Głowacki Law Firm

Transfer of allocated EUAs within the same group of companies – the problem persists - Page 2
Saturday, 24 April 2010 10:21

What we can expect as regards the third trading period


As was recalled above, the Court’s considerations in this case were founded on text of the Directive as of the first and second trading period.


There are no doubts that the alleged inconsistency flowing from divergent national laws of the Member States in that regard can pose a serious threat to the freedom of establishment and the common market – regardless of whether it originates in the Community law or the law at national level.


In that context, it is useful to recall the provisions of Articles 10a(19) and 10a(20) of the Directive 2003/87/EC (as amended by the Directive 2009/29/EC), which relate to transitional Community-wide rules for harmonised free allocation in the third trading period 2013 – 2020. The Directive envisions now that, by 31 December 2010, the Commission shall adopt ‘Community-wide and fully-harmonised implementing measures for the allocation of the allowances referred to in paragraphs 4, 5, 7 and 12, including any necessary provisions for a harmonised application of paragraph 19’.


It is apparent from Art. 10a(1) that this fully-harmonised implementing measure to be adopted by 31 December 2010 should include rules on allocations in the reserve for new entrants (5 % - Art. 10a(7)) as well as ‘harmonised application of paragraph 19’ (which relates just to the ‘installations that has ceased its operations’).


So, according to the said Art. 10a(7) of the Directive by 31 December 2010, the Commission should adopt harmonised rules for the application of the definition of ‘new entrant’, in particular in relation to the definition of ‘significant extensions’.


By the same date, as a part of the same measure, the Commission should define installations that ‘partially cease to operate or significantly reduce their capacity, and measures for adapting, as appropriate, the level of free allocations given to them accordingly’.


Let’s recall that according to the Art.10a(19), ‘No free allocation shall be given to an installation that has ceased its operations, unless the operator demonstrates to the competent authority that this installation will resume production within a specified and reasonable time. Installations for which the greenhouse gas emissions permit has expired or has been withdrawn and installations for which the operation or resumption of operation is technically impossible shall be considered to have ceased operations’.


To conclude, it is now for the Commission to decide, in particular, whether, mentioned in the Art. 10a(19), ‘the resumption of the production’ must take place in the same installation (or in the same Member State) or not. But generally – the said measure, to be adopted by the Commission, would be decisive for solving the problem outlined by the Arcelor in the case T 16/04.


And – it would be no longer the matter of the national laws of the Member States – but the matter of uniform Community law. It can be considered as a direction which is more safe for  companies as well as the Common Market and cross-border, intra-Community trade in emission allowances.


But the question, whether the said measure fulfills the expectations of global companies in that regard, in unknown yet.


Cap-and-Trade Schemes


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