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					                 Consultation on the Transposition of Directive 2009/29/EC
                           EU Emissions Trading Scheme (ETS)



1.    Introduction
1.1   The purpose of this document is to outline the approach being adopted in transposing
      the revised ETS Directive (2009/29/EC), to provide details of the first phase of the
      transposition process, and to seek views of stakeholders and interested parties on the
      draft Regulations for that first phase. The draft Regulations for Phase 1 are outlined in
      a separate document - Draft European Communities (Greenhouse Gas Emissions
      Trading) (Amendment) Regulations 2010.

1.2   The revised ETS Directive (2009/29/EC) provides substantial amendments to the ETS
      Directive (2003/87/EC) so as to provide for a more efficient, more harmonised and
      fairer system. A copy of the Directives and details of other aspects of the ETS are
      available on the Department's website (www.environ.ie), on the Environmental
      Protection Agency's website (www.epa.ie), and on the European Commission's
      website (http://ec.europa.eu/environment/climat/emission/ets_post2012_en.htm).

1.3   EU Member States are required to bring into force the legal instruments necessary to
      comply with certain provisions of Directive 2009/29/EC by 31 December 2009 so as to
      prepare for the revised operation of the Community scheme from 2013 onwards.
      Specifically, this is to provide for the transposition of Article 9a(2) of the Directive
      2003/87/EC as inserted by Article 1(10) of Directive 2009/29/EC and Article 11 of the
      Directive 2003/87/EC as amended by Article 1(13) of Directive 2009/29/EC. These
      Articles concern the collection of duly substantiated and verified emissions data from
      installations that will only be covered by the EU ETS from 2013, the preparation of a
      national list of installations covered by the Directive and the allocation of free
      allowances to each one. The remaining provisions of the Directive are required to be
      transposed into national law by 31 December 2012.

1.4   It is proposed to transpose the Directive in two phases: the first phase of the
      transposition will provide for the transposition of the 2 Articles mentioned above; and
      the second phase will provide for the transposition of the remaining provisions of the
      Directive.

1.5   A Regulatory Impact Analysis (RIA) will be prepared as part of the transposition of the
      Directive and this will be undertaken in the second phase of the transposition process.
      The outcome of this consultation and any further consultation will be outlined in that
      RIA.



2     EU ETS
2.1   The aim of the EU ETS, which came into operation on 1 January 2005, is to help EU
      Member States achieve their commitments to limit or reduce greenhouse gas



Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 1 of 14
      emissions in a cost-effective way. Allowing participating companies to buy or sell
      emission allowances means that emission cuts can be achieved at least cost.

2.2   The EU ETS is the cornerstone of the EU's strategy for fighting climate change. It is
      the first international trading scheme for CO2 emissions in the world. It currently
      covers over 10,000 installations in the energy and industrial sectors which are
      collectively responsible for close to half of the EU's emissions of CO2 and 40% of its
      total greenhouse gas emissions.

2.3   The EU ETS is a 'cap and trade' scheme, that is to say it caps the overall level of
      emissions allowed but, within that limit, allows participants in the scheme to buy and
      sell allowances as they require. These allowances are the common trading 'currency'
      at the heart of the scheme. One allowance gives the holder the right to emit one tonne
      of CO2 or the equivalent amount of another greenhouse gas. The cap on the total
      number of allowances creates scarcity in the market. The EU ETS has put a price on
      carbon and proved that trading in greenhouse gas emissions works.

2.4   The rationale behind emissions trading is that it enables emission reductions to take
      place where the cost of the reduction is lowest, thus lowering the overall costs of
      combating climate change. More abatement will be undertaken by operators with
      lower abatement costs, therefore reducing the overall costs of meeting the emissions
      target (cap) set by any trading scheme.

2.5   Experience in the operation of the EU ETS since 2005 has called for the overall
      functioning to be improved in a number of respects. Discussions at EU level have led
      to a review of the ETS Directive and the Commission published its proposal for a
      revised ETS Directive in January 2008 in order to achieve the following 3 objectives:
      -     fully exploiting the potential of the EU ETS to contribute to the EU's overall
            greenhouse gas reduction commitments in an economically efficient manner;
      -     refining and improving the EU ETS in light of experience gathered; and
      -     contributing to transforming Europe into a low greenhouse-gas-emitting economy
            and creating the right incentives for forward looking low carbon investment
            decisions by reinforcing a clear undistorted and long-term carbon price signal.

2.6   In December 2008, the text of the revised ETS Directive was agreed by the European
      Parliament. The revised Directive aims to improve and extend the ETS and will
      provide for a more efficient, more harmonised and fairer system. Increased efficiency
      will be achieved by means of a longer trading period, a robust and annually declining
      emissions cap, and a substantial increase in the amount of auctioning. More
      harmonisation has been agreed in many areas, including with respect to the cap-
      setting and the rules for transitional free allocation. The fairness of the system has
      been substantially increased by the move towards EU-wide free allocation rules for
      industrial installation and by the introduction of a redistribution mechanism that entitles
      new Member States to auction more allowances




Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 2 of 14
3.    Legislating the EU ETS (EU and National)
3.1   Directive 2003/87/EC (ETS Directive) was transposed into Irish law by the European
      Communities (Greenhouse Gas Emissions Trading) Regulations 2004 (S.I. No. 437 of
      2004). The competent authority for the ETS in Ireland is the EPA.

3.2   Directive 2004/101/EC (Linking Directive) provides for a number of amendments to the
      ETS Directive - these relate to the inclusion of certified emissions reduction units and
      emission reduction units in the scheme. These amendments were transposed into
      Irish law by the European Communities (Greenhouse Gas Emissions Trading)
      (Amendment) Regulations 2005 (S.I. No. 706 of 2005), and the Kyoto Protocol Flexible
      Mechanisms Regulations 2006 (S.I. No. 244 of 2006). The latter Regulations provide
      for a link between the Kyoto Protocol project based mechanisms and the ETS.

3.3   Directive 2008/101/EC (Aviation Directive) provides further amendments to the ETS
      Directive so as to include aviation activities in the ETS. This Directive is required to be
      transposed by 2 February 2010. Certain aspects of the Directive required an earlier
      transposition in view of particular obligations on aircraft operators with respect to the
      submission of monitoring and reporting plans to the competent authority by end August
      2009. These provisions were transposed into Irish law by the European Communities
      (Greenhouse Gas Emissions Trading) (Aviation) Regulations 2009 (S.I. No. 274 of
      2009). Further Regulations to transpose the remaining aspects of the Directive are
      being progressed separately.

3.4   Directive 2009/29/EC (revised ETS Directive) provides for substantial amendments to
      the ETS Directive including some aspects of the ETS Directive which had been
      amended earlier by the Aviation Directive. Directive 2009/29/EC provides for some
      minor amendments to the Aviation Directive. The revised ETS Directive is required to
      be transposed primarily by 31 December 2012 with 2 of its Articles to be transposed by
      31 December 2009.



4.    Phase 1 - Transposition
4.1   Article 2 of Directive 2009/29/EC provides that Member States bring into force the
      laws, regulations and administrative provisions necessary to comply with certain
      provisions of the Directive before 31 December 2009. These are:
      -      Article 9a(2) of Directive 2003/87/EC as inserted by Article 1(10) of Directive
             2009/29/EC; and
      -      Article 11 of Directive 2003/87/EC as amended by Article 1(13) of Directive
             2009/29/EC.

4.2   The remaining provisions of the revised ETS Directive do not require transposition until
      31 December 2012. It is therefore proposed to transpose these 2 Articles by
      amending the Greenhouse Gas Emissions Trading Regulations and to consider
      consolidating/repealing these Regulations when the remaining provisions of the
      revised ETS Directive 2009/29/EC are being transposed.



Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 3 of 14
4.3   Consideration of issues relating to the transposition of the 2 Articles are explored in
      Appendix 1. However, in considering the transposition of these 2 Articles, it was
      necessary to explore the transposition of 3 other Articles - Articles 3, 10c and 27. As a
      result, the first phase provides for the transposition of the following:
      -      Article 3 of Directive 2003/87/EC as inserted by Article 1(2) of Directive
             2009/29/EC;
      -      Article 9a(2) of Directive 2003/87/EC as inserted by Article 1(10) of Directive
             2009/29/EC;
      -      Article 11 of Directive 2003/87/EC as amended by Article 1(13) of Directive
             2009/29/EC; and
      -      Article 27 of Directive 2003/87/EC as inserted by Article 1(28) of Directive
             2009/29/EC.

4.4. In addition, it was decided as part of the transposition process to use the opportunity to
     standardise the penalties provision across the ETS sectors - aviation and installations.
     As such, the amendment provided in the draft Regulations reflects the approach
     adopted in the partial transposition of the Aviation Directive last year and as outlined in
     the European Communities (Greenhouse Gas Emissions Trading) (Aviation)
     Regulations 2009 (S.I. No. 274 of 2009).



5.    Consultation
5.1   Comments are invited on the Draft European Communities (Greenhouse Gas
      Emissions Trading) (Amendment) Regulations 2010. Comments should be submitted
      by email to climatechangeinfo@environ.ie or by post to Climate Change Policy
      Section, Department of the Environment, Heritage and Local Government, Custom
      House, Dublin 1. Comments must be received by Wednesday 24 February 2010.




Climate Change Policy Section
Department of the Environment,
Heritage and Local Government
1 February 2010




Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 4 of 14
                                               Appendix 1

                                         Transposition Issues



      Article 9a(2): Adjustment of the Community-wide quantity of allowances
1.    Article 1(10) of Directive 2009/29/EC provides for the insertion of a new Article 9a in
      Directive 2003/87/EC. Article 9a is about the adjustment of the Community-wide
      quantity of allowances and only sub-article (2) is now required to be transposed. The
      text of this sub-article is as follows:

             Article 9a
      2.     In respect of installations carrying out activities listed in Annex I, which are only
             included in the Community scheme from 2013 onwards, Member States shall
             ensure that the operators of such installations submit to the relevant competent
             authority duly substantiated and independently verified emissions data in order
             for them to be taken into account for the adjustment of the Community-wide
             quantity of allowances to be issued.

             Any such data shall be submitted, by 30 April 2010, to the relevant competent
             authority in accordance with the provisions adopted pursuant to Article 14(1).

             If the data submitted are duly substantiated, the competent authority shall notify
             the Commission thereof by 30 June 2010 and the quantity of allowances to be
             issued, adjusted by the linear factor referred to in Article 9, shall be adjusted
             accordingly. In the case of installations emitting greenhouse gases other than
             CO2, the competent authority may notify a lower amount of emissions according
             to the emission reduction potential of those installations.

2.    This sub-article provides that operators of certain installations submit to the
      competent authority specified emissions data before 30 April 2010; and the
      competent authority notifies the Commission by 30 June 2010 as appropriate. The
      competent authority in this instance is the EPA.



      Certain Installations
3.    The installations involved are only those carrying on activities that come within the
      ETS from 2013 onwards and as such, it is only those new activities that have been
      added to Annex I of Directive 2009/29/EC. It is noted that some of the categories of
      activities in Annex I have been substantially amended and split into separate
      categories. A recategorisation of installations in Ireland will be necessary so as to
      identify all installations under the new categories.

4.    It is noted that some installations which fall under the new categories of activities have
      already been included in the ETS in Ireland because they may have been categorised
      under the general category of "combustion installations". As such, the identification of


Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 5 of 14
      those installations coming within the ETS from 2013 onwards is not readily available
      but the EPA is currently investigating and analysing this issue. It may be the case that
      an installation would be deemed to come within the ETS from 2013 by virtue of its
      activity being a new category in Annex I, but in Ireland's case, the activity may already
      be within the ETS.

5.    The new Annex I is only relevant to Article 9a(2) at this stage in that it serves to
      identify those installations which come within the ETS from 2013 onwards. It is not
      relevant to the application and granting of greenhouse gas emission permits or to other
      aspects of the Greenhouse Gas Emissions Trading (GHGET) Regulations. As such, it
      would not be appropriate at this stage to revise Schedule 1 of the GHGET Regulations
      as other aspects of the current transposition exercise will not affect the
      activities/installations already within the ETS. The new Annex will need to be included
      in the proposed Regulations as a Schedule to those Regulations. It is noted that
      Article 3 of the revised ETS Directive states that the provisions of the existing ETS
      Directive will continue to apply until 31 December 2012.

6.    The EPA are currently identifying those installations coming within the ETS from 2013
      onwards i.e. those installations not already within the ETS in Ireland and their
      appropriate category of activity. It is noted that aviation activities are not installations
      and come within the ETS from 2012.



      Specified Emissions Data
7.    Article 9a(2) places an obligation on operators to submit to the competent authority
      duly substantiated and independently verified emissions data in accordance with the
      provisions adopted pursuant to Article 14(1) of the ETS Directive.

8.    Neither Article 9a(2) or the remainder of the Directive or the Commission's Monitoring
      and Reporting Guidelines identify the emission data that is required to be submitted to
      the competent authority by those installations coming within the ETS for the first time
      in 2013. However, Article 10a(5) of the Directive refers to the reference year in the
      context of determining a maximum allocation level, as the average emissions of all old
      and new ETS installations between 2005 and 2007. Article 10a(2) also refers to a
      reference year in the context of defining the principles for benchmarking as the
      average performance of the 10% most efficient installations in a sector/subsector in
      the Community in the years 2007 - 2008.

9.    It could be argued that emissions data for the period 2005 to 2008 would be the
      appropriate dataset to be submitted to the competent authority by those installations
      coming within the ETS from 2013. However, it may be the case that for some
      installations that such data would not be available for each of those years and in those
      instances, the EPA would have to deal with those installations on a case by case
      basis.




Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 6 of 14
10.   In the absence of a dataset being prescribed in the Directive, it is proposed that the
      EPA should decide on the emissions data to be submitted. It is therefore proposed to
      avoid prescribing the dataset in the proposed Regulations and to leave this to the
      discretion of the EPA.

11.   The emissions data to be submitted requires to be duly substantiated and
      independently verified. The term "duly substantiated" is not defined in the Directive or
      in the Commission's Monitoring and Reporting Guidelines. It is not intended to define
      this term in the proposed Regulations. It is considered that the EPA could advise
      installations of the requirements with respect to duly substantiating their emissions
      data.

12.   With respect to independently verifying the emissions data, it is considered that the
      approach to be adopted would be similar to that adopted in the GHGET Regulations
      and in the Aviation Regulations (referred to in paragraph 3.3 above). The reports
      should be verified in accordance with the principles for monitoring, reporting and
      verifying emissions, and the Commission's Monitoring and Reporting Guidelines. The
      verifier should be independent and should be in a position to carry out the verification
      requirements of Article 15, to the satisfaction of the EPA.

13.   Article 14 of the ETS Directive currently requires Member States to ensure that
      operators report emissions to the competent authority in accordance with guidelines
      adopted by the Commission. Article 15 requires that such reports are subject to a
      verification process.

14.   However, Directive 2009/29/EC provides for amendments to Articles 14 and 15 of the
      ETS Directive. These are to provide for the adoption of a Commission regulation for
      the monitoring and reporting of emissions, and a Commission regulation for the
      verification of emission reports - both regulations to be adopted by 31 December 2011.

15.   As the Commission regulations relating to Articles 14 and 15 have not yet been
      formulated or adopted, it would seem reasonable and appropriate in the transposing
      instrument to refer to the provisions of Article 14(1) of the ETS Directive rather than
      being specific and referring to the existing monitoring and reporting guidelines, by
      default in referring to Article 14(1), reference is being made to the guidelines anyhow.



      Submission to the Competent Authority
16.   The obligation on operators to submit data to the EPA is mandatory in the Directive
      and as such operators would be expected to be penalised if they fail to comply with
      their obligations.

17.   It is noted that Regulation 16 of the GHGET Regulations provides for penalties and
      this Regulation could be relied upon in the event that an operator doesn't comply.
      However, in light of the approach adopted with respect to penalties under the Aviation



Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 7 of 14
      Regulations, it is intended to adopt the same approach here and to use the opportunity
      of the proposed Regulations to standardise the penalties.

18.   It is not proposed to provide for administration fees to be applied by the EPA in respect
      of administering the emissions data being submitted by installations. This is because,
      there is expected to be only a small number of installations that will be coming within
      the scope of the new scheme in 2013; the installations and the work involved in
      bringing them into the scheme should not be extensive as the systems and
      mechanisms are already in place; and the EPA will have access to some funding
      arising from the auctioning of allowances in the period to 2012 to cover the
      administration of the scheme.



      Submission to the Commission
19.   The EPA, as competent authority is obliged to notify the Commission of duly
      substantiated emissions data before 30 June 2010, and it may notify a lower amount of
      emissions in respect of those installations emitting greenhouse gases other than
      carbon dioxide.

20.   The GHGET Regulations provide for specific reporting by the EPA to the Commission
      on an annual basis, however, explicit provision would be required to provide for the
      new provision and to use the same terminology as that used in the Directive.




      Article 11: National Implementation Measures
21.   Article 1(13) of Directive 2009/29/EC provides for amendments to Article 11 in
      Directive 2003/87/EC. New text is being provided for Article 11. Previously Article 11
      concerned the allocation and issue of allowances which is now being dealt with in
      other Articles and Article 11 is now about national implementation measures. The text
      of the new Article 11 is as follows:

             Article 11
      1.     Each Member State shall publish and submit to the Commission, by 30
             September 2011, the list of installations covered by this Directive in its territory
             and any free allocation to each installation in its territory calculated in
             accordance with the rules referred to in Article 10a(1) and Article 10c

      2.     By 28 February of each year, the competent authorities shall issue the quantity
             of allowances that are to be allocated for that year, calculated in accordance with
             Articles 10, 10a and 10c.

      3.     Member States may not issue allowances free of charge under paragraph 2 to
             installations whose inscription in the list referred to in paragraph 1 has been
             rejected by the Commission.



Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 8 of 14
22.   This Article provides for the compilation and publication of the list of installations
      covered by the Directive in Ireland and the allocation of allowances to these
      installations.



      Compilation and publication of list of installations
23.   It is considered that the publishing and reporting arrangements under Article 11(1) and
      the issuing of allowances under Article 11(2) should be discharged by the EPA. This
      would be in accordance with the existing approach as adopted in the GHGET
      Regulations.

24.   Article 11(1) requires the listing of installations covered by this Directive. The
      installations would be those activities listed in Annex I of Directive 2009/29/EC but
      excluding aviation activities as the latter are not installations. The list is required to be
      published and submitted by 30 September 2011.



      Free Allocation
25.   Article 11(1) refers to the free allocations being calculated in accordance with rules
      referred to in Articles 10a(1) and 10c. Article 11(2) refers to the issuing of allowances,
      calculated in accordance with Articles 10, 10a and 10c. Those Articles refer to the
      Commission adopting Community-wide and fully-harmonised implementing measures
      for the allocation of the allowances, they also contain obligations for the Commission
      and concern the amounts of allowances to be auctioned, a Commission regulation on
      auctioning, rules relating to new entrants, listing of carbon leakage sectors as well as
      guidance on allocation methodology. In particular Article 10c concerns allocation of
      allowances for the modernisation of electricity generation. It is noted that Articles 10,
      10a and 10c are not required to be transposed at this stage. It is considered that in
      transposing Article 11, the references to the other Articles will be maintained as simply
      Articles of the Directive.

26.   The EPA will be responsible for identifying how they propose to allocate the free
      allowances and this work will be determined having regard to the harmonised
      approach to be adopted by the Commission. It would seem reasonable to expect that
      the proposed Commission regulation, rules and guidance would contain details for
      competent authorities on their proposed allocation of allowances. However, in the
      meantime, the EPA would need to separately ascertain how they propose to allocate
      the free allowances. As part of this process, the EPA would also need to identify any
      small installations which are to be excluded from the ETS in accordance with Article
      27(1) of the Directive, and any electricity production installations that would be eligible
      in accordance with Article 10c of the Directive; these aspects are dealt with below.

27.   For this purpose, the EPA will require some level of data from installations. The data
      to be submitted to competent authorities for this purpose is not clear in the Directive
      but it should become clearer during the course of the development of the above-



Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 9 of 14
      mentioned Commission documents. It is considered that some production-related data
      over a period of time would be required by the EPA.

28.   As such, it is proposed to adopt the same approach as in the case of the emissions
      data above and to allow the EPA to specify what data it requires for the purpose of
      ascertaining the allocation of free allowances. The proposed Regulations will not
      prescribe the dataset to be submitted.

29.   The obligation on operators to submit data to the EPA is not specified in the Directive
      and while it is necessary for the EPA so as to administer the scheme, it would be
      difficult to consider this a mandatory obligation on operators. It would be in the
      operator's interest to submit the required data so as to maximise allowances rather
      than run the risk of not getting the appropriate allowances. It would be difficult to apply
      penalties to operators for the non-supply of the data required by the EPA.

30.   However, where an operator does not supply data to the EPA, it will be a matter for the
      EPA to determine the appropriate data to be included with respect for the free
      allocation in such instances. This may require significant work by the EPA and as
      such, it is considered that operators should be penalised financially for this purpose.

31.   The EPA's deadline for submission of the list to the Commission is 30 September
      2011. The Commission's deadline for completing their proposed regulation and rules,
      referred to in paragraph 25 above is 31 December 2010. To allow the EPA adequate
      time to give advice on the data to be submitted, to consider and analyse the data
      submitted, to work through any issues that might arise and to prepare for the free
      allocation, it is considered that data should be submitted by operators to the EPA by
      28 February 2011.

32.   It is not proposed to provide for administration fees to be applied by the EPA in respect
      of administering the production-related data being submitted by installations.




      Article 27: Exclusion of small installations subject to equivalent measures
33.   Article 27 of the ETS Directive deals with the exclusion of small installations subject to
      equivalent measures. That Articles provides that Member States may exclude certain
      installations from the ETS where those installations meet specific criteria and where
      the Member State complies with a number of conditions. Such conditions include
      notifying the Commission of the proposed exclusion of an installation before or at the
      same time as the list of installations under Article 11(1) is being submitted to the
      Commission. The exclusion of an installation will only be effective after 1 January
      2013 and as such, it could be argued that it is not necessary to transpose this Article
      27 at this juncture. The text of Article 27 is as follows:




Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 10 of 14
             Article 27
      1.     Following consultation with the operator, Member States may exclude from the
             Community scheme installations which have reported to the competent authority
             emissions of less than 25 000 tonnes of carbon dioxide equivalent and, where
             they carry out combustion activities, have a rated thermal input below 35 MW,
             excluding emissions from biomass, in each of the three years preceding the
             notification under point (a), and which are subject to measures that will achieve
             an equivalent contribution to emission reductions, if the Member State
             concerned complies with the following conditions:

             (a)    it notifies the Commission of each such installation, specifying the
                    equivalent measures applying to that installation that will achieve an
                    equivalent contribution to emission reductions that are in place, before the
                    list of installations pursuant to Article 11(1) has to be submitted and at the
                    latest when this list is submitted to the Commission;

             (b)    it confirms that monitoring arrangements are in place to assess whether
                    any installation emits 25 000 tonnes or more of carbon dioxide equivalent,
                    excluding emissions from biomass, in any one calendar year. Member
                    States may allow simplified monitoring, reporting and verification measures
                    for installations with average annual verified emissions between 2008 and
                    2010 which are below 5 000 tonnes a year, in accordance with Article 14;

             (c)    it confirms that if any installation emits 25 000 tonnes or more of carbon
                    dioxide equivalent, excluding emissions from biomass, in any one calendar
                    year or the measures applying to that installation that will achieve an
                    equivalent contribution to emission reductions are no longer in place, the
                    installation will be reintroduced into the Community scheme;

             (d)    it publishes the information referred to in points (a), (b) and (c) for public
                    comment.

             Hospitals may also be excluded if they undertake equivalent measures.

      2.     If, following a period of three months from the date of notification for public
             comment, the Commission does not object within a further period of six months,
             the exclusion shall be deemed approved.

             Following the surrender of allowances in respect of the period during which the
             installation is in the Community scheme, the installation shall be excluded and
             the Member State shall no longer issue free allowances to the installation
             pursuant to Article 10a.

      3.     When an installation is reintroduced into the Community scheme pursuant to
             paragraph 1(c), any allowances issued pursuant to Article 10a shall be granted
             starting with the year of the reintroduction. Allowances issued to these


Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 11 of 14
             installations shall be deducted from the quantity to be auctioned pursuant to
             Article 10(2) by the Member State in which the installation is situated.

             Any such installation shall stay in the Community scheme for the rest of the
             trading period.

      4.     For installations which have not been included in the Community scheme during
             the period from 2008 to 2012, simplified requirements for monitoring, reporting
             and verification may be applied for determining emissions in the three years
             preceding the notification under paragraph 1 point (a).

34.   However, because of the tie in with Article 11(1) and to provide that the EPA may
      consider such installations in advance of their submission of the list of installations, it is
      considered necessary to provide for its transposition at this stage. Article 27 is
      discretionary provision and is similar to Articles 24 and 29 of the 2003 ETS Directive
      and as such, it is intended to adopt the same approach in transposing Article 27.




      Article 10c: Option for transitional free allocation for the modernisation of
      electricity generation
35.   This Article is about Member States seeking a derogation to give transitional free
      allocations to certain installations for electricity production which meet specific criteria.
      Article 10c(5) states that if any Member State intends to allocate allowances to such
      installations, applications are required to be submitted to the Commission by 30
      September 2011 i.e. the same deadline for the submission of the list of installations
      under Article 11(1). It would seem reasonable that if Article 10c is applicable to
      Ireland, then transposition should be undertaken at this stage so that the submission of
      applications is completed at the same time as the submission of the list of installations
      i.e. 30 September 2011.

36.   However, Ireland is not eligible for the derogation as we do not meet any of the 3
      conditions specified in Article 10c(1) and the submission of applications to the
      Commission under Article 10c(5) will not arise. The text of Article 10c(1) is as follows:

             Article 10c
      1.     By derogation from Article 10a(1) to (5), Member States may give a transitional
             free allocation to installations for electricity production in operation by 31
             December 2008 or to installations for electricity production for which the
             investment process was physically initiated by the same date, provided that one
             of the following conditions is met:

             (a)    in 2007, the national electricity network was not directly or indirectly
                    connected to the network interconnected system operated by the Union for
                    the Coordination of Transmission of Electricity (UCTE);



Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 12 of 14
             (b)    in 2007, the national electricity network was only directly or indirectly
                    connected to the network operated by UCTE through a single line with a
                    capacity of less than 400 MW; or

             (c)    in 2006, more than 30 % of electricity was produced from a single fossil
                    fuel, and the GDP per capita at market price did not exceed 50 % of the
                    average GDP per capita at market price of the Community.

37.   While the transposition of Article 10c does not arise in Ireland's case the reference to
      Article 10c with respect to the allocation or allowances and the rules referred to in
      Article 10c as stated in Article 11 will be retained for the purposes of transposition of
      Article 11 at this stage, as there may be other issues that will be clarified in those
      rules.



      Deadline for issuing allowances
38.   Article 11(3) requires the competent authority to issue the quantity of allowances by 28
      February each year. It is considered that the first year is 2013.




      Article 3: Definitions
39.   It is noted that Article 1(2) of the revised ETS Directive provides for amendments and
      additions to definitions contained in Article 3 of the 2003 Directive. While Article 1(2) is
      not required to be transposed at this stage, it is considered that aspects of this article
      may need to be transposed for the purposes of Article 9a(2), Article 11 and Annex I -
      these are the definitions of "greenhouse gases" and "combustion"; while "new entrant"
      and "electricity generator" are not referred to in Article 9a(2), Article 11 and Annex I -
      but they are referred to in Articles 10a and 10c, and on this basis, it is proposed to
      include them in the transposing instrument. As noted above, the provisions of the
      existing ETS Directive will continue to apply until 31 December 2012.

40.   The text of Article 3 is as follows:

             Article 3
      (c)    “greenhouse gases” means the gases listed in Annex II and other gaseous
             constituents of the atmosphere, both natural and anthropogenic, that absorb and
             re-emit infrared radiation;

      (h)    “new entrant” means:
             -    any installation carrying out one or more of the activities indicated in Annex
                  I, which has obtained a greenhouse gas emissions permit for the first time
                  after 30 June 2011,
             -    any installation carrying out an activity which is included in the Community
                  scheme pursuant to Article 24(1) or (2) for the first time, or



Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 13 of 14
             -      any installation carrying out one or more of the activities indicated in Annex
                    I or an activity which is included in the Community scheme pursuant to
                    Article 24(1) or (2), which has had a significant extension after 30 June
                    2011, only in so far as this extension is concerned.

      (t)    “combustion” means any oxidation of fuels, regardless of the way in which the
             heat, electrical or mechanical energy produced by this process is used, and any
             other directly associated activities, including waste gas scrubbing;

      (u)    “electricity generator” means an installation that, on or after 1 January 2005, has
             produced electricity for sale to third parties, and in which no activity listed in
             Annex I is carried out other than the “combustion of fuels”.




Consultation on the Transposition of Revised ETS Directive 2009/29/EC (February 2010)   page 14 of 14

				
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