundtheclockthroughout2019,withonlyminorinterruptionsaddinguptoatotalofapproximately7hoursduetotechnicalupgrades.From1January2019,theCommissionsuspended19allprocessesfortheUKrelatingtofreeallocation,auctioningandtheexchangeofinternationalcredits,inaccordancewiththe17CommissionRegulation(EU)No601/2012of21June2012onthemonitoringandreportingofgreenhousegasemissionspursuanttoDirective2003/87/ECoftheEuropeanParliamentandoftheCouncil,OJL181,12.7.2012,p.30.18Anexampleofacommercialaircraftoperatorwouldbeapassengerairlineprovidingservicestothegeneralpublic.Anexampleofanon-commercialaircraftoperatorwouldbeaprivatelyownedaircraft.19CommissionDecisionC(2018)8707of17.12.2018oninstructingthecentraladministratortotemporarilysuspendtheacceptancebytheEuropeanUnionTransactionLogofrelevantprocessesfortheUnitedKingdomrelatingtofreeallocation,auctioningandtheexchangeofinternationalcreditsTheUnionRegistryandtheEuropeanUnionTransactionLog(EUTL)tracktheownershipofgeneralandaviationallowancesbyrecordingtheamountsownedintheaccountsandthetransactionsbetweenaccounts.Furthermore,thesesystemsregistertheemissionsofstationaryinstallationsandaircraftoperators,andthecompliancewithobligationsstemmingfromtheseemissions.BothsystemsareoperatedandmaintainedbytheCommission,whereasthenationalregistryadministratorsintheparticipatingcountriesremainthepointofcontactfortheholdersandrepresentativesoftheaccounts(companiesandnaturalpersons).WhiletheUnionRegistryholdsaccountsandregisterscomplianceinformation,theEUTLautomaticallychecks,recordsandauthorisesalltransactionsbetweenaccounts,thusensuringthatalltransferscomplywithEUETSrules.ThedatarecordedintheUnionRegistryandtheEUTLisanimportantsourceofinformationforvarioustypesofETSreporting,suchasthecalculationoftheMarketStabilityReservesurplusindicator(seechapter3.3)andthereportingdonebytheEuropeanEnvironmentAgency.TheEUTLalsoprovidesfortransparencyintheEUETSbypublishinginformationonthecomplianceofstationaryinstallationsandaircraftoperatorswithETSprovisionsandonthetransactionsbetweenaccountsTheinformationpublishedbytheEUTLcanbefoundat:https://ec.europa.eu/clima/ets/9safeguardmeasures20toprotecttheenvironmentalintegrityoftheEUETSincaseswhereEUlawceasestoapplytoaMemberStatewithdrawingfromtheEU.Thissuspensionwasautomaticallyliftedon1February2020,whentheAgreementonthewithdrawaloftheUnitedKingdom21fromtheEUenteredintoforceandensuredthatUKinstallationsandaircraftoperatorswouldfollowthroughwiththeircomplianceobligationsstemmingfrom2019and2020emissions.TheagreementonlinkingtheEUETSwithSwitzerland’sETS22enteredintoforceon1January2020.Tooperationalisethelinkbetweentheemissionstradingsystems,thepartiesagreedtoestablishaprovisionalsolution23forlinkingthetworegistriesandenablingthetransferofallowancesbetweenthem.Theprovisionalsolutionbecameoperationalon21September2020.InMarch2019,CommissionDelegatedRegulation(EU)2019/112224wasadopted,settingtherulesforthefunctioningoftheUnionRegistryin2021-2030.ThetechnicalimplementationofthenewrulesintroducedbytheRegulationisongoingandthenewfunctionalitieswillbeavailableintheUnionRegistryasof1January2021.3.FUNCTIONINGOFTHECARBONMARKETIN2019ThischapterprovidesinformationonaspectsrelatingtothesupplyanddemandofallowancesintheEUETS.Thesupplysidesectionincludesinformationonthecap,freeallocation,auctioning,thederogationfromfullauctioningforelectricityandheatproduction(Article10c),theNER300programmeandpreparationsfortheInnovationandModernisationFunds,achapteronindirectcarboncostcompensationschemes,andtheuseofinternationalcredits.Onthedemandside,informationisprovidedonthequantityofverifiedemissions.ThebalancingofthedifferentelementsofthesupplyanddemandofallowancesinthecarbonmarketviatheMarketStabilityReserve(MSR)isthenpresented.20CommissionRegulation(EU)2018/208of12February2018amendingRegulation(EU)No389/2013establishingaUnionRegistry,OJL39,13.02.2018,p.3.21AgreementonthewithdrawaloftheUnitedKingdomofGreatBritainandNorthernIrelandfromtheEuropeanUnionandtheEuropeanAtomicEnergyCommunity(2019/C384I/01),OJC384I,12.11.2019,p.1.22AgreementbetweentheEuropeanUnionandtheSwissConfederationonthelinkingoftheirgreenhousegasemissionstradingsystems,OJL322,7.12.2017,p.3.23https://ec.europa.eu/clima/sites/clima/files/ets/markets/docs/decision_201902_swiss_ets_linking.pdf24CommissionDelegatedRegulation(EU)2019/1122of12March2019supplementingDirective2003/87/ECoftheEuropeanParliamentandoftheCouncilasregardsthefunctioningoftheUnionRegistry,OJL177,2.7.2019,p.3.103.1.Supply:allowancesputincirculation3.1.1.CapTable1showsthefiguresforthecapforstationaryinstallationsandthenumberofaviationallowancesputannuallyintocirculation25foreachyearduringphase3oftheEUETS.25Thenumberofaviationallowancesputintocirculationsince2013istheresultofabottom-upapproachstartingfromfreeallocation(determinedonthebasisofactivity-basedbenchmarksforoperators'activitywithintheEEA).Thenumberofallowancesauctionedisthenderivedbasedonthefactthatfreeallocation(includingaspecialreserveforlaterdistributiontofast-growingaircraftoperatorsandnewentrants)shouldbe85%ofthetotalandauctioningshouldbe15%.ThecapisthemaximumabsolutequantityofGHGs,whichmaybeemittedbycoveredentitiestoensuretheemissionreductiontargetismetandthatitcorrespondstothenumberofallowancesputincirculationoveratradingperiod.AcommonEU-widecapappliesfortheentireEUETS.The2013capforemissionsfromstationaryinstallationswassetat2084301856allowances.Thiscapdecreaseseachyearbyalinearreductionfactorof1.74%oftheaveragetotalquantityofallowancesissuedannuallyin2008-2012,thusensuringthatthemaximumnumberofallowancesthatcanbeusedbystationaryinstallationswillbe21%lowerin2020thanin2005.Theaviationsectorcapwasoriginallysetat210349264aviationallowancesperyear,whichis5%belowtheaverageannuallevelofaviationemissionsin2004-2006.Itincreasedby116524aviationallowanceson1January2014toaccommodateCroatiajoiningtheEUETS.Thiscapwasmeanttoreflectthe2008legislationwhichincludedallflightsfrom,toandwithintheEEAintheEUETS.However,thescopeoftheEUETSwastemporarilylimitedtoflightswithintheEEAbetween2013and2016tosupportthedevelopmentofaglobalmeasurebytheICAOtostabiliseemissionsfrominternationalaviationat2020levels.Therefore,thenumberofaviationallowancesputintocirculationin2013-2016wassignificantlylowerthantheoriginalcap.In2017,tosupportthedevelopmentoftheICAOglobalmeasure,thelimitationtointra-EEAflightswasprolongeduntil2023(seechapter4).Inphase4oftheEUETS(2021–2030),thecapforbothstationaryinstallationsandaviationwilldecreasebyalinearreductionfactorof2.2%.Directive2008/101/ECoftheEuropeanParliamentandoftheCouncilof19November2008,amendingDirective2003/87/ECsoastoincludeaviationactivitiesintheschemeforgreenhousegasemissionallowancetradingwithintheCommunity11Table1:EUETScap2013-2020YearAnnualcap(installations)Annualaviationallowancesputintocirculation26201320843018563245529620142046037610418668342015200777336450669024201619695091183887931620171931244873387116512018189298062738909585201918547163813894656220201816452135On1February2020,theAgreementonthewithdrawaloftheUnitedKingdomfromtheEuropeanUnion27enteredintoforce.TheETSDirectiveappliestotheUKuntiltheendof31December2020,andpursuanttotheProtocolofIrelandandNorthernIreland28,electricitygenerationlocatedinNorthernIreland(NI)remainsintheEUETSwiththerelevantrightsandobligations.TheCommissiontookthesedevelopmentsintoaccountbyadoptingaCommissionDecision29ontheadjustedUnion-widequantityofallowanceson16November2020.Figure1summarisesthecapreductionfollowingtheincreaseofthelinearreductionfactorto2.2%asof2021,whilealsovisualisingtheroleoftheMarketStabilityReserve(MSR)feedandthebackloadingcontributionstotheMSR(seealsochapter3.3).26Theupdatedfiguresincludeexchangesofinternationalcreditsinadditiontothefreeallocationandauctionedamounts.27https://ec.europa.eu/info/european-union-and-united-kingdom-forging-new-partnership/eu-uk-withdrawal-agreement_en28https://ec.europa.eu/info/european-union-and-united-kingdom-forging-new-partnership/eu-uk-withdrawal-agreement/protocol-ireland-and-northern-ireland_en29CommissionDecisionC/2020/770412Figure1:CapreductionwithincreaseoftheLinearReductionFactorto2.2%asof20213030Thecapfor2021-2030reflectsthepost-BREXITpublicationoftheEUETStotalvolumeofallowancesviaCommissionDecisionC/2020/7704.Theimpactoftheincreased2030emissionreductiontargetsproposedbytheCommissionon17September2020intheClimateTargetPlanontheETSlegislationwillbeassessedintheupcomingclimatelegislationreviewexercise.133.1.2.Issuedallowances3.1.2.1.FreeallocationInphase3,about43%ofthetotalquantityofavailableallowancesisallocatedforfree,whiletheshareofallowancestobeauctionedbyMemberStatesamountstosome57%.TheinitialNewEntrantsReserve(NER),afterdeducting300millionallowancesfortheNER300programmethataimstosupportinnovation,held480.2millionallowances.UntilJune2020,171.1millionallowanceshavebeenreservedfor1089installationsfortheentiretyofphase3.TheremainingNERamountsto309.1millionallowances.Whileitisexpectedthattherewillbeallocationchangesuntiltheendofphase3,asignificantnumberoftheseallowanceswillremainunallocated.Attheendofphase3,theunallocatedallowancesfromAlthoughinphase3oftheEUETS,auctioningisthedefaultallocationmethod,asignificantamountofallowanceshasbeenallocatedforfreetoindustrialinstallationstoaddresstheriskofcarbonleakage(asituationwherecompaniestransferproductiontothirdcountrieswithlaxerconstraintsonGHGemissions,whichmayleadtoanincreaseintheirtotalemissions).Thefollowingprinciplesapply:Electricityproductionisnoteligibleforfreeallowances;FreeallowancestomanufacturingindustryaredistributedaccordingtoEU-wideharmonisedrules;ThefreeallocationisbasedonperformancebenchmarkstostrengthentheincentivesforGHGemissionreductionsandinnovationandrewardthemostefficientinstallations;AnEU-wideNewEntrants'Reserve(NER)fornewindustrialinstallationsandinstallationssignificantlyincreasingcapacityhasbeenestablished,equivalentto5%ofthetotalamountofallowancesforphase3.Thesectorsandsub-sectorsdeemedtobeexposedtoasignificantriskofcarbonleakageareplacedonacarbonleakagelist.Whileoriginallythelistcoveredtheperiod2015-2019,therevisedEUETSDirectiveprolongeditsvalidityuntil31December2020.Inphase3,asthedemandforfreeallocationexceededtheamountavailable,theallocationforallinstallationsundertheEUETSwasreducedbythesamepercentagethroughtheapplicationofa"cross-sectoralcorrectionfactor(CSCF)".In2017,theoriginalCSFCvalueswererevised.Thecurrentcarbonleakagelistcanbefoundhere:http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32014D0746CommissionDecision2013/448/EU,OJL240,7.9.2013,p.27.CommissionDecision2017/126/EU,OJL19,25.1.2017,p.93.14thephase3NERwillbeplacedintheMarketStabilityReserve(MSR),outofwhich200millionallowanceswillbeplacedintheNERforphase4.UntiltheendofJune2020,theoriginallyapprovedfreeallocationuptotheendofphase3hasbeenreducedbyaround570millionallowancesduetoinstallationsthathaveclosedorreducedtheirproductionorproductioncapacity.Table2:Thenumberofallowances(inmillions)allocatedtoindustryforfreefrom2013toJune20203120132014201520162017201820192020Freeallocation32(EU27+UK+EEAEFTAstates)903.0874.8847.6821.3796.2771.9748.133724.8Allocationfromthenewentrantsreserve(greenfieldinvestmentsandcapacityincreases)11.715.218.922.724.426.026.525.4Freeallowancesremainingunallocatedduetoclosuresorchangesinproductionorproductioncapacity40.659.573.170.579.183.479.884.6Topreventtheriskofcarbonleakage,freeallocationwillcontinueafter2020,basedonupdatedbenchmarkvaluesderivedwithreferencetotheperformanceofthe10%mostefficientinstallationsintheEU.InFebruary2019,theCommissionadoptedthecarbonleakagelistfor2021-203034,whichwillbevalidfortheentiretyofthatperiod.Thislistspecifieswhichindustrialsectorsbenefitfromahighershareoffreeallocation.Toreflectprogressintechnologyandinnovation,thebenchmarkvalueswillbeupdatedfor2021-2025and2026-2030onthebasisofrealdata.Thedelegatedactonrevisingthefree31WhilefiguresinpreviousyearswerebasedonnotificationsbyMemberStatesuntiltheendofJuneoftherespectiveyear,inthisyear’sreporttheyarebasedontheUnionRegistrywithacut-offdate30June2020.ThisnewapproachwaschosentomoreaccuratelyreflectallocationsastheyoccurandarerecordedintheUnionRegistry.32Initialamount,beforeapplicationofthereductionsmentionedbelow.33AllocationfortheUK(48.0millionallowancesofthetotalfor2019)thatwassuspendedin2019duetothesafeguardmeasurestoprotecttheenvironmentalintegrityoftheEUETSresumedin2020.34CommissionDelegatedDecision(EU)2019/708,https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2019:120:FULL&from=EN15allocationrulesfor2021-2030wasadoptedinDecember201835.ItisexpectedthattheimplementingRegulationonrevisedbenchmarkvaluestobeappliedintheperiod2021–2025willbeadoptedbytheendof2020(seeAppendix6totheAnnex).Inphase4,allocationstoindividualinstallationswillbeadjustedinatimelymannertoreflectsignificantincreasesanddecreasesinoperation.Topreventmanipulationandabuseoftheallocationadjustmentsystemandtoavoidanyundueadministrativeburden,theCommissionadoptedanimplementingactdefiningfurtherarrangementsfortheadjustmentsinOctober201936(seeAppendix6totheAnnex).3.1.2.2.AuctioningofallowancesThe2019auctionstookplacethroughtheauctionplatformEEX,providingauctionsasthecommonauctionplatformforthe25MemberStatesparticipatinginajointprocurementprocedure,forPoland,whichopted-outfromthejointprocurementprocedurebuthasnotappointedaseparateauctionplatform,andforGermanyasan'opt-out'auctionplatform.EEXstartedauctioningforIceland,LiechtensteinandNorwayinJune2019,aftertheEEAAgreementwasamendedtoallowthemtoparticipateintheJointProcurementAgreementforthecommonauctionplatform.Inagreementwiththethreecountries,theauctionvolumesfor2013-2018arespreadovertheyears2019and2020toensureastableandpredictablesupplyofallowancestothemarket.InaccordancewiththesafeguardmeasuresadoptedtoprotecttheenvironmentalintegrityoftheEUETS37,noallowanceswereauctionedin2019onbehalfoftheUnitedKingdom.WiththeentryintoforceoftheWithdrawalAgreementon1February2020,theauctionsfortheUKrestartedon4March2020andtakeplacethroughtheauctionplatformICE.Thequantityincludedinthe2020UKauctioncalendaramountstothecombinedvolumestobeauctionedforthecalendaryears2019and2020.35CommissionDelegatedRegulation(EU)2019/331,https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2019:059:FULL&from=EN36CommissionImplementingRegulation(EU)2019/1842,https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L.2019.282.01.0020.01.ENG37CommissionDecisionC(2018)8707of17.12.2018oninstructingthecentraladministratortotemporarilysuspendtheacceptancebytheEuropeanUnionTransactionLogofrelevantprocessesfortheUnitedKingdomrelatingtofreeallocation,auctioningandtheexchangeofinternationalcredits.Auctioningisthedefaultmodeforallocatingallowances.PrimaryauctionsaregovernedbytheAuctioningRegulationwhichspecifiesthetiming,administrationandotheraspectsofhowauctionsshouldtakeplacetoensureanopen,transparent,harmonisedandnon-discriminatoryprocess.CommissionRegulation(EU)No1031/2010of12November2010onthetiming,administrationandotheraspectsofauctioningofgreenhousegasemissionallowancespursuanttoDirective2003/87/ECoftheEuropeanParliamentandoftheCouncilestablishingaschemeforgreenhousegasemissionallowancestradingwithintheCommunity,OJL302,18.11.2010,p.1.16Morethan1700auctionshadbeenheldby30June2020.Table3providesanoverviewofthevolumesofallowances38auctionedbytheEEXandICEupto30June2020,includingearlyauctions39ofgeneralallowances.Table3:Totalvolumeofphase3allowancesauctionedinfrom2012to30June202040YearGeneralallowancesAviationallowances20128970150025000002013808146500020145283995009278000201563272550016390500201671528950059975002017951195500473050020189157500005601500201958854000055025002020(until30June2020)3604460003371500Source:EEXTheenteringintooperationoftheMarketStabilityReserve(MSR)inJanuary2019hassubstantiallyloweredtheauctionsupply,ascanbeseeninTable3.Theauctionsweregenerallyconductedsmoothlyandtheauctionclearingpricesweregenerallycloselyalignedwithsecondarymarketprices.BetweenJanuary2019andJune2020,threeauctionswerecancelleddueeithertothereservepricenotbeingmetorduetothetotalbidvolumefallingshortoftheauctionedvolume,inlinewiththerelevantrulesintheAuctioningRegulation.Withthesethreeauctions,atotaloffifteenauctionswerecancelledoutofthemorethan1700auctionsheldsincelate2012.Anoverviewoftheauctionclearingpricesfrom2013to30June2020isprovidedinFigure2:38ThevolumesofgeneralallowanceshavebeendeterminedtakingintoaccountDecision1359/2013/EU.ThevolumesofaviationallowanceshavebeendeterminedtakingintoaccountDecisionNo377/2013/EUandRegulation(EU)No421/2014.39Earlyauctionsofallowancesinphase3wereperformedin2012inviewofthewidespreadcommercialpracticeintheelectricitysectorofsellingelectricityonaforwardbasisandpurchasingtherequiredinputs(includingallowances)whentheyselltheiroutput.40ThetableincludesauctionvolumesforEU27+UK+EEA.17Figure2:Clearingpriceforgeneralallowancesauctionsfrom2013to30June2020___AuctionClearingPriceSource:EEXThenumberofparticipantsintheauctionsofgeneralallowancesfrom2013to30June2020isprovidedinAppendix2.Theauctionplatformspublishdetailedresultsofeachauctioninatimelymannerondedicatedwebsites.Furtherinformationontheperformanceoftheauctions,includingontheparticipation,coverratiosandprices,canbefoundintheMemberStates'reportspublishedontheCommission'swebsite41.ThetotalrevenuesgeneratedbyMemberStates,theUKandEEAcountriesfromtheauctionsbetween2012and30June2020exceededEUR57billion(seeTables2.1and2.2inAppendix2).In2019alone,thegeneratedtotalrevenueswereaboveEUR14billion,whileinthefirsthalfof2020theyreachedEUR7.9billion.TheEUETSDirectiveprovidesthatatleast50%ofauctionrevenues,includingallrevenuesgeneratedfromallowancesdistributedforthepurposesofsolidarityandgrowth,andallrevenuesfromallowancesissuedinrespectofaviation42,shouldbeusedbyMemberStatesforclimateandenergyrelatedpurposes.AccordingtotheinformationsubmittedtotheCommissionbytheMemberStates,MemberStatesspentorplannedtospendatotalof77%oftheserevenuesforspecifiedclimateandenergyrelatedpurposesin2019.Intheperiod2013-2019,about78%ofauctionrevenueswerespentforsuchpurposes.Whileasmallshareofthisamount(about1.9billionor4%oftotalrevenuesinthisperiod)wasspentoninternationalclimateandenergypurposes,the41http://ec.europa.eu/clima/policies/ets/auctioning/documentation_en.htm42Article3d(4)ofDirective2003/87/EC.18majorityofauctionrevenuesinphase3werespentondomesticclimateandenergypurposes(mostlyonrenewableenergy,energyefficiencyandsustainabletransport).43In2019,theAuctioningRegulationwasamended44toestablishtheframeworkfortheauctioningofallowancesandthemanagementofprojectsundertheInnovationFundandtheModernisationFundinphase4.TheamendmentalsoreflectstheclassificationofEUETSallowancesasfinancialinstrumentsunderDirective2014/65/EUonmarketsinfinancialinstruments(MiFID2).InMay2020,theCommissionpublishedaninvitation45totheprocurementofthethirdcommonauctionplatformoftheEUETS,whichwillauctionallowancesonbehalfof25MemberStatesandthe3EEA-EFTAStates,aswellastheallowancesfortheInnovationFundandtheModernisationFund.Theauctionsatthethirdcommonauctionplatformareexpectedtostartinthebeginningof2021.3.1.2.3.DerogationfromfullauctioningforelectricityandheatproductionThetotalvalueofreportedinvestmentsupportduringtheyears2009-2019isaroundEUR13.1billion.About83%ofthisamountwasdedicatedtoupgradingandretrofittinginfrastructure,whiletherestoftheinvestmentswereinthediversificationoftheenergymixandincleantechnologies.43MoredetailedinformationontheuseofauctioningrevenuescanbefoundintheEUClimateActionProgressReport2020.44CommissionDelegatedRegulation(EU)of28.8.2019amendingRegulation(EU)No1031/2010toaligntheauctioningofallowanceswiththeEUETSrulesfortheperiod2021to2030andwiththeclassificationofallowancesasfinancialinstrumentspursuanttoDirective2014/65/EUoftheEuropeanParliamentandoftheCouncil45https://etendering.ted.europa.eu/cft/cft-display.html?cftId=6456Article10coftheEUETSDirectivederogatesfromthegeneralruleofauctioninginordertosupportinvestmentsinthemodernisationoftheelectricitysectorincertainlowerincomeEUMemberStates.EightoutofteneligibleMemberStatesmadeuseofthisderogationinphase3andallocatetoelectricitygeneratorsanumberoffreeallowancesprovidedcorrespondinginvestmentswerecarriedout.ThefreeallowancesunderArticle10caredeductedfromthequantitythattherespectiveMemberStatewouldotherwiseauction.ThegeneralprincipleisthatelectricitygeneratorscanreceivefreeallowancesofanequivalentvaluetotheinvestmentstheycarryoutfromtheirNationalInvestmentPlans,ortopaymentsmadeintoanationalfundthroughwhichsuchinvestmentsarefinanced,basedonnationalrulesfortheimplementationofthederogation.AsthefreeallocationofallowancestoelectricitygeneratorsunderArticle10coftheETSDirectivewouldinprincipleinvolveStateaid,thenationalschemesfortheimplementationoftheArticle10cderogationhavebeenclearedunderstateaidrulesandaresubjecttotherequirementsoftheStateAidGuidelines.Allocationtakesplaceonthebasisofannualreportingto,andauthorisationby,theCommission.TransitionalfreeallocationunderArticle10cwillcontinuetobeavailableinphase4butwithenhancedtransparencyprovisionsandwiththeoptionforeligibleMemberStatestouseallorpartoftheirArticle10callocationtosupportinvestmentswithintheframeworkoftheModernisationFund(seechapter3.1.2.6).BasedoninformationsubmittedtotheCommissionbyMemberStates,useofArticle10cwillbelimitedinthenextphase,withonlyBulgaria,Romania,andHungaryoptingtoimplementthederogation.TheothereligibleMemberStates,includingPolandandCzechia,whichhadthehighestvolumesoftransitionalfreeallocationinphase3,optednottousethederogationanylonger.Inphase3,Bulgaria,Cyprus,Czechia,Estonia,Hungary,Latvia,Lithuania,Malta,PolandandRomaniawereeligibleforthederogation.MaltaandLatviadecidednottomakeuseofit.GuidelinesoncertainStateaidmeasuresinthecontextofthegreenhousegasemissionallowancestradingschemepost2012,OJC158,05.06.2012,p.4.Inphase4,Bulgaria,Croatia,Czechia,Estonia,Hungary,Latvia,Lithuania,Poland,Slovakia,andRomaniaareeligibleforthederogation.19Thenumberofallowancesallocatedforfreetoelectricitygeneratorsin2019isindicatedinTable1.1,Appendix1totheAnnex,whilethemaximumnumberofallowancesperyearisindicatedinTable1.2ofAppendix1.Allowancesremainingunallocatedfromphase3mayeitherbeauctionedor,followingtheprovisionsoftheEUETSDirective,maybeallocatedin2021-2030toArticle10cinvestmentsselectedthroughcompetitivebiddingortotheModernisationFund.WhileHungaryoptedtotransferitsunallocated10callowancesfromphase3toits10cvolumeinphase4,mostotherMemberStatesdecidedtoauctiontheirremainingallowances.Romaniamadeuseofbothoptions,transferringpartofitsunallocatedallowancestophase4,andauctioningpartofit.Figure3showsthenumberof10callowancesthatwereallocatedfortheperiod2013-2019perMemberState.Figure3:NumberofallowancesallocatedforfreepursuanttoArticle10c46Source:DGClimateActionFigure4showstheextenttowhich10callowancesfromeachallocationyearofphase3havebeenallocated,addedtotheauctions,orremainunused.46Thenumberof10callowancesincludedinthisfigurecanincludeallowancesissuedwithadelayforpreviousyears.Inthiscase,therelevantamountsperyeararereflectedintheEUTL.20Figure4:Distributionofallowances(allocated,auctioned,remainingunused)47Source:DGClimateActionTable4showsthenumberofunused10callowanceswhichhavebeenauctionedintheperiod2013-2020,aswellasthenumberofallowancesremainingunusedafterallocationyear2019thatwilleitherbeauctionedin2021,transferredforallocationunderArticle10cinphase4,ortransferredtotheModernisationFund.Table4:Treatmentoftheunused10callowancesfromallocationyears2013-201948MemberStateNumberof10callowanceswhichhavebeenauctioned(inmillions)Numberof10callowancesremainingunused(inmillions)BG9.80.5CY0.00.0CZ0.40.0EE2.90.0LT1.20.1PL105.334.7RO15.43.6HU00.9Total135.039.7Source:DGClimateActionThenumberofunallocatedallowancesthathavebeenauctioned(orplannedforauctioning)byMemberStatesundertheArticle10cderogationfortheperiod2013-2021isindicatedinTable1.3inAppendix1totheAnnex.47Thefiguresincludeamountstoauctionuptoandincludingthe2020auctioningcalendar.48Thefiguesincludeamountstoauctionuptoandincludingthe2020auctioncalendar(fromallocationyears2013-2019).213.1.2.4.NER300programmeAsaresultofthetwocallsforproposalsoftheNER300programme,38RESprojectsand1CCSprojectwereawardedin20EUMemberStates,amountingtoEUR2.1billion.By31December2019,9projectsareoperational:bionergyprojectVerbiostrawinGermany,on-shorewindprojectsWindparkBlaikeninSwedenandWindparkHandalminAustria,offshorewindprojectsVejaMateandNordseeOneinGermany,smartgridprojectPugliaActiveNetworkinItaly,floatingoff-shorewindprojectsVertimedinFranceandWindfloatinPortugal,aswellastheconcentratedsolarpowerprojectMinosinGreece.Oneproject,theItalianbionergyBEST,isconsideredcompleted.Anotherthreeprojectsfromthesecondcallareadvancingintheirpreparationstoenterintooperationby30June2021.GiventhechallengingeconomicandpolicycontextsincetheNER300programmewasestablished,22projectshavenotbeenabletoraisesufficientadditionalfinancialsupportandhavebeenwithdrawn,releasingatotalofEUR1.455billion.Fourmoreprojectsareundervariousstagesofdevelopment.TheamendedNER300Decision49allowedforthere-investmentofthereleasedfundsfromthecancelledprojectsofthefirstcall(EUR708.7millionsofar)inexistingfinancialinstruments-theInnovFinEnergyDemonstrationProjects(EDP)andtheConnectingEuropeFacilityDebtInstrument(CEFDI),bothmanagedbytheEuropeanInvestmentBank.ThiswillallowmaximisingthebenefitsoftheNER300programmeandleveragingadditionalprivateinvestmentsinlow-carboninnovation.Intheperiodcoveredbythereport,twonewprojectshavebeenselectedtobenefitfromtheunspentfundsoftheNER300undertheInnovFinEDP,withthesupportamountingtosomeEUR95million(seeAppendix8totheAnnex).Projectdevelopmentassistance(PDA)undertheInnovFininstrumentisalsoavailabletoprojectpromoterstoincreasethematurityoftheirprojects.Recently,threeclimateprojectsbenefitedfromEUR692.000ofPDA-financing,backedbytheNER300undisbursedfunds.Theseprojects,inSweden,ItalyandtheNetherlands,addressclimatechangebydevelopinginnovative,first-of-a-kinddemonstrationplants(seeAppendix8totheAnnex)Finally,supportofsomeEUR34millionfromundisbursedNER300fundswasawardedundertheCEFDItothreeinnovativecleantransportprojectsthatarelocatedinItalyandGermany(seeAppendix8totheAnnex).49CommissionDecision(EU)2017/2172of20November2017amendingDecision2010/670/EUasregardsthedeploymentofnon-disbursedrevenuesfromthefirstroundofcallsforproposals.TheNER300isalarge-scalefundingprogrammeforinnovativelow-carbonenergydemonstrationprojects.Itisaimedatdemonstratingenvironmentallysafecarboncaptureandstorage(CCS)andinnovativerenewableenergy(RES)technologiesonacommercialscalewithintheEU.TheNER300wasfundedfromthemonetisationof300millionemissionallowancesfromtheNER.ThefundswereawardedtoprojectsselectedthroughtworoundsofcallsforproposalsinDecember2012andJuly2014.22Thereleasedfundsfromthecancelledprojectsofthesecondcall(EUR746millionsofar)willbeaddedtotheresourcesavaiblefortheInnovationFund.Table5:NER300projectsawardedunderthefirstandsecondcallsforproposals501stCallforproposals2ndCallforproposalsProjectsinpreparation06Projectsunderstatusrevision10Projectsinoperation81Projectscompleted10Projectswithdrawn1012Total2019Source:DGClimateAction3.1.2.5.TheInnovationFundThefirstcallforproposals51undertheInnovationFundwaslaunchedinJuly2020.ThecallisopenforprojectsineligiblesectorsfromEUMemberStates,NorwayandIceland.ItwillprovidegrantfundingofEUR1billionintotaltolarge-scalecleantechnologyprojectswithcapitalcostsofaboveEUR7.5million.TheInnovationFundwillgivegrantsinaflexiblemanner,basedonproject-specificmilestones,andcansupportupto60%ofthecostslinkedtoinnovation.Grantsfromthefundcanbecombinedwithotherpublicfundinginitiatives,suchasStateaidorotherEUfundingprogrammes.Thefirstcallwillbefollowedbyregularcallsuntil2030,tohelpcompaniesinvestandbringtothemarketthebreakthroughcleantechnologysolutionsneededforEUclimateneutralityin2050.50InlinewithCommissionDecision2010/670/EU,projectsawardedunderthefirstcallhadtoreachfinalinvestmentdecisionbyend2016,whileprojectsawardedunderthesecondcallhadtodosobyendJune2018.51Thecallforproposalscanbeaccessedhere:https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/opportunities/topic-details/innovfund-lsc-2020-two-stageTheInnovationFundisoneofthetwolow-carbonfundscreatedbytheEUETSDirectivefor2021-2030.Itwillsupport,onacompetitivebasis,first-timemarketdevelopmentandcommercialscaledemonstrationofinnovativetechnologiesandbreakthroughinnovationinsectorscoveredbytheEUETS,includinginnovativerenewables,energyintensiveindustries,carboncapture,utilisationandstorage(CCUS),energystorage,aswellassubstituteproductsandcross-sectoralprojects.Itwillbefundedbytheauctioningof450millionallowancesandundisbursedrevenuesfromthesecondcalloftheNER300Programme.23Independentexternalevaluatorswillassesstheprojectsbasedonacomprehensivesetofcriteria:greenhousegasemissionavoidance,innovationpotential,thefinancial,technicalandoperationalmaturityoftheprojects,aswellastheirpotentialforscalingupandcostefficiency.Forprojectsthatarefoundpromising,butnotyetsufficientlymature,thecallforeseesabudgetofEUR8milliontoassistwithprojectdevelopment.ProjectscanapplyviatheEUFundingandTendersportal52.Thedeadlineforsubmissionofapplicationstothefirststageis29October2020.Applicantswillbeinformedabouttheresultsoftheevaluationandinvitedtosubmitafullapplicationorreceiveprojectdevelopmentassistanceinthefirstquarterof2021.Theinformationontheevaluationresultsfromthesecondstagewillbeprovidedinthefourthquarterof2021.Grantswillbeawardedattheendof2021.Furthermore,theCommissionisplanningtolaunchadedicatedcallforsmall-scaleprojectsbytheendof2020.3.1.2.6.TheModernisationFundTheModernisationFundisthesecondofthetwolow-carbonfundscreatedbytheEUETSDirectiveforphase4.Itwillsupportinvestmentsinmodernisingthepowersectorandwiderenergysystemsintenlower-incomeMemberStates.53Thefundwillbeoperationalasof2021.ThefinancialresourcesoftheModernisationFundaredistributedamongthebeneficiaryMemberStatesbasedonArticle10(d)andAnnexIIboftheETSDirective.Inaddition,Romania,Lithuania,Czechia,Croatia,Hungary,andSlovakiadecidedtotransfermoreallowancestotheirsharesoftheModernisationFund.Asaresult,almost650millionallowancesintotalareavailabletothefund.TheETSDirectivedefinesthepriorityareasforinvestment,namelygenerationanduseofelectricityfromrenewablesources,theimprovementofenergyefficiency(exceptfossilfuelsinstallations),energystorage,themodernisationofenergynetworks,andjusttransitionincarbon-dependentregions.Atleast70%oftheModernisationFundresourcesmustbespentonpriorityinvestments.Investmentsinnon-priorityareaswouldbesubjecttoadeeperassessmentbytheEuropeanInvestmentBank(EIB)andavotebyaninvestmentcommitteecomposedofMemberStates,theEIBandtheCommission.TheCommissionadoptedtheimplementingact54ontheoperationoftheModernisationFundinJuly2020.TheimplementingactestablishesaleanprocedurewherebeneficiaryMemberStatesareresponsiblefortheselection,financingandreportingofinvestments,andmust52https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/home53Bulgaria,Croatia,Czechia,Estonia,Hungary,Latvia,Lithuania,Poland,RomaniaandSlovakia54CommissionImplementingRegulation(EU)2020/1001,https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32020R100124complywithapplicableStateAidrules.TheCommissionwillberesponsibleforthedisbursementdecisions,followingtheassessmentbytheEIB.3.1.2.7.CompensationofindirectcarboncostsTodate,theCommissionhasapproved1455indirectcarboncostcompensationschemesin13MemberStates.InAugust2019,theCommissionapprovedanewschemeforPoland56.Polandisexpectedtostartcompensatingin2020forindirectcostsincurredin2019.ThesameholdsforaRomanianschemewhichwasapprovedbytheCommissioninMay202057.AnumberofotherMemberStateshaveindicatedtheirintentiontostartcompensatingforindirectcosts.TheEUETSDirectivedeterminesthatwithinthreemonthsoftheendofeachyear,MemberStatesthathaveanindirectcostcompensationschemeinplaceshouldmakeavailabletothepublic,inaneasilyaccessibleform,thetotalamountofcompensationprovidedandabreakdownperbenefittingsectorandsubsector.AsummaryofthedatapublishedbytheMemberStatesforcompensationpaidoutin2019ispresentedinTable6.SincePolandandRomaniadidnotcompensateforindirectcostsincurredin2018,theseMemberStatesarenotreflectedinthetable.55Inaddition,modificationshavebeenadoptedtotheFrenchandSpanishschemes.56https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_5385057https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_56403InadditiontoEU-wideharmonisedfreeallocationtocoverdirectcarboncosts,EUMemberStatesmaygrantStateaidtocompensatesomeelectro-intensiveindustriesforindirectcarboncosts,i.e.costsresultingfromincreasedelectricitypricesduetopowergeneratorspassingonthecostsofpurchasingallowancestoconsumers.Tominimizecompetitiondistortionsintheinternalmarket,increasetransparency,andpreservetheobjectiveoftheEUETStoachieveacost-effectivedecarbonisation,theCommissionadoptedtheEUETSStateAidGuidelines,whicharevaliduntilendof2020.TheGuidelinesdetermine,interalia,eligiblesectorsandmaximumamountsforcompensationofindirectcarboncosts.InviewoftheimminentexpirationofthecurrentGuidelines,theCommissionrevisedtheEUETSStateAidGuidelinesfor2021-2030.ThenewStateAidGuidelineswereadoptedon21September2020(seealsoAppendix6totheAnnex).GuidelinesoncertainStateaidmeasuresinthecontextofthegreenhousegasemissionallowancestradingschemepost2012,OJC158,05.06.2012,p.4GuidelinesoncertainStateaidmeasuresinthecontextofthesystemforgreenhousegasemissionallowancetradingpost2021,OJC317,25.09.2020,p.5–1925Table6:Indirectcarboncostcompensationpaidoutin2019CountryDurationoftheschemeCompensationdisbursedin2019forindirectcostsincurredin2018(inEURmillion)Numberofbeneficiaries(installations)Auctionrevenue2018(inEURmillion)58PercentageofauctionrevenuesspentonindirectcostcompensationUK592013-2020226016073.7%DE2013-202021989825658.5%BE(FL)2013-202035.910737911.4%BE(WL)2017-20207.529NL2013-202040.3925018.0%EL2013-202016.8505193.2%LT2014-20200.31800.3%SK2014-2020682292.6%FR2015-2020102.128681812.4%FI2016-202029.16125011.6%ES2013-2015172.2183129113.3%LU2018-20204.241823.2%Source:Countries’submissionstoDGClimateActionThetotalindirectcostcompensationpaidoutbythe10EUMemberStatesandtheUKin2019forcostsincurredin2018amountedtoaroundEUR656million.Thatisalmost200millionmorethantheamountpaidoutin2018.Thenotableincreasecomparedtothepreviousyearcanbeexplained,ontheonehand,bythesignificantbudgetincreaseofSpain(fromEUR6millionin2018toEUR172millionin2019),andontheotherhandbytheslightincreaseofthecarbonpriceusedtocalculatethecompensation.Thesustainedincreaseofthecarbonpricein2018isnotyetfullyreflectedintheamountspaidoutin2019duetothefactthattheGuidelinesprescribetheuseoftheforwardpriceatyearx-1.OneofthetransparencyprovisionsintherevisedEUETSDirectivedeterminesthatMemberStatesthathavespentmorethan25%oftheirauctionrevenuesonindirectcostcompensationinanyyearhavetopublishareportsettingoutthereasonswhythisamountwasexceeded.Thefactthatin2018auctionrevenuesweresignificantlyhigherthaninpreviousyears,combinedwiththefactthatcompensationdidnotincreasesorapidlyyetgiventheobligationtousethepriceofthepreviousyear,meansthatinnoneoftheMemberStatesthe25%thresholdwasreached.Onaverage,MemberStatesspent7.9%oftheirauctionrevenuesonthecompensationofindirectcosts.Inthecomingyears,MemberStatesareinvitedtokeepaclosewatchontheirbudgetsforthisitemofexpenditure.58Revenuesfromtheauctioningofaviationallowancesareexcluded.59ThefiguresfortheUKreflectedinthetablearethesamefiguresasinlastyear’sreport.Thereasoniscomparabilitywithothercountriesimplementingindirectcarboncostcompensationschemes.TheUKpublishesitsfiguresfasterthanothercountriesandhence2020figuresarealreadyavailablehere:https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/903187/indirect-cost-compensation-uk-2019.pdf263.1.3.InternationalcreditsAlthoughtheexactquantityofinternationalcreditentitlementsoverphases2and3(2008-2020)partiallydependonthequantityoffutureverifiedemissions,marketanalystsestimatethatitwillamounttoapproximately1.6billioncredits.AsofendJune2020,thetotalnumberofinternationalcreditsusedorexchangedamountedtoaround1.54billion,accountingforover96%oftheestimatefortheallowedmaximum.In2019alone,about17.3millionunitswereexchanged.Forafulloverviewoftheinternationalcreditsexchange,seeAppendix3totheAnnex.ParticipantsintheEUETScanstilluseinternationalcreditsfromtheKyotoProtocol'sCleanDevelopmentMechanism(CDM)andJointImplementation(JI)towardsfulfillingpartoftheirEUETSobligationsuntiltheendofthe2020compliancecycle,subjecttoqualitativeandquantitativerestrictions.ThesecreditsarefinancialinstrumentsthatrepresentatonneofCO2removedorreducedfromtheatmosphereasaresultofanemissionsreductionproject.Creditsarenotsurrendereddirectly,butmaybeexchangedforallowancesatanytimeduringthecalendaryear.AccordingtotheprovisionsoftheEUETSDirective,internationalcreditswillnolongerbeusedforEUETScompliancein2021-2030.CDMandJIprojectsgenerateKyotocarboncredits:CertifiedEmissionReductions(CERs)andEmissionReductionUnits(ERUs)respectively.273.2.Demand:allowancestakenoutofcirculationIn2019,emissionsfromstationaryinstallationsparticipatingintheEUETSdecreasedstronglyby9.1%comparedto2018basedontheinformationrecordedintheUnionRegistry.Astable7demonstrates,thedecreasewasmainlydrivenbyelectricityandheatproduction,whereemissionsfellbyabout15%comparedto2018,reflectingdecarbonisationfromcoalbeingreplacedbyelectricityfromrenewablesandgas-firedpowerproduction.Emissionsfromindustryfellbycloseto2%,markingtheirstrongestdecreaseinphase3sofar.Overall,sincethestartofphase3in2013,ETSemissionsfromstationaryinstallationshavedecreasedby19.8%.Table7:Verifiedemissionsfromstationaryinstallations(inmilliontonnesCO2equivalents)60Year201120122013201420152016201720182019Verifiedtotalemissions190418671908181418031750175516821530Changefromyearx-1-2.0%2.2%-4.9%-0.6%-2.9%0.2%-4.1%-9.1%Verifiedemissionsfromelectricityandheatproduction120612011138104910431001996930792Changefromyearx-1-0.5%-5.2%-7.8%-0.5%-4.1%-0.5%-6.6%-14.9%Verifiedemissionsfromindustrialinstallations698666770765760750759753738Changefromyearx-1-4.6%15.6%-0.7%-0.7%-1.3%1.3%-0.8%-1.9%RealGDPgrowthrateEU27+UK1.8%-0.4%0.3%1.7%2.4%2.0%2.6%2.0%1.5%Source:EUTL,GDPdataasreportedonEurostat(tablecode:tec00115,accessedinJuly2020).Verifiedaviationemissionsarereportedseparatelyinchapter4.AbreakdownofETSverifiednon-CO2emissionsfrominstallationsbytypeofgreenhousegas(N2OandPFCs)isprovidedintable4.1,Appendix4totheAnnex.60FiguresforEU27+UK+EEA.ThecategorisationintoelectricityandheatproductionandindustryinTable7isbasedontheNACEclassificationfromthe2020submissionbyMemberStatesoftheirNationalImplementationMeasurespursuanttoArticle11ofDirective2003/87/EC.28Thenumberofallowancescancelledonavoluntarybasisamountsto33498in2019.Intotal,voluntarycancellationsof372840allowanceshavebeenrecordeduntilJune2020.Mostofthecancellationsbetween2013andJune2020wereperformedbyaccountholdersintheRegistriesoftheUnitedKingdom,Germany,Sweden,Norway,andtheNetherlands.3.3.BalancingsupplyanddemandAtthestartofphase3in2013,theEUETSwascharacterisedbyalargestructuralimbalancebetweenthesupplyanddemandofallowances,equaling2.1billionallowances.Toaddressthestructuralimbalance,aMarketStabilityReserve(MSR)wascreatedin2015torendertheauctionsupplyofemissionallowancesmoreflexible.TheMSRbeganoperatingin2019.In2018,thesurpluswas1.65billionallowances,whilein2019itreachedasignificantlylowerlevel,of1.385billionallowances.Figure5presentsthedevelopmentofthesurplusintheEuropeancarbonmarketbytheendof2019.Figure5:DevelopmentofthesurplusintheEuropeancarbonmarketin2013-2019Source:DGCLIMATEACTIONInthecontextoftherevisionoftheEUETS61,importantchangesweremadetothefunctioningoftheMSR,asshowninthetextboxbelow.61Directive(EU)2018/410oftheEuropeanParliamentandoftheCouncilof14March2018amendingDirective2003/87/ECtoenhancecost-effectiveemissionreductionsandlow-carboninvestments,andDecision(EU)2015/1814,(OJL76,19March2018,p.3);availableat:http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2018.076.01.0003.01.ENG&toc=OJ:L:2018:076:TOC29ThecarbonmarketreportallowsfortheconsolidationofsupplyanddemandfigureswhicharepublishedaccordingtothetimelineofreportingobligationsstemmingfromtheEUETSDirectiveanditsimplementingprovisions.Figure6showsthecompositionofsupplyanddemandin2019.Therelevantdatahavealsobeenpublishedaspartofthefourthcommunicationonthetotalnumberofallowancesincirculation(TNAC)forMSRpurposes62.62C(2020)2835final,https://ec.europa.eu/clima/sites/clima/files/ets/reform/docs/c_2020_2835_en.pdfAkeynotionforthefunctioningoftheMSRisthetotalnumberofallowancesincirculation(TNAC).Allowanceswillbeaddedtothereserve,iftheTNACisaboveapredefinedupperthreshold(833millionallowances)andwillbereleasedfromthereserve,ifthenumberisbelowapredefinedlowerthreshold(below400millionallowances).Thus,theMSRabsorbsorreleasesallowancesifthecirculatingonesareoutsideofapredefinedrange.Back-loadedandso-calledunallocatedallowanceswillalsobeputinthereserve.From2023,allowancesheldintheMSRexceedingthepreviousyear'sauctionvolumewillnolongerbevalid.ThetotalnumberofallowancesincirculationrelevantfordeterminingtheMSRfeedsandreleasesiscalculatedonthebasisofthefollowingformula:TNAC=Supply–(Demand+allowancesintheMSR)ThecomponentsofsupplyanddemandusedintheformulaaredescribedintheCommunicationfromtheCommissionontheTNAC,whichispublishedeveryyearby15May.OrwheremeasuresareadoptedunderArticle29aoftheEUETSDirective.UnallocatedallowancesareallowancesnotallocatedpursuanttoArticle10a(7)oftheEUETSDirective,i.e.allowancesremaininginthenewentrants'reserve,andresultingfromtheapplicationofArticle10a(19)and(20),i.e.allowancesforeseenforfreeallocationtoinstallationsbutremainingunallocatedbecauseof(partial)cessationofoperationsorsignificantcapacityreductions.Defacto"unallocated"allowancesstemmingfromtheapplicationoftherelevantcarbonleakagefactortosectorsnotincludedinthecarbonleakagelistduringthecurrentperiod,aswellasanyallowancesthatarenotallocatedunderArticle10coftheETSDirective,arenotforeseentobeplacedintheMarketStabilityReserveunderArticle1(3)ofDecision(EU)2015/1814.Suchallowancesarethereforenotcovered(pleaserefertop.225oftheImpactAssessment(SWD(2015)135final)accompanyingthe2015proposalforrevisionoftheEUETSDirective.SeethelatestTNACCommunication,publishedinMay2020:C(2020)2835final,https://ec.europa.eu/clima/sites/clima/files/ets/reform/docs/c_2020_2835_en.pdf.30Figure6:Compositionofcumulativesupplyanddemand(inmillionallowances)untiltheendof2019Source:DGClimateActionInpreparationfortheMSRbecomingoperationalin2019,theCommissionhasregularlypublishedasfrommid-May201763theTNACfortheprecedingyear.InMay2020,theTNACwaspublishedforthefourthtime,correspondingto1385496166allowances64.The2020publicationwillcontinuetoleadtotheplacementofallowancesintheMSR,reducingtheauctionvolumein2020and2021.Thus,onthebasisofthe2019and2020TNACandtherevisedlegislation,theauctionsin2020werereducedbycloseto375millionallowances(ornearly35%).Auctionvolumesin2021willalsobereducedfollowingthesameapproach.Appendix7providesinformationonthecontributionsbyMemberStatetotheMSRforthewholeof2020.In2021,theCommissionwillcarryoutthefirstreviewoftheMSR.TheMSRDecisionrequiresthatareviewbecarriedoutthreeyearsafterthestartofitsoperation(i.e.theendof2021).ThereviewwillbecarriedoutinthewidercontextofarevisionoftheEUETSinthelightoftheEU’sincreasedemissionsreductionstargetfor2030,whichisplannedforJune2021.TheCommissionwillreviewtheMSRonthebasisofananalysisoftheorderlyfunctioningoftheEuropeancarbonmarket,payingparticularattentiontothepercentagefigurefortheMSRfeed,thenumericalvalueofthethreshold,andthenumberofallowances63C(2017)3228final,https://ec.europa.eu/clima/sites/clima/files/ets/reform/docs/c_2017_3228_en.pdf64C(2020)2835final,https://ec.europa.eu/clima/sites/clima/files/ets/reform/docs/c_2020_2835_en.pdf0200040006000800010000120001400016000SupplyDemandandMSRholdingsMillionsNumberofallowancesinthereserveBankingfromphase2EarlyauctionsNER300monetisationbyEIBInternationalcreditsexchangedCancellationsAllowancesissuedforauctioningFreeallocationFreeallocation(10c)Freeallocation(NER)Verifiedemissions31tobereleasedfromthereserve,andlookingalsointotheimpactofthereserveongrowth,jobs,theEU'sindustrialcompetitivenessandontheriskofcarbonleakage.4.AVIATIONIn2019,allowanceswereissuedinlinewiththeintra-EEAscope.Thefreeallocationamountedtoslightlyover32.4millionallowances.Thisnumbercomprisesthefreeallocation(slightlyover31.3millionallowances)andnearly1.1millionfreeallowancesallocatedfromthespecialreservefornewentrantsandfastgrowingoperators.Allocationsfromthisreservearedoubledin2017-2020astheyrelatetothefullperiod2013-2020.Thevolumeauctionedin2019wasapproximately5.5millionallowances.Withregardtodevelopmentsinaviationemissions,verifiedemissionsgrewmoreslowlyin2019(by1%comparedto2018),reachingthelevelof68.2milliontonnesofCO2.Table8showsasummaryofverifiedemissions,freeallocation,andauctionvolumesfortheaviationsectorsincethestartofphase3.TheaviationsectorhasbeenpartoftheEUETSsince2012.TheoriginallegislationcoveredallflightsoutgoingandincomingtotheEuropeanEconomicArea(EEA).However,theEUhastemporarilylimitedobligationstoflightsofallnationalitiesofairlinewithintheEEA,inordertosupportthedevelopmentofaglobalmeasurebytheInternationalCivilAviationOrganisation(ICAO)toreduceaviationemissions.InOctober2016,theICAOAssemblyagreedonaresolutionontheCarbonOffsettingandReductionSchemeforInternationalAviation(CORSIA),tostartin2021.CORSIAisacarbonoffsettingschemewiththeobjectiveofstabilisingnetemissionsfrominternationalaviationat2020levelsthroughthepurchaseandcancellationofinternationalcredits.Inlightofthisoutcome,theEUETSDirectivewasamendedin2017toprolongtheintra-EEAscopeforaviationuntil2023.TheEUETSforaviationcoversflightsonroutesbetweenaerodromessituatedintheEuropeanEconomicArea(EEA),andensuresequaltreatmentofairlinesonflightroutes.TheEUETSDirectiveforeseesthattheEuropeanCommissionwillreporttotheEuropeanParliamentandtotheCouncilonwaystoimplementCORSIAinEUlawthrougharevisionoftheDirective.Unlessactivelyrevised,thegeographicscopederogationoftheEUETSexpiresattheendof2023,revertingtocoverallflightsdepartingfrom(and,unlessexempted,arriving)intheEEA.32Table8:Verifiedemissionsandallocationtotheaviationsector(inmillions)Year20132014201520162017201820192020Verifiedemissions(inmilliontonnesCO2equivalents)53.554.857.161.564.467.568.2Changeofverifiedemissionstoyearx-12.5%4.1%7.7%4.8%4.8%1%Freeallocation(EU27+UK+EEA)6532.432.432.132.033.131.331.36631.2Freeallocationfromspecialreservefornewentrantsandfastgrowingoperators00001.11.11.10.9Volumesofallowancesauctioned09.316.46.04.75.65.53.467Sources:EUTL,DGClimateAction,EEXThevolumesofaviationallowancesauctionedovertheperiod2013-2015reflectthe2013co-legislator'sdecisionto"stoptheclock"68andlimitclimateobligationsonlytoflightswithintheEEA.Compliancefortheaviationsectorwaspostponedfor2012and2013.Thepostponed2012volumesofallowanceswerethusauctionedin2014,whilecompliancetookplacebetweenJanuaryandApril2015foraviationemissionsfrom2013and2014.TheinclusionoftheaviationsectorintheEUETShadasignificantimpactontheenvironmentalperformanceofthesystemasawhole.InPhase3,until2019,aircraftoperatorssurrendered296millionaviationallowancesand127milliongeneralallowances,thelatterfigurerepresentingthecontributionoftheaviationsectortotheoverallstringencyoftheEUETS.65ThesenumbersdonottakeintoaccountallclosuresofaircraftoperatorsandfreeallowancesfromtheSpecialReserve.66Takingintoaccountthenumberswithheldduetoclosures,therealallocationfor2019wouldbe1.4millionbelowthepresentedfigure.AllocationfortheUK(4.31millionallowancesofthetotalfor2019)thatwassuspendedin2019duetothesafeguardmeasuresadoptedbytheCommissiontoprotecttheenvironmentalintegrityoftheEUETS,resumedin2020.67UntilendJune202068DecisionNo377/2013/EUoftheEuropeanParliamentandoftheCouncilof24April2013derogatingtemporarilyfromDirective2003/87/ECestablishingaschemeforgreenhousegasemissionallowancetradingwithintheCommunityTextwithEEArelevance,OJL113,25.4.2013,p.1.33InJune2018,ICAOadoptedtheCORSIAStandardsandRecommendedPractices(SARPs)69,which,togetherwiththeImplementationElements,detailthefunctioningofthescheme.WhilesupportingtheformaladoptionoftheSARPsbyICAO,theEUanditsMemberStatesfollowedICAOprocedurestonotifytheexistingdifferencesbetweenrelevantEUlegislationandCORSIA70.DifferencesfromotherStateshavenotyetbeenpublishedbytheICAO.ThesignificantimpactofCOVID-19oninternationalaviationalsohadrepercussionsonCORSIA.Aviationemissionsin2020areexpectedtofalltobelow40%of2019levels.Inlightofthisimpact,theglobalaviationindustry,supportedbynumerousICAOparticipatingcountries,successfullyrequestedthealteringCORSIA’sbaselinefromtheoriginal2019-2020averageofemissionstoa2019averageonlyfortheCORSIApilotphase.Thereby,thefutureoffsettingobligationsforairlineshavebeensignificantlyreducedoreliminatedcomparedtotheoriginallyforeseenbaseline.Whetherthe2019-onlybaselinewillbeextendedbeyond2023istobedecidedinthecomingyears.AspartofthebroaderpackageoflegislationundertheEuropeanGreenDealandbasedontheEUETSDirectiveasamendedin201771,theCommissioniscurrentlypreparingaproposaltoamendtheEUETSforaviationbyJune2021.Theproposalwillbetwo-fold.Itwillreducetheshareofallowancesallocatedforfreetoaircraftoperators,toreducegreenhousegasemissionsfurther.ItwillalsoaddresstheimplementationofCORSIAinEUlawinawaythatisconsistentwiththeEU’s2030climateobjectives.72AlreadyagreedrevisionstotheEUETSprovidefortheextensionoftheLinearReductionFactorof2.2%totheaviationcapasofphase4oftheEUETS,startingin2021.69https://www.icao.int/environmental-protection/CORSIA/Pages/SARPs-Annex-16-Volume-IV.aspx70https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32018D202771http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2017.350.01.0007.01.ENG72https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12494-Revision-of-the-EU-Emission-Trading-System-Directive-concerning-aviation-345.MARKETOVERSIGHTIn2019,thenumberofparticipantseligibletobidintheauctionsattheCommonAuctionPlatformcontinuedtogrow.Startingwith80participantsinJanuary,theyearendedwith86eligiblebiddersinDecember2019.Operatorsremainedthemostdominantcategoryofparticipantseligibletobidintheauctions(around70%)followedbyinvestmentfirmsandcreditinstitutions(around20%)andpersonsexemptfromMiFIDrequirements(10%).73Undertheexistingmarketabuserules,thenationalcompetentauthorities74areresponsibleformonitoringthemarket,bothwithrespecttotheauctionsandthesecondarymarket.At73AlldataistakenfromtheCommonAuctionPlatform(CAP2)monthlyreportstotheCommission.74Moredetailedinformationontheactivitiesofnationalcompetentauthoritiesinmonitoringthemarketisavailableinthe2019CarbonMarketReport(COM(2019)557final/2),availablehere:https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52019DC0557R(01)UndertherevisedDirectiveonMarketsinFinancialInstruments(MiFID2),emissionallowancesareclassifiedasfinancialinstrumentsasof3January2018.Thismeansthatrulesapplicabletotraditionalfinancialmarkets(thoseincludingcarbonderivativestradeonleadingplatformsorover-the-counter(OTC))alsoapplytothespotsegmentofthesecondarycarbonmarket(transactionsinemissionallowancesforimmediatedeliveryinthesecondarymarket).Thissegmentisthusputonequalfootingwiththederivativesmarketintermsoftransparency,investorprotectionandintegrity.OversightintheprimarymarketcontinuestobecoveredbytheAuctioningRegulation,otherthanissuesrelatedtomarketabuse.Byvirtueofcross-referencestoMiFID2definitionsoffinancialinstruments,otherpiecesoffinancialmarketlegislationapply.ThisisinparticularthecasefortheMarketAbuseRegulation(MAR),whichcoverstransactionsandconductinvolvingemissionallowances,onbothprimaryandsecondarymarkets.Similarly,across-referencetoMiFID2intheAnti-MoneyLaunderingDirectivewilltriggeramandatoryapplicationofcustomerduediligencechecksbyMiFID-licensedcarbontraderstotheirclientsinthesecondaryspotmarketinemissionallowances.Directive2014/65/EUoftheEuropeanParliamentandoftheCouncilof15May2014onmarketsinfinancialinstrumentsandamendingDirective2002/92/ECandDirective2011/61/EURegulation(EU)No596/2014oftheEuropeanParliamentandoftheCouncilof16April2014onmarketabuse(marketabuseregulation)andrepealingDirective2003/6/ECoftheEuropeanParliamentandoftheCouncilandCommissionDirectives2003/124/EC,2003/125/ECand2004/72/ECDirective(EU)2015/849oftheEuropeanParliamentandoftheCouncilof20May2015onthepreventionoftheuseofthefinancialsystemforthepurposesofmoneylaunderingorterroristfinancing,amendingRegulation(EU)No648/2012oftheEuropeanParliamentandoftheCouncil,andrepealingDirective2005/60/ECoftheEuropeanParliamentandoftheCouncilandCommissionDirective2006/70/ECDuediligencechecksarealreadymandatoryintheprimarymarketandinthesecondarymarketinemissionallowances'derivatives.35Europeanlevel,theiractionsarecoordinatedbytheEuropeanSecuritiesandMarketsAuthority(ESMA),asisthecaseforotherfinancialinstruments.7575ThelistofnationalcompetentauthoritiesresponsibleundertheMarketAbuseRegulationcanbefoundonESMA’swebpages.ThelistofEuropeanFinancialIntelligenceUnits,whichdealwithissuesrelatedtomoneylaunderingandterroristfinancing,canbefoundonthewebpagesofEuropol.366.MONITORING,REPORTINGANDVERIFICATIONOFEMISSIONS6.1.GeneralDevelopmentsExperiencewiththeimplementationoftheMRRandtheAVRduringphase3oftheETShasshowntheneedforfurtherimprovement,clarificationandsimplificationofrulestofurtherpromoteharmonisation,reduceadministrativeburdenfortheoperatorsandparticipatingcountries,andtofurtherenhancetheefficiencyofthesystem.Takingthisintoaccount,thefirstupdateofthetwoRegulationssoastoprepareforphase4oftheEUETSandtoimproveandsimplifytheMRVAprocesses,tookplacein2018.TherevisedversionsoftheMRR76andAVR77enteredintoeffecton1January2019.Workonthe76CommissionImplementingRegulation(EU)2018/2066of19December2018onthemonitoringandreportingofgreenhousegasemissionspursuanttoDirective2003/87/ECoftheEuropeanParliamentandoftheCouncilandamendingCommissionRegulation(EU)No601/2012,OJL334,31.12.2018,p.1–93Themonitoring,reporting,verificationandaccreditation(MRVA)requirementsoftheEUETSareharmonisedintheMonitoringandReportingRegulation(MRR)andtheAccreditationandVerificationRegulation(AVR).ThemonitoringsystemintheEUETSisdesignedasa'buildingblock'approachwhichallowsahighdegreeofflexibilityforoperatorstoensurecost-efficiency,whileatthesametimeachievinghighreliabilityofthemonitoredemissionsdata.Forthispurpose,severalmonitoringmethods('calculation-based'or'measurement-based',aswellasbyexception'fall-backapproaches')areallowed.Methodsmaybecombinedforindividualpartsofaninstallation.Foraircraftoperators,onlycalculation-basedapproachesarefeasible,withfuelconsumptionbeingthecentralparametertobedeterminedfortheflightscoveredbytheEUETS.TherequirementforinstallationsandaircraftoperatorstohaveamonitoringplanapprovedbythecompetentauthorityonthebasisoftheMRRpreventsarbitraryselectionofmonitoringmethodsandtemporalvariations.WiththeAVRforphase3andbeyond,anEU-wideharmonisedapproachtowardstheaccreditationofverifiershasbeenintroduced.VerifiersmustbeaccreditedbyaNationalAccreditationBody(NAB)inordertocarryoutverificationsincompliancewiththeAVR.Thisuniformaccreditationsystemallowsverifierstooperatewithmutualrecognitionacrossallparticipatingcountries,therebytakingfulladvantageoftheinternalmarketandhelpingtoensuresufficientavailabilityoverall.CommissionRegulation(EU)No601/2012of21June2012onthemonitoringandreportingofgreenhousegasemissionspursuanttoDirective2003/87/ECoftheEuropeanParliamentandoftheCouncil,OJL181,12.7.2012,p.30.CommissionRegulation(EU)No600/2012of21June2012ontheverificationofgreenhousegasemissionreportsandtonne-kilometrereportsandtheaccreditationofverifierspursuanttoDirective2003/87/ECoftheEuropeanParliamentandoftheCouncil,OJL181,12.7.2012,p.1.37secondupdatestartedinFebruary2019.ParticipatingcountrieswereconsultedforupdatingthesetwoRegulationsonsometargetedissuesthatcouldnotbeaddressedduringthefirstupdate,suchastheimplementationoftherecastoftheRenewableEnergyDirective78.TheoverallMRVArevisionprocessshouldbeconcludedsufficientlyaheadofthebeginningofphase4in2021.TheefficiencyofthecompliancesystemhasimprovedsincetheMRRallowedcountriestomakeelectronicreportingmandatory.Aslastyear,17participatingcountriesreportedtheuseofelectronictemplatesorspecificfileformatsformonitoringplans,emissionsreports,verificationreportsand/orimprovementreportsbasedontheminimumrequirementssetbytheCommission.13participatingcountriesreportedthattheyusesomeformofautomatedITsystemforEUETSreporting.6.2.MonitoringappliedAccordingtotheArticle21reportssubmittedin2020,mostinstallationsusethecalculation-basedmethodology79.Only155installations(1.5%)in23countrieswerereportedtousecontinuousemissionsmeasurementsystems,mostfrequentlyinGermany,theCzechiaandFrance.Whilethenumberofcountriesisthesameaslastyear,therearefewerinstallationsoverallusingthisapproach.Only13countriesreportedtheuseofthefall-backapproachby34installations,coveringapproximately3.0milliontonnesCO2e(comparedto2.6milliontonnesCO2eby38installationsin11countriesintheyearbefore).OneinstallationintheNetherlandsisresponsiblefor42%oftheoverallemissionsreportedinrelationtothefall-backmethodology.Theminimumtierdefaults80oftheMRRaremetbythevastmajorityofinstallations.Only90categoryCinstallations(comparedto97lastyear),thatis11.8%,werereportedtodeviateforatleastoneparameterfromtherequirementtoapplythehighesttiersforthemajorsourcestreams.Thesedeviationsareonlyallowedwheretheoperatordemonstratesthatthehighesttieristechnicallynotfeasibleorincursunreasonablecosts.Oncetheseconditionsnolongerapply,theoperatorhastoimprovetheirmonitoringsystemaccordingly.Similarly,reportsfrom23participatingcountriesindicatethatoverall22%ofcategoryBinstallationsarepermittedwithsomeformofdeviationfromtheMRRdefaultrequirements,77CommissionImplementingRegulation(EU)2018/2067of19December2018ontheverificationofdataandontheaccreditationofverifierspursuanttoDirective2003/87/ECoftheEuropeanParliamentandoftheCouncil,OJL334,31.12.2018,p.94–13478Directive(EU)2018/2001oftheEuropeanParliamentandoftheCouncilof11December2018onthepromotionoftheuseofenergyfromrenewablesources,OJL328,21.12.2018,p.82–20979Themainreasonforthisisthatthemeasurement-basedmethodologyinvolvesthedeploymentofsignificantresourcesandknow-howforthecontinuousmeasurementoftheconcentrationofrelevantGHGs,whichalotofsmalleroperatorsdonothave.80CommissionRegulation(EU)No601/2012requiresalloperatorstomeetcertainminimumtiers,withlargeremissionsourcesrequiredtomeethighertiers(involvingmorereliabledataquality),whileforcost-efficiencyreasonslessstrictrequirementsapplyforsmallersources.38whichisnearlysimilarcomparedto19%lastyearand21%theyearbefore,demonstratingasteadylevelofthehighesttiercompliance.6.3.AccreditedverificationThetotalnumberofverifiersisnotreportedinArticle21reports.However,theEuropeancooperationforAccreditation(EA)providesacentrallinktorelevantNationalAccreditationBodies(NABs)andtheirlistsofEUETSaccreditedverifiers81.Themutualrecognitionofverifiersamongparticipatingcountriesisworkingsuccessfully:28countriesreportedthatatleastoneforeignverifierisactiveintheirterritory.ComplianceofverifierswiththeAVRisfoundtobehigh.Nocountryreportedasuspensionorwithdrawalofaccreditationofaverifier.Thiscomparestoonesuspensionandnowithdrawalsfor2018.Germanyreportedareductionmadeinthescopeofsixverifiers'accreditation,andPolandforoneverifierfor2019,comparedtoscopereductionsforrespectivelytwo,oneandthreeverifiersreportedbyGermany,FranceandPolandin2018.Sevencountriesreportedcomplaintsreceivedaboutverifiersthisyear(threefewerthanlastyear).Theoverallnumberofcomplaints(66)is7%lower.71%ofthecomplaintsreceivedaredetailedasresolvedatthetimeofreporitng(lastyearthisratewas93%).Eightcountriesreportedidentificationofverifiernon-conformitiesaspartoftheinformationexchangeprocessbetweenNABsandcompetentauthorities(comparedtotenlastyear).7.OVERVIEWOFADMINISTRATIVEARRANGEMENTSAccordingtoArticle21submissionsin2020,therewere,onaverage,4competentauthoritiesinvolvedinEUETSimplementationpercountry.82Withregardtothecoordinationbetweenauthorities,differenttoolswerereported,suchaslegislativeinstrumentsforcentralmanagementofmonitoringplans(in14countries),bindinginstructionsandguidancebyacentralcompetentauthoritytolocalauthorities(in10countries),andregularworkinggroupsormeetingsbetweenauthorities(in13countries).Sevencountriesindicatedthatnosuchtoolsareinplace(CY,IE,IS,IT,LI,LUandMT).Onadministrativefeeschargedinrelationtopermittingandapprovalofmonitoringplans,13countriesreportedin2020thattheydonotchargeanyfeestoinstallationoperators(CY,DE,EE,EL,IE,LI,LT,LU,LV,MT,NL,SE,SK),thesameaslastyear.Aircraftoperatorsin1581EAlistofaccesspointstoNABsaccreditingverifiersforEUETS:https://european-accreditation.org/national-accreditation-bodies-having-successfully-undergone-peer-evaluation-by-ea/82Insomecases,countriesmaybereportingamultiplenumberofregional/localauthoritiesasonecompetentauthority.CountriesparticipatingintheEUETSusedifferentapproachesregardingthecompetentauthoritiesinchargeofitsimplementation.Insomecountriesseverallocalauthoritiesareinvolved,whileinotherstheapproachismuchmorecentralised.39countriesdonotpayfees(BE,CY,CZ,DE,EE,ES,EL,LI,LT,LU,LV,MT,NL,SE,SK).Chargesvarysignificantlyacrosscountriesandtypesofservices,rangingfromEUR5toEUR7283.17forpermitandmonitoringplanapprovalforinstallationsandfromEUR2.19toEUR2400forthesameserviceforaviationoperators.Overall,participatingcountries'ETSadministrativeorganisationislargelyeffective.Communicationandthesharingofbestpractices,includingviatheactivitiesoftheEUETSComplianceForumandtheannualEUETSComplianceConference,shouldcontinuetobereinforcedandencouraged.8.COMPLIANCEANDENFORCEMENTForthe2019compliancecycle,despitethedifficulteconomicsituationduetotheCOVID-19crisis,thelevelofcompliancewiththeEUETSremainedveryhigh:mostoperators,coveringmorethan99%ofemissionsfromstationaryinstallations,compliedwiththeirlegalobligationsinMarchandApril2020.Non-compliantinstallationsweretypicallysmall.Around500aircraftoperatorsreportedandcomplied,includingmorethan100commercialaircraftoperatorsthatarebasedoutsideoftheEUbutoperateflightswithintheEEA.Non-compliantoperatorsweretypicallysmallorceasedoperatingin2018.Thecompetentauthoritiescontinuetocarryoutdifferentcompliancechecksontheannualemissionsreports.BasedonArticle21submissionsin2020,allparticipatingcountries83checkannualemissionreportsfrominstallationsforcompleteness(100%ofreportsexceptBE31%,ES94%,FR95%),andmostcountriescheckreportsfromaircraftoperators-allexceptHungary,Latvia(bothhavetwoaircraftoperators)andLiechtenstein(noaircraftoperators).Thereportsfurtherindicatethatonaveragecountriescheckabout83%ofinstallations’reportsforconsistencyagainstmonitoringplans(with91%ofaviationreports)andabout70%ofinstallations’reportsagainstallocationdata.Twenty-threecountriesreportedthattheyalsocarryoutcross-checksagainstotherdataforbothinstallationsand24countriesdothisforaircraftoperators.Competentauthoritiesin12countriescarriedoutconservativeestimatesregardingmissingdatainthecaseof101installations(approximately1%ofinstallationsoverall),almosttwiceasmanyasinthepreviousthreeyears.Theincreaseseemstobeduetoahighernumberof83Italydidnotanswertherelevantquestioninthe2020submission,therefore,forthiscountrydatafromthepreviousyearwasusedasanapproximation.TheEUETSDirectiveprovidesforanexcessemissionspenaltyintheformofEUR100(indexedtoinflation)foreachtonneofCO2emittedforwhichnoallowancehasbeensurrenderedinduetime,aswellasrequiringallowancestobesurrenderedfortheseemisisons.OtherpenaltiesapplicabletoinfringementsinimplementationofEUETSareaccordingtothenationalprovisionssetbytheconcernedcountry.40conservativeestimatesintheNetherlands(51affectedinstallationsin2019comparedto11in2018),becauseofmorereceivednotificationsofmonitoringerrorscomparedtopreviousyears.Thereportedquantityofaffected2019emissionswas61.0milliontonnesCO2(comparedto11.2milliontonnesCO2in2018),approximately4%ofoverallemissions(comparedto0.7%in2018).ThemostcommonreasonsgivenformakingconservativeestimateswereemissionreportsthatwerenotfullyinlinewithMRRrequirementsandtheabsenceofanemissionreportby31March.Conservativeestimatesregardingmissingdataforaviationwerereportedbysevencountriesconcerning33aircraftoperators(5.4%ofalloperators),and1.6%ofaviationemissions.Competentauthorities'checksremainimportanttosupplementtheverifier’swork.For2019,allcountriesconfirmedthattheycarryoutfurtherchecksinthecaseofinstallations.Mostcountriesreportedasimilarapproachregardingaircraftoperators(allexceptHU,IT,LIandLV).Mostcountries(allexceptEL,IT,LUandMT)reportedthattheycarriedoutspotchecksatinstallationsin2019,andalmosthalfthecountriesreportedspotchecksforaviation(allexceptBG,CY,CZ,EE,ES,FI,FR,EL,HU,IT,LI,LT,LU,LV,MT,NO,PTandUK).In2019,theapplicationofexcessemissionspenaltywasreportedfor25installationsby8countries(DE1,DK2,ES1,IT4,PL2,PT1,RO7andUK7).Foraviation,excessemissionpenaltieswerereportedfor34aircraftoperators(CY1,DE3,ES4,IT3,PT11andUK12).Sixcountriesconfirmedissueofpenalties(otherthanexcessemissionspenalties)in2019.Noimprisonmentswerereported,butfines,formalnotices,andwarningletterswerenotedascarriedoutoryettobecarriedout(e.g.duetoongoinglegalproceedings),amountingtoatotalfinancialvalueofEUR7.8million(ofwhichEUR0.15millionforaviation).Themostcommonviolationsreportedfor2019werefailuretosubmitverifiedannualemissionreportsbytheduedeadline,failuretonotifyplannedoreffectivechangestocapacity,activitylevelsandoperationofaninstallationontime,andfailuretomonitorinaccordancewiththeapprovedmonitoringplanandRegulation(EU)No601/2012.Asreportedlastyear,afifthEUETScompliancecycleevaluationtookplacein2018and2019,withtheaimtoidentifyEUETScomplianceissuesatthelevelofparticipatingcountriesandsupporttheminimprovingtheirimplementationoftheEUETS.Theevaluationwasfinalisedin2020andatechnicalreportontheresultswaspublished84.Thereportconcludesthat,whilethequalityandeffectivenessoftheapprovalofMonitoringPlans,thereviewofAnnualEmissionReportsandVerificationReports,aswellasinspectionshaveimprovedduetotheincreaseduseoftheCommission’stemplatesandITsystems,aswellasstrengthenedCompetentAuthorityprocedures,someMRVareascontinuetocauseinterpretationproblemsandwouldbenefitfromdedicatedtrainingortailoredguidance.84https://ec.europa.eu/clima/sites/clima/files/ets/monitoring/docs/report_5th_compliance_en.pdf41DifferencesinMemberStates’implementationcanmostlybefoundinthereviewofAnnualEmissionReportsandVerificationReports,andinthefollow-upofissuesidentifiedduringverification,inspectionprocedures,andenforcement.WhilethesedifferencesdonotseemtohaveadetrimentaleffectontherobustnessoftheMRVsystem,insomeareas-suchasinformationexchangeacrossborders,follow-upofrecommendationsforimprovement,andinspectionprocedures,improvementscanbemadeattheEUlevel.MemberStates’recommendationsforimprovementhavebeenmadeintailoredactionplans.Oncetherevisionsoftheregulationsstarttoapply,someoftheareasofimprovementidentifiedintheanalysiscanlikelyberesolved.Tailoredupdatesinguidancematerial,templatesandfollowingtherecommendationslistedinMemberStates’actionplanscanimproveimplementationevenmore.SpecificrecommendationstothiseffecthavebeenmadeinthetechnicalreportandintheMemberStates’actionplans.9.CONCLUSIONSANDOUTLOOKIn2019,greenhousegasemissionsfromEUETS-coveredinstallationsmarkedahistoricalfallof9.1%comparedto2018.Thiswasmainlydrivenbyareductionofalmost15%inemissionsfromelectricityandheatproduction,withastrongpenetrationofrenewablesourcesofenergy,increaseduseofnaturalgasandareductionofcoalofaround19%.Emissionsfromindustryalsomarkedtheirstrongestdecreaseinphase3sofar,ofcloseto2%.Verifiedaviationemissionshowevercontinuedgrowing,albeitbyamuchsmalleramountthaninpreviousyears(1%above2018).ThelegislativechangesagreedinrecentyearstoreinforcetheETSandtoaddressthesurplusofallowancescontinuetoshowpositiveresults.TheMarketStabilityReservesurplusindicatorwaspublishedforthefourthtimeinMay2020,showingthatthesurplushasdecreasedtoaround1.39billionallowances.OnthebasisofthesurplusandtherevisedEUETSlegislationforphase4,theauctionsin2020werereducedbynearly40%(around375millionallowances).Auctionvolumesin2021willbereducedinasimilarmanner.DespitethedifficulteconomicsituationforindustryandaviationduetotheCOVID-19crisis,thecarbonpricesignalremainedstablebetweenJanuary2019andendJune2020,withashortexceptioninMarch/April.ThetotalrevenuesgeneratedbytheEUETSfromtheauctionsbetween2012and30June2020exceededEUR57billion,withtotalrevenuestoMemberStatesofmorethanEUR14billionin2019andEUR7.9billioninthefirsthalfof2020.AlargepartoftheserevenuesareusedbytheMemberStatesforclimateaction.Moreover,inspiteoftheexceptionalcircumstancesin2020,thelevelofcompliancewiththeEUETSfor2019remainedveryhigh:mostoperators,coveringmorethan99%ofemissionsfromstationaryinstallations,compliedwiththeirlegalobligations.Forbothstationaryinstallationsandaircraftoperators,non-compliantoperatorsweretypicallysmall.TheEU42ETSarchitectureremainedrobustandtheadministrativeorganisationacrossMemberStatesprovedtobeeffective.Inthefollowingyears,aspartofthebroaderpackageoflegislationundertheEuropeanGreenDeal,theETScouldundergosubstantiverevisionsregardingitsscopeandaviationrequirements,toenableittomeettheEU’sheightenedclimateambitions.2021willbethefirstyearofimplementationofphase4oftheEUETS.Thenextcarbonmarketreport,foreseenforpublicationinlate2021,willprovideanoverviewoftheentireETSimplementationinphase3.ItwillalsoprovideafirstlookattheoperationoftheEUETSinphase4.43ANNEXAppendix1Table1.1:Numberoffreeallowancesallocatedformodernisingtheelectricitysector85MemberState2013201420152016201720182019BG11009416977924382596806593238381243624712971948441CY25190772195195190730215834201259538935657575789CZ252853532238339820623005158313291168199476618403830905EE513516644015683667975293438020556143893919471HU867047255n.a.n.a.n.a.n.a.n.a.n.a.LT32244929711326947523723020037915892294432PL8765992703529208894359432031621148217529083194228116912108RO15748011859146192107977189961622225537784391723016Total1330594301005688678753255465990706469851244698737525104162Source:DGClimateActionTable1.2:MaximumnumberoffreeallowancesperyearunderthederogationfromfullauctioningforelectricityandheatproductionMemberState2013201420152016201720182019TotalBG13542000116074289672857773828658037143869143193457154167999CY2519077219519519073021583420125953893565757578910975978CZ269166672307142919226191153809531153571476904763845238107666668EE52888274533280377773330221872266640151109375554721155307HU70472550000007047255LT5823735366154866984284603619032870271705522853628PL77816756722584166670007660030069522483934335504932238370404647129RO1785247915302125127517711020141776510635100708255035471409917Total15156543412950448811452262898384792811269656274915342070421679923881Source:DGClimateAction85Thenumberof10callowanceslistedinthistablecanincludeallowancesissuedwithadelayforpreviousyears.Inthiscase,therelevantamountsperyeararereflectedintheEUTL.86HUmadeuseoftheArticle10cderogationonlyin2013.87FinalallocationnumbersforPolandwillbeavailableinnextyear’sreport,pendingthefinalisationofallallocationrequests.44Table1.3:NumberofunusedfreeallowancesundertheArticle10cderogationwhichhavebeenauctionedorareplannedforauctioningin2013-202188MemberState2015201620172018201920202021BG5444169146136092082360490813863720476621CY0000000CZ090694777416674054550802950EE01886821348971767499761088500260LT259924045672519122916152212810576120PL119607491055800000495200003450129989RO210446867106643540974301145600827338HU0000000Appendix2Figure2.1:Numberofbiddersingeneralallowancesauctionsfrom2013to30June2020Source:EEX.Numberofbidders88NounusedArticle10callowanceswereauctionedin2013and2014.89FinalnumbersforPolandwillbeavailableinnextyear’sreport,pendingthefinalisationofallallocationrequests.45Table2.1:RevenuesgeneratedfromtheauctioningofemissionallowancesbyMemberStatesandtheUKintheperiod2012–30June2020(inmillionEUR)90201220132014201520162017201820192020General(earlyauctions)Aviation(earlyauctions)GeneralAviationGeneralAviationGeneralAviationGeneralAviationGeneralAviationGeneralAviationGeneralAviationGeneralAviationAT11.050.0055.750.0052.171.1876.242.3658.810.6578.740.69208.202.16180.942.8982.071.50BE0.000.00114.990.0095.032.05138.962.69107.140.74143.520.79379.002.47353.473.30160.281.70BG22.140.0052.630.0036.190.22120.910.9185.080.25130.150.27367.340.83439.191.11205.960.58CY1.580.000.350.000.430.300.001.420.000.396.150.4124.661.3024.41.7417.030.91HR0.000.000.000.000.000.0086.400.4920.090.1626.970.1870.960.5571.970.7432.520.37CZ0.000.000.000.0055.240.47110.301.20117.630.33199.430.35583.331.10628.941.46329.840.75DE166.1817.52791.250.00749.970.001093.3116.87845.744.651141.745.072565.3416.313146.1417.891149.910.00DK1.070.0056.060.0046.931.1668.642.7152.930.7470.930.79187.322.48162.783.3173.561.70EE0.000.0018.070.007.410.0421.130.1523.570.0439.310.05139.890.14142.650.2065.810.08EL14.840.00147.640.00129.971.10190.174.99146.681.37196.571.46518.964.57503.346.11229.193.16ES68.530.00346.110.00323.536.56473.2016.32364.974.48488.784.771291.0714.971225.2219.97555.9310.31FI13.280.0066.970.0062.680.8191.642.1370.630.5894.640.62249.841.96217.352.6098.331.33FR43.460.00219.250.00205.2910.05299.9412.18231.343.35309.853.55818.4011.16711.6414.89322.107.69HU3.990.0034.590.0056.210.2982.280.9963.430.2784.940.29224.480.91226.81.21102.980.62IE0.000.0041.680.0035.110.8751.322.1539.540.5952.930.63140.101.97121.642.6254.971.37IT76.500.00385.980.00361.255.24528.0014.41407.233.96545.444.211440.1013.221271.3517.64576.069.11LT3.290.0019.980.0017.280.0628.130.2920.760.0831.430.0980.110.2583.690.3539.490.1790Source:EEX46LU0.740.004.970.004.520.636.620.225.080.066.810.0718.090.2016.790.287.740.17LV2.130.0010.790.0010.080.1414.760.5311.360.1515.240.1540.200.4941.920.6618.580.33MT0.270.004.470.003.810.105.620.574.300.165.780.1715.190.5215.210.716.970.37NL25.610.00134.240.00125.635.47183.573.68141.591.01189.631.07500.843.37435.644.50197.442.33PL0.000.00244.020.0078.010.00129.842.98135.570.58505.310.691209.981.592545.942.891384.134.38PT10.650.0072.780.0065.821.2796.322.8974.290.7999.500.85262.962.65253.583.53115.371.83RO39.710.00122.740.0097.570.32193.621.60193.560.44260.290.47717.641.45747.871.95369.331.00SE7.070.0035.670.0033.341.0248.793.6337.611.0050.451.06132.983.34124.14.4356.522.29SI3.510.0017.740.0016.590.0524.280.1418.700.0425.050.0466.190.1265.140.1629.420.08SK12.190.0061.700.0057.590.0484.310.2064.990.0687.010.06229.740.18244.470.24111.500.12UK75.740.00409.630.00387.4214.08567.7218.54418.965.37604.025.301607.320.00001043.320.83TOTAL603.5217.533550.730.003115.1153.534815.97117.263761.5732.285490.6034.1414090.2390.2714002.17117.377436.3655.1147Table2.2:RevenuesgeneratedfromtheauctioningofemissionallowancesbyEEAcountriesintheperiod2019-30June2020(inmillionEUR)9120192020GeneralAviationGeneralAviationIS23.911.8616.261.66LI0.5200.470.00NO476.7818.24332.1715.84TOTAL501.2120.1348.9017.51Appendix3Table3.1:SummaryofinternationalcreditsexchangeuntilJune202092InternationalcreditsexchangedbyendJune2020millionpercentagesInternationalcreditsexchangedbyendJune2020millionpercentagesCERs288,8660,06%ERUs192,0739,94%China213.3173.85Ukraine147.6976.89%India20.307.03Russia32.0616.69%Uzbekistan10.173.52Poland2.821.46%Brazil6.002.08Germany1.650.85%Vietnam3.711.28France1.240.64%Chile3.211.11Bulgaria0.500.26%Mexico3.171.10Others6.113.21%Korea2.931.01Others26.069.02TOTALCERsandERUs480.94100%Source:EUTLTable3.2:SummaryofinternationalcreditsexchangeuntilJune2020bytypeofinstallationsInternationalcreditsexchangedbyendJune2020by:CERsinmillionERUsinmillionStationaryinstallations282.54191.25Aviationoperators6.320.8291Source:EEX92UKexchangesthatweresuspendedin2019duetothesafeguardmeasuresadoptedtoprotecttheenvironmentalintegrityoftheEUETSresumedin2020.48TOTAL288.86192.07Source:EUTLAppendix4Table4.1ETSverifiednon-CO2emissionsfrominstallationsbytypeofgreenhousegas2013-2019(inmilliontonnes)93Source:EUTLAppendix5Table5.1:SelectedrulingsoftheCourtofJusticeoftheEUrelevanttothefunctioningoftheEUETSintheperiodJuly2019toJune2020CasereferenceLegislationConcernedPartiesContextofthecaseDateFindingbytheCourtCaseC‑189/19CommisisonDecision2011/278SpennerGmbH&Co.KG/DESpennerGmbhwantedtoreceivemorefreeallocationforphase3oftheETS(2013-2020),clainingthattheGermancompetentauthoritydidnotgiveitenoughfreeallocationbecauseofismisinterpretationofthe2011/278/EUCommissionDecision,inparticularArticle9thatconcernshistoricalactivitylevels.14.05.2020TheCourtruledthatArticle9(9)ofDecision2011/278doesnotapplytosignificantincreasesinthecapacityofaworkinginstallationthatoccurredbeforethebaseperioddeterminedinaccordancewithArticle9(1)ofthedecision,andthatArticle9(1)ofDecision2011/278doesnotobligethecompetentauthoritytodeterminetherelevantbaseperioditselfinordertoassessthehistoricalactivitylevelsofaninstallation.93Forsomeinstallations,emissionsfromN2OorPFCsmightnothavebeenreportedseparatelyintheUnionRegistry,withthetotalemissionsreportedintonnesofCO2equivalentinstead.ThedatainthetablereflectsthebreakdownofemissionsbyGHGasavailableintheUnionRegistry.EmissionsofN2OwereincludedintheEUETSasofphase2(from2008)asavoluntaryopt-inbysomeMemberStates,andtogetherwithPFCsonamandatorybasis–asofphase3(from2013).2013201420152016201720182019PFCs0.400.740.580.640.510.640.57N2O2.485.485.314.624.924.1083.6849CaseC‑113/19Directive2003/87/EC,CharterofFundamentalRightsoftheEuropeanUnionLuxaviationSA/MinisterfortheEnvironment,LuxembourgLuxaviationthoughtithadcompletedtheprocedureforsurrenderingemissionallowancesin2016,butaccordingtotheMinistryoftheEnvironmentthiswasnotthecase.InJune2016,theMinisterfortheEnvironmentindicatedtoLuxaviationthatithadfailedtocarryoutthesurrenderrequiredinthetimeallowed,namelybefore30Aprilofthatyear.ApenaltywasimposedandLuxaviation’snamewaspublishedonthewebsiteoftheEnvironmentAgency.26.03.2020TheCourtorderedthatArticles20,47andArticle49(3)oftheCharterofFundamentalRightsoftheEUdonotprecludethattheflat-ratepenaltyundertheETSDirectivecanbevariedbyanationalcourt,Article41oftheCharterdoesnotapplytotheissueofwhetheritisobligatoryoroptionalforMemberStatestoissuewarningsorreminderstooperatorsactingingoodfaith,andthattheprincipleoftheprotectionoflegitimateexpectationsdoesnotprecludetheimpositionofthepenaltyprovidedforinArticle16(3)ofDirective2003/87,inasituationwherethecompetentauthoritiesdidnotwarntheoperatorpriortotheexpiryofthetimelimitforsurrender.Appendix6Table6.1:StateofplayofEUETSphase4implementationMeasurePurposeTypeoflegislativeactForeseenadoptionCarbonLeakageListfor2021-2030EstablishingthenewCarbonLeakageListforphase4oftheEUETSbasedonthecriteriafordeterminingsectorssignificantlyexposedtotheriskofcarbonleakageCommissionDelegatedDecisionAdoptedon15February2019andpublishedintheOfficialJournalon8May201994Revisionofthefreeallocationrulesfor2021-2030RevisingCommissionDecision2011/278/EUondeterminingtransitionalunion-widerulesforharmonisedfreeallocationsoasadaptittothenewlegalcontextsetforphase4CommissionDelegatedRegulationAdoptedon19December2018andpublishedintheOfficialJournalon27February201995AdjustmenttofreeallocationduetoproductionchangesDefiningthearrangementsfortheadjustmentoftheleveloffreeallocationtoinstallationsonthebasisofchanginglevelsofoperationofmorethan15%upwardsordownwardsonaverageoveraperiodoftwoyearsCommissionImplementingRegulationAdoptedon31October2019andpublishedintheOfficialJournalon4November201996UpdateoftheDeterminingupdatedbenchmarksfor2021-Commission202094https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2019:120:FULL&from=EN95https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R0331&from=EN96https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R1842&from=EN50benchmarkvaluesforfreeallocationfor2021-20252025onthebasisofdatasubmittedbyMemberStatesby30September2019fortheyears2016and2017.ImplementingRegulationEstablishmentoftheInnovationFundDeterminingtherulesontheoperationoftheInnovationFund,includingtheselectionprocedureandcriteriaCommissionDelegatedRegulationAdoptedon26February2019andpublishedintheOfficialJournalon28May201997EstablishmentoftheModernisationFundDeterminingtherulesfortheoperationoftheModernisationFundCommissionImplementingRegulationAdoptedon9July2020andpublishedintheOfficialJournalon10July202098RevisionofRegulation(EU)No389/2013(theRegistryRegulation)LayingdowntherequirementsfortheUnionRegistryforphase4intheformofstandardisedelectronicdatabasescontainingcommondataelementstotracktheissue,holding,transferandcancellationofallowances,andtoprovideforpublicaccessandconfidentialityCommissionDelegatedRegulationAdoptedon12March2019andpublishedintheOfficialJournalon2July201999AmendmentofRegulation(EU)No1031/2010(theAuctioningRegulation)Enablingtheauctioningofthefirst50millionallowancesfortheInnovationFundtakenfromtheMarketStabilityReserve(MSR)in2020CommissionDelegatedRegulationAdoptedon30October2018andpublsihedintheOfficialJournalon4January2019100RevisionofRegulation(EU)No1031/2010(theAuctioningRegulation)Revisingsomeaspectsoftheauctioningprocesstoimplementrequirementsforphase4,inparticulartoenabletheauctioningofallowancesfortheInnovationFundandtheModernisationFund,aswellastoreflecttheclassificationofEUETSallowancesasfinancialinstrumentsunderDirective2014/65/EUonmarketsinfinancialinstruments(MiFID2).CommissionDelegatedRegulationAdoptedon28August2019andpublishedintheOfficialJournalon8November2019101RevisionofRegulationN°601/2012onMonitoringandReportingSimplifying,improvingandclarifyingthemonitoringandreportingrulesandreducingadministrativeburden,basedonimplementationexperiencefromphase3CommissionImplementingRegulationAdoptedon19December2018andpublishedintheOfficalJournalon31December2018102RevisionofRegulationN°600/2012onVerificationandAccreditationSimplifying,improvingandclarifyingtheaccreditationandverificationrulesandreducingadministrativeburdentotheextentpossible,basedonimplementationexperiencefromphase3CommissionImplementingRegulationAdoptedon19December2018andpublsihedintheOfficialJournalon31December2018103Regulation(EU)2019/1603supplementingDirective2003/87/ECforthemonitoring,reportingandSupplementingtheEUETSDirectiveasregardsmeasuresadoptedbytheInternationalCivilAviationOrganisationforthemonitoring,reportingandverificationofaviationemissionsforthepurposeofimplementingCORSIACommissionDelegatedRegulationAdoptedon18July2019andpublishedintheOfficialJournalon30September201910497https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R0856&from=EN98https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R1001&from=EN99https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R1122&from=EN100https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R0007101https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R1868&from=EN102https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32018R2066103https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32018R2067&from=EN104https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R1603&from=EN51verificationofaviationemissionsasregardsCORSIAEUETSStateAidGuidelines2021-2030RevisingtheEUETSStateAidGuidelinesforphase4toaccommodatethenewprovisionsintroducedbytherevisedEUETSDirectiveforindirectcarboncostcompensationschemesCommunicationfromtheCommission2020CommissionDelegatedDecision(EU)2020/1071ontheexclusionofincomingflightsfromSwitzerlandfromtheEUemissionstradingsystemAmendsAnnexIoftheEUETSDirectivetoexcludeincomingflightsfromSwitzerlandfromtheEUemissionstradingsystemasfrom1January2020CommissionDelegatedRegulationAdoptedon18May2020andpublishedintheOfficialJournalon21July2020105Appendix7Table7.1:MemberState/EEAEFTAstatecontributionstotheMarketStabilityReservein2019-2020(numberofallowances)MemberState/EEAEFTAStateMSRcontributions2019106MSRcontributions2020107Austria59357485614399Belgium98469949313899Bulgaria82927207843771Croatia16149841527552Cyprus932844882342CzechRepublic1540685814572765Denmark53407505051614Estonia29043192747085Finland71300256744021France2334679122082847Germany8538977080766957Greece1268449211997782Hungary51157084838755Iceland166450157439Ireland39913933775308105https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020D1071106FortheperiodJanuarytoAugust2019,thefiguresarebasedontheCommunicationfromtheCommissionC(2018)2801finalof15.5.2018,availableathttps://ec.europa.eu/clima/sites/clima/files/ets/reform/docs/c_2018_2801_en.pdf107FortheperiodsbetweenSeptembertoDecember2019andJanuarytoAugust2020,thefiguresarebasedontheCommunicationfromtheCommissionC(2019)3288final,availableathttps://ec.europa.eu/clima/sites/clima/files/ets/reform/docs/c_2019_3288_en.pdfStateofplayPlannedOngoingDone52Italy4030472938122721Latvia865501818645Liechtenstein37253524Lithuania17923241695292Luxembourg467394442090Malta354798335590Netherlands1429141113517705Norway33145703135127Poland3928217037155520Portugal64787756128029Romania1494129014132401Slovakia47525134495223Slovenia15777141492300Spain3266023430892081Sweden34571063269946UnitedKingdom4448062342072540Total397124722375625270Appendix8Table8.1:NER300unspentfundsundertheInnovFinEDPandandCEFDI:supportedprojectsintheperiodAugust2019toJune2020ProjecttitleDescriptionVOLTALIS(EDP)Voltalisisademandresponseaggregatorintheelectricitysector.Itprovidessmarttechnicalsolutionstoenablehouseholdloadsandsmallcommercialandindustrialloadstoparticipateinenergymarketsandunlocktheirflexibilitypotential.Theprojectwillimprovesecurityofsupply,byreducingtheriskofblack-outs,andwillimproveenergyefficiencybyreducingoverallelectricityconsumption.VoltaliswasawardedanEUR20millionloanfinancedfromtheNER300unspentfunds.STEELANOL(EDP):Advancedbio-fuelproductionfromwastegascomingfromsteel-makingTheSteelanoloperationreceivedanEUR75millionloanfullybackedbyNER300unspentresourcestosupportthedemonstrationoflowcarbonsteelmaking.Thisfirst-of-a-kindprojectaimstodemonstrateaneffectivepathwayforproducingbioethanolfromwoodwastefeedstockandfullyintegrateitintoalarge-scalesteelmill.Itrepresentsamajorbreakthroughinthedecarbonisationofthesector.EVChargingItaly(CEFDI)TheprojectaimstodevelopelectricvehiclecharginginfrastructureinItaly.Itwillinvolvetheinstallationofapproximately6850chargingpointsandtheassociatedconnectionstothedistributionnetworkovertheperiod2019-2023.ThefinancingoftheprojectamountstoEUR25millionfullybackedbytheNER300unspentfunds.53HamburgerHochbahnE-mobilityprogramme(CEFDI)ThisprojectbyHamburgerHochbahn,apublictransportoperatorinHamburg,aimstorenewandelectrifyHamburg’surbanpublictransportfleetwiththereplacementofcurrentdieselbusesby100e-busesandthedeploymentoftherelatedcharginginfrastructure.Theprojectpromoteruses100%certifiedrenewableenergyforitse-buses.Thecompany’sstrategyforeseesthatthecharginginfrastructureshouldbemodularandscalable,easytomaintain,andhighlyenergyandcost-efficient.VHHHamburge-mobilityprogramme(CEFDI)ThisprojectsupportsVHH,apublictransportoperatorinHamburg,inpurchasingapproximately155e-busestosubstituteolddieselbusesandbuildtheassociatedcharginginfrastructure.Itincludestheadaptationoffourdepotstoelectromobilityandtheconstructionofonenewdepotadaptedtoelectricbuses,aswellastheimplementationofsoftwareandITsystems.Theprojectpromoteruses100%certifiedrenewableenergy.LIGNOL(PDA)ThisprojectsupportsthebuildingofaLignolproductionplantatanexistingpulpmillinMörrum,Sweden,whichisexpectedtoproduceapproximately185000tonsofLignol(arenewable,lignin-basedbio-oil,mixableincombustionenginestoanydegreeandsuitableforblendingwithaviationfuel)annually.BesidesreducingCO2emissionsfromtheSwedishtransportsector,theproductionprocessforLignolishighlyenergyefficientanddoesnotproducetoxicemissionsorharmfulwasteproducts.TheestimateddemonstrationcostsamounttoEUR105.5million.SolarThermoElectricMagaldi(PDA)Thisproject,basedinItaly,supportsafirst-of-a-kindplantbasedonanewsolarthermalgenerationandstorageconceptandgeneratinggreenelectricitydispatchableondemand.Theplantwilloffercontinuouselectricalsupplyfromrenewableswithouttheneedtobuildlongtransmissionlines,displacingthecostofthermalplantsrunningonheavyfueloilordiesel.Thetotalpowergeneratedannuallyfromtheplantisexpectedtobeabout14300MWh/year.CostsarecurrentlyestimatedtosomeEUR36million.BIOFOREVER(PDA)Thisprojectsupportsademonstration-scalewood-to-ethanolbiorefinerybasedinRotterdam,producing8000tonnesofethanolperyear.TheinputtotheproductionprocesswillbewoodwasteofgradesAorB.Theoutputoftheproductionprocesswillbeethanolforbiofuels.ThedemosntrationcostsoftheprojectareestimatedatEUR30million.

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