Głowacki Law Firm

Benchmarks Decision of the Commission – rules on closures specified - Page 2
Friday, 04 February 2011 20:27


Significant capacity change – adjustment of an allocation

 

It should be noted that, pursuant to the Decision, an impact on the installation’s allocation of EUAs have, generally, three categories of events:

1) the change to an installation’s capacity (Articles 20 and 21 of the Decision),

2) the change to an installation’s operation (Article 22 of the Decision), and

3) the change to an installation’s activity level (Article 23 of the Decision)

 



'significant capacity extension' means a significant increase in a sub-installation's initial installed capacity whereby all of the following occur:

(i) one or more identifiable physical changes relating to its technical configuration and functioning other than the mere replacement of an existing production line take place, and

(ii) the sub-installation can be operated at a capacity that is at least 10% higher compared to the initial installed capacity of the sub-installation before the change, or

(iii) the sub-installation to which the physical changes relate has a significantly higher activity level resulting in an additional allocation of emission allowances of more than 50000 allowances per year representing at least 5% of the preliminary annual number of emission allowances allocated free of charge for this sub -installation before the change.

(j) 'significant capacity reduction' means one or more identifiable physical changes leading to a significant decrease in a sub-installation's initial installed capacity and its activity level of the magnitude considered to constitute a significant capacity extension

(
Article 3 points (i) and (j) of the Decision)



The first one - the change to an installation’s capacity can have two opposite forms: extension and reduction (these considerations concentrate on the capacity reduction), it relates in this case to the ones occurred after 30 June 2011, and in order to influence the installation’s allocation, should be significant (see: box).

 

If these conditions are met, the allocation to the installation shall be adjusted - accordingly to the Article 21 of the Decision - as of the year following the one during which the capacity reduction took place or as of 2013, if the significant capacity reduction took place before 1 January 2013.

 

The cessation of operations – no allowances

 

The conditions under which the an installation is deemed to have ceased operations are set out in Article 22 of the Decision. They relate to such rather obvious occurrences as the expiration or withdrawal of the greenhouse gas emissions permit, the permit in force in accordance with Directive 2008/1/EC or any other relevant environmental permit or technical impossibilities to operate the installation. The concrete deadline (6 months) for resuming ceased operations follows, however, from Article 22(1) point (e) of the Decision (extended term 18 months is provided for events that used to be usually defined as instances of the force majeure clause.

 

Article 22(1) point (e) of the Decision:

“An installation is deemed to have ceased operations, where any of the following conditions is met:

...

(e) the installation is not operating, but has been operating before and the operator cannot establish that this installation will resume operation at the latest within 6 months after having ceased operations. Member States may extent this period up to a maximum of 18 months if the operator can establish that the installation cannot resume operation within 6 months due to exceptional and unforeseeable circumstances that could not have been avoided even if all due care had been exercised and that are beyond the control of the operator of the installation concerned, in particular because of circumstances such as natural disasters, war, threats of war, terrorist acts, revolution, riot, sabotage or acts of vandalism”.

It is apparent from the abovementioned provision that operators should pay special attention to the calendar when the installation takes a break. 5 months of lack of operation doesn’t qualify for this provision (however may influence the installation’s activity level with effects specified in Article 23) but one month longer break poses a problem.

 

The aforementioned paragraph 1 (e) of the said Article does not apply to installations that are kept in reserve or standby and installations that are operated on a seasonal schedule, where all of the following conditions are fulfilled:

(a) the operator holds a greenhouse gas emissions permit and all other relevant permits;

(b) it is technically possible to start operations without making physical changes to the installation;

(c) regular maintenance is carried out.

 

Member States may suspend the issuance of the emission allowances to installations  referred to in paragraph 1(e) as long as it is not established that the installation will resume operations but the general effect of the situation where an installation has ceased operation, it that the Member State concerned shall not issue emission allowances to installation falling under Article 22 of the Decision as of the year following the cessation of operations.

 



 

Cap-and-Trade Schemes

Search

TwitterFacebookLinkedin
Copyright © 2009 - 2019 Michal Glowacki. All rights reserved.
The materials contained on this website are for general information purposes only and are subject to the disclaimer