Report 'Identifying Good Regulatory Practice in the EU Emissions

Identifying Good Regulatory Practice In The EU Emissions Trading Scheme ii Introduction to IMPEL The European Union Network for the Implementation and Enforcement of Environmental Law is an informal network of the environmental authorities of EU Member States, acceding and candidate countries, and Norway. The European Commission is also a member of IMPEL and shares the chairmanship of its Plenary Meetings. The network is commonly known as the IMPEL Network The expertise and experience of the participants within IMPEL make the network uniquely qualified to work on certain of the technical and regulatory aspects of EU environmental legislation. The Network’s objective is to create the necessary impetus in the European Community to make progress on ensuring a more effective application of environmental legislation. It promotes the exchange of information and experience and the development of greater consistency of approach in the implementation, application and enforcement of environmental legislation, with special emphasis on Community environmental legislation. It provides a framework for policy makers, environmental inspectors and enforcement officers to exchange ideas, and encourages the development of enforcement structures and best practices. Information on the IMPEL Network is also available through its web site at: http://europa.eu.int/comm/environment/impel iii iv Identifying Good Regulatory Practice In The EU Emissions Number of the report Trading Scheme 11/2004 Project Manager:– Dr Neil Davies, Environment Agency, England Report adopted at and Wales IMPEL Plenary Authors:- Meeting in Cardiff Ian Skinner (IEEP) December 2005 Catherine Bowyer (IEEP) Jason Anderson (IEEP) Project Group Members Number of Pages See Annex 4. Report : 32 Annexes : 14 EXECUTIVE SUMMARY The project on which this report is based set out to identify good regulatory practice in relation to the EU emissions trading scheme (EU ETS), which was established by Directive 2003/87/EC, and to inform the second phase of the EU ETS. It was organised through IMPEL and the information analysed in the project was obtained using a questionnaire that was distributed to regulatory authorities in a number of EU Member States. The questionnaire was finalised on the basis of discussions held at an initial IMPEL workshop (held in October 2004) of Member State experts, who are all actively involved in the regulatory aspects of the EU ETS. The draft findings, recommendations and conclusions were presented at a second workshop in March 2005, on the basis of which a draft report was produced. This was then peer reviewed by the participants of the workshops before being finalised in May 2005. In the course of the project, it was realised that the EU ETS was still at too early a stage to be able to identify good practice in relation to certain aspects of the scheme, such as monitoring and reporting. In addition, other practices were the result of particular national circumstances or choices, which made it difficult to identify whether one practice was inherently better than another. Hence, the report provides a snapshot of regulatory practice at an early stage of the EU ETS, which should provide some useful and interesting information to other regulatory authorities that are considering developing and implementing an emissions trading scheme. Additionally, the countries involved in the project identified significant common areas of concern, which they have agreed to take forward. Section 1 of the report provides more information on the aim of the project and the methodology used, while Section 2 gives an overview of the key characteristics of an emissions trading scheme for those readers unfamiliar with the instrument. Section 3 presents a detailed discussion of the findings of the project, while Section 4 presents conclusions that could usefully be taken into consideration when developing and implementing the regulatory aspects of an emissions trading scheme. Key findings of the project include: o From the regulatory perspective, the definitions and scope of activities to be covered by an emissions trading scheme need to be more precise than those included in command and control legislation aimed at similar sources. o Consideration needs to be given to the most cost-effective way of addressing installations that emit relatively low levels of greenhouse gas emissions, including whether they should be covered by an emissions trading scheme or another, parallel, instrument. v o Potential problems in the EU ETS have arisen as a result of the desire to leave as much of the operational detail as possible to the individual Member States. In the event of similar devolved emissions trading schemes, attention, therefore, needs to be paid to ensuring that aspects of the scheme that could potentially increase market distortions, e.g. the allocation methodology and the approach to new entrants and closed installations, are harmonised as far as possible. o A devolved approach is appropriate in relation to, for example, permitting and institutional structures, as the approach chosen reflects national legislative and regulatory circumstances. o The monitoring and reporting of emissions covered by an emissions trading scheme is complex. Hence, guidelines are likely to be complex, but consideration needs to be given to developing other means of demonstrating how monitoring and reporting should be done, e.g. the development of templates and ‘frequently asked questions’ sheets. o In order to ensure that a devolved scheme delivers in the same manner across the participants, consideration should be given to harmonising verification procedures and the accreditation of verifiers. o The devolved nature of the EU ETS has also led to replication of effort, e.g. in relation to the development of national registries, which could have been avoided. o The use of electronic means of communication, e.g. dedicated websites and email addresses and templates, has proved useful. Applications for permits can also be made electronically, although there might be legal issues surrounding signatures. o It is also useful to engage industry at an early stage in the process of setting up an emissions trading scheme, with dedicated working groups, seminars and workshops and group emails, all considered to be useful means of doing so. o Consideration could be given to developing a charging regime that aims to cover the costs of the scheme. In relation to future phases of the EU ETS, particularly the second phase that will run from 2008 to 2012, the report makes a number of recommendations, which have been developed into an action plan to be taken forward by Member State experts (see Section 5). The need for urgent action was identified with respect to: o The definitional problems present in the original Directive; o Issues arising from the existence of the new entrants reserve, particularly the methodology used to allocate allowances to new entrants; o The particular problems relating to installations that emit relatively low levels of greenhouse gases, including the potential application of a de minimus threshold to exclude the smallest emitters from the scheme, as well as the monitoring, reporting and verification of emissions from such installations; and o Various aspects of monitoring and reporting, including feeding in to the Commission’s consultation and ongoing stakeholder discussions. Other, less urgent action to be taken forward by the IMPEL EU ETS experts includes a review of the approach taken to the closure of installations, the development of guidelines on certain aspects of monitoring and reporting and a review of verification, as well as the regular exchange of information on general practice in relation to, for example, compliance, enforcement, registries and charging. vi Disclaimer This report on Identifying Good Regulatory Practice in the EU Emissions Trading Scheme is the result of a project within the IMPEL Network. The content does not necessarily represent the view of the national administrations or the Commission. vii viii IDENTIFYING GOOD REGULATORY PRACTICE IN THE EU EMISSIONS TRADING SCHEME Contents EXECUTIVE SUMMARY ..................................................................................................................................... v IDENTIFYING GOOD REGULATORY PRACTICE IN THE EU EMISSIONS TRADING SCHEME............. 1 1 Introduction ................................................................................................................................................. 1 1.1 The EU Emissions Trading Scheme .................................................................................................... 1 1.2 The Aim of this Report ....................................................................................................................... 1 1.3 Methodology ....................................................................................................................................... 2 1.4 Structure of this report ........................................................................................................................ 3 2 Overview of Emissions Trading Process..................................................................................................... 4 Box 2.1 – Cap and Trade versus Baseline and Credit Trading Systems ................................................. 4 3 Regulatory Practice in relation to the EU Emissions Trading Scheme ....................................................... 7 3.1 Links with other Legislation

Load more