|How does the allocation for a heat producer change when its consumers enter or leave the scope of ETS during the baseline period|
|Tuesday, 13 March 2012 18:17|
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The one of the fundamental rules as regards free allocation of emission permits for the heating sector in the period from 2013 to 2020 with respect to cross-boundary heat flows under the European Commission’s Decision of 27 April 2011 and the Guidance Documents 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
1) allocation is given to ETS heat consumers unless heat is imported from non-ETS heat producers,
2) allocation is given to ETS heat producers if consumers are not covered by the ETS.
Another Guidance document - Question&Answers on the harmonised free allocation methodology for the EU-ETS post 2012 of 9 November 2011 (http://ec.europa.eu/clima/documentation/
The said Q&A document confirms that following the rules for cross-boundary heat flows in Guidance Document 6, a heat producer only receives allocation for net heat flows it produces for non-ETS consumers.
A non-ETS heat consumer may, however, become an ETS heat consumer and vice versa. It should be recalled that this can have an effect in the allocation of the heat producer.
The specific clarifications given in the said Q&A document as regards this situation are as follows:
1. when a non-ETS consumer enters the scope of ETS, the activity level of the heat benchmark subinstallation that covers the heat export to non-ETS consumers will decrease;
2. when an ETS consumer falls outside the scope of the ETS, the activity level of the heat benchmark sub-installation that covers the heat export to non-ETS consumers will increase;
3. if the change occurred during the baseline period, this influences the historical activity level;
4. a non-ETS consumer entering the ETS scope can never lead to a significant capacity reduction at the heat producer side as physical changes outside the ETS can never give rise to a significant capacity changes;