When the change of the heat supplier under EU ETS rules leads to a significant change in the installations capacity, and consequently to a change in allocation of emission permits free of charge
Monday, 03 September 2012 06:17

 

The fundamental change in the rules of the EU ETS as from 2013 consisting in the allocation of free emission allowances to the heat-benchmark sub-installations principally for the consumption of the heat (and for the production thereof in exceptional cases only) necessitates the careful examination of technical connections in the context of the allocation rules.

 

 

In the context of significant capacity changes of heat benchmark sub-installations, two things are important to keep in mind:

 

- Significant capacity changes can only be the result of a physical change. If an installation would change heat supplier without making a physical change, the change in heat supply would not be regarded as a significant changes in capacity.

 

- The capacity is defined on the basis of consumption of heat produced by units covered by the EU ETS and export of heat produced by units covered by the EU ETS to non-EU ETS entities. Therefore switches to other heat suppliers or costumers can lead to a significant change in capacity even though the amount of heat consumption or export does not change.

 

Examples:

 

1. An EU ETS installation consumes heat produced by a boiler covered by the same permit.

The installation makes a physical change due to which it can consume more heat. The additional heat is sourced from a biomass-fueled CHP unit that is not part of the EU ETS.

 

This case would not be regarded as a significant capacity change since the amount of consumed heat that is eligible for free allocation does not change. Hence, the increase in heat consumption does not lead to a change in capacity.

 

2. An EU ETS installation exports heat to a non-EU ETS consumer. This consumers increase his production and heat consumption by 30%. The additional amount of heat is delivered by the EU ETS installation using existing boiler spare capacities without any physical change at the supplier's side. Due to the absence of a physical change, this increased consumption cannot constitute a significant capacity increase of the heat exporting heat benchmark sub-installation.

 

The source of the guidelines and examples: Guidance Document n°6 on the harmonized free allocation methodology for the EU-ETS post 2012 Cross-Boundary Heat Flows Final version issued on 14 April 2011

 

 

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