21ST MEETING OF THE INFORMAL TECHNICAL WORKING GROUP ON BENCHMARKS FOR THE ETS. Subgroup of Working Group 3 under the Climate Change Committee

Transcription

1 21ST MEETING OF THE INFORMAL TECHNICAL WORKING GROUP ON BENCHMARKS FOR THE ETS Subgroup of Working Group 3 under the Climate Change Committee Brussels 17 March 2011 REPORT 1. Adoption of agenda and minutes of previous meetings The Commission welcomed the participants and the agenda of the meeting was adopted. The minutes of the 20th meeting were adopted. 2. Draft final data collection template The consultant gave a presentation on the Baseline data collection template, 3rd (final) draft explaining the differences with the previous version. A Member State ("MS" henceforth) asked about the decision of referring only on one HCUF for all the capacity changes occurring within the baseline period. The Commission explained that the value added related to have several HCUF, each related to a single capacity change, is relatively low compared to the burden for the operator to calculate it and for the verifier and the Competent Authority to check. A MS asked for a third party check of the template in order to avoid any possible mistake in the formulae. The Commission and the consultant explained that the third party check would go beyond the purposes of the development of the data collection template and that the consultant would provide anyway for a tool that enables Member States to check the 'integrity' of the file. Another MS and Ireland pointed out that the template asks for biomass emissions even if they are required neither as mandatory nor as memo items within the MRGs. The consultant and the Commission took note of the comment for further assessment of that aspect. 3. Updated guidance paper 3 on data collection The consultant gave a presentation on the Guidance paper number 3 on data collection. A MS queried about the potential difference in treatment of operators actually returning and measuring the returned condensate and those not doing so. The Commission explained that the net measurable heat shall always be considered as if the condensate is returned assuming default conditions for flow, temperature and pressure. Another MS asked for more clarification on the concept of 'conservative estimate' in the determination of measurable heat. The Commission and the consultant take not of the comment to provide for more clarity within the guidance. 1

2 Another participant queried why the guidance states that the application of the households rule is not mandatory. The Commission explained that it is on purpose as the application of the rule is based on the voluntary application by the operator. 4. Updated methodology report template The Commission gave a presentation on the Methodology report template. Two MS pointed out that the structure of the template looks too burdensome for the operators and one of the MS asked then for more clarification on the purpose of the document within the data verification process. The Commission explained that the methodology report is an essential document that needs to be always submitted by the operators to complement data provided through the data collection template; the Decision does not foresee specific requirements on the format and content of the methodology report and that the main purpose of the template developed is to provide for instrument that the Member States can use as a basis for developing the Member State specific template, giving the broadest possible picture of it. A MS asked for clarification on the 'simplified scheme' that is asked for in the template. The Commission explained that the 'simplified scheme' is to be meant as a simplified or schematic description of the installation and its sub-installations and that more clarity will be provided in the following version of the document. 5. Updated guidance paper 2 on allocation methodologies Updated guidance paper 6 on cross-boundary heat flows Updated guidance paper 8 on waste gases The Commission gave a presentation on the updated guidance papers on allocation methodologies, cross-boundary heat flows and waste gases. A MS posed a question related to the treatment of installations starting their normal operation before 30 th June 2011 but without the possibility for determining the capacity according to the general methodology of the average two highest monthly production volumes out of six.. The Commission argued that pragmatic solutions should be found to solve those issues, even waiting for those data to be submitted only when complete. Three MS expressed their concern on the procedure to be followed in cases similar to those rose by Spain and asked for more guidance to the Commission that took note of the comments for the next revision of the guidance documents. Another participant asked for more clarity on the timing for the issuance of the Guidance document on new entrants, given the overlap with some of the issues related to the treatment of incumbent installations having had significant changes in the baseline period. The Commission reassured Austria that the provisions of the guidance on allocation methodology will be fully mirrored, where relevant, in the guidance on new entrants and that this guidance will be published soon, but after the finalisation of the others, dealing with less urgent issues compared to those related to the data collection and incumbents. A delegation enquired about the legal basis of what is stated in the guidance document on allocation methodologies, i.e. linking the physical change and the related capacity change to the allocation in 2

3 case of installations having had the physical change before the cut off date of 30/06/2011 and the related capacity change, or part of it, after that date. The Commission explained that, normally, there's no time limit between the occurrence of the physical change and the related capacity change, after which, the allocation may be given, provided that the thresholds are met. When both the physical change and the capacity change can be accounted for within the 'incumbents' allocation' or the 'new entrants allocation', this ensures that no double counting of the allocation related to the increased capacity occurs. For the mentioned case, instead, part of the allocation related to the new capacity may have already be considered as part of the allocation based on historical data, leading to a potential double counting of emission allowances, if granting an allocation on the basis of the 'new entrant' rules after the cut off date. The Commission took anyway note for the next revision of the guidance paper. A MS asked about the cases of several small subsequent physical changes (so called 'debottlenecking' practice) and which date should be considered as the date of the significant capacity change. The Commission answered that the last start of changed operation related to the capacity change that leads to meet the threshold should be considered as reference date. Another MS queried about the eligibility to free allocation of heat produced via 'non ETS processes'. The Netherlands also expressed concerns related to the same issue. The Commission explained that heat can be eligible for free allocation if it is produced via an ETS process: those processes that are not covered by ETS cannot be taken into account when dealing with free allocation. A MS asked if the proposed definitions of incumbents and new entrants could not lead to a gap where an installation is neither incumbent nor new entrant. The Commission took note of this remark in view of the next revision of the relevant guidance documents. Concerning guidance document on the cross boundary heat flows, a MS welcomed the default rule to be applied in case of application of the households rule but argued that it should be applied at the producers' side, given that it covers the case in which no data from the consumer are available. The Commission took note for the next revision of the document. Another MS queried for more clarity on the example given on the same issues, in particular concerning the cases in which the district heating to private household can be seen as the 'predominant' one. The Commission took note for the next revision of the document. A participant argued that the formula for the evaluation of heat produced via CHP should be made easier but the Commission explained that there's the need for consistency with the approach already followed in case of the application of Article 10.c, this comment was echoed by another MS that also expressed concerns in case another approach would have been chosen. Concerning the Guidance document on waste gases, a MS, echoed by another MS, expressed its concerns about the allocation rules to ferro-alloy industry, especially for those cases in which no energy recovery is done. It was announced by Norway, that a paper was sent to the Commission expressing the concerns on the allocation rules to this production process. They also asked for adding the ferro-alloys industry within paragraph 'background' of the document. The Commission explained that, in the spirit of the Directive, only an efficient use of waste gases shall be rewarded. According to literature, the sector has a huge potential to reduce its emissions from waste gases, recovering heat from it. The Commissions intends to encourage such a reduction 3

4 in recognising an additional allocation in case changes are made to the plants in order to recover energy from waste gases. Another participant argued that some more details should be added to the definition of waste gases, like the fact that waste gases should have a high calorific value that allows them to burn even without auxiliary fuels and proposed a new drafting. 6. New guidance paper on verification The agenda item was postponed to the next Technical WG Meeting. 7. New guidance paper 9 on sector-specific issues The consultants gave a presentation on Guidance n. 9 Sector specific guidance. A MS asked for inserting more details concerning the Soderberg method in the section dedicated to Aluminium. Another MS queried about the indirect emission that should be taken into account when dealing with heat and electricity exchangeability. It shall be made clear that this only refers to the emissions related to electricity used within the mineral wool production process and not to 'other' electricity. The Commission took note of the comment for the next revision of the Guidance document. A delegation asked for more clarity on some specific processes, like the production of lime within the sugar production process, or the use of shale oil for the production of cement. The Commission answered that this guidance documents only aims at covering all product benchmarks and that guidance on all possible issues in various sectors was not considered feasible. 8. Draft final guidance paper 1 on general principles Draft final guidance paper 5 on carbon leakage The Commission gave a presentation on Guidance Documents n. 1 and 5 final format. No major comments were raised by the Member States. 9. Progress on the NIMs implementation process As the tour de table was already done during the 20 th Technical WG Benchmarks of Feb-11, an update of the NIM implementation process within the Member States was moved to the next Technical WG Benchmarks. 10. Exclusion of small installations subject to equivalent measures under Article 27 of the Directive The Commission gave a presentation on the exclusion of small installations subject to equivalent measures (Art. 27). Some MS asked what was exactly meant in the presentation by "Equivalent measures should compensate for not being in the EU ETS". The Commission replied that this basically means that in 4

5 the construction of the equivalent measures, the amount of free allowances that the installation would have been allocated if it would had stayed under EU ETS, should play an important role. A MS asked to discuss this topic also at a WG III meeting of the Climate Change Committee. The Commission replied that it is willing to do so. Another MS asked whether there is a common definition for "hospitals". The Commission referred to the "Guidance on Interpretation of Annex I of the EU ETS Directive" that was endorsed by CCC on 18 th March Some Member States asked whether an installation should be reintroduced if it does not comply with the equivalent measures. The Commission replied that this is stipulated in point (c) of paragraph 1 of Article 27: an installation must be reintroduced if it emits more than 25 kton or if the equivalent measures "are no longer in place". A MS added that MS should have sanctions if the equivalent measures are not complied with. Another MS asked whether that sanction could also be a "reintroduction". Another delegation asked for some procedural aspects on the notification of the small installations. The Commission referred to its slides referring to Transposition of Art 27 in national legislation. Another participant asked for recent developments related to the carbon leakage status of the "manufacture of bricks and tiles" subsector. The Commission replied that the situation should clear up in the coming weeks. A representative of a MS asked how an installation that falls under the scope of ETS, but is excluded based on Article 27, will be treated when it relates to the application of the "crossboundary heat flows" rules for other ETS installations. The Commission replied that the allocation is calculated based on historical data therefore it is not possible to take into account the fact that installations may be excluded according to Art. 27 of the ETS Directive. 11. Any other business Ecofys gave a presentation on the MS workshop preparation. The main aim of the organised workshops is to provide help and support to Member States' work. 5