EU Commission Prepares for Third Phase of EU ETS

9 July 2010: The European Commission has adopted a decision determining for the first time a cap on the number of emission allowances that will be available under the EU Emissions Trading System (EU ETS) in 2013, the beginning of the third phase of the System covering the 2013-2020 trading period. It also launched a tool to estimate fuel consumption by small aircraft operators as part of their compliance with the EU ETS.

The cap on the number of emission allowances for the year 2013 has been determined at 1.927 billion. It has been calculated on the basis of a formula applying a 1.74% annual reduction in allowances below the average yearly total allocated through member States' national allocation plans in the 2008-2012 trading period. The application of this reduction each year to 2020 and beyond is expected to result in a 21% fall in emissions from the 2005 level by 2020.
 The cap is not considered definitive, as an adjusted cap taking into account the inclusion in the EU ETS from 2013 of new sectors and gases is to be published in September 2010, and the 2013 cap for the aviation sector, which will join the EU ETS in 2012, will be determined by a separate decision.

The cap just determined by the Commission could be revised if a decision is taken to increase the emission reduction target to 30%, as the EU has committed to do if other major economies agree to take on their fair share of a global emissions reduction effort. EU Commissioner for Climate Action Connie Hedegaard stressed that an EU-wide cap that decreases annually provides market operators with a long-term perspective and the necessary predictability on which they can base decisions to invest in emission reductions and in green technologies.

In addition, the Commission adopted a regulation approving the use of a tool to estimate fuel consumption by small aircraft operators as part of their compliance with the EU ETS. The tool enables small-emitter aircraft operators with a limited number of flights per annum or small amount of annual carbon dioxide emissions to use simplified monitoring procedures. It models the fuel consumption of their flights rather than measuring consumption of each flight. The tool is also expected to be used by other aircraft operators to determine estimates of fuel consumption for specific flights where actual fuel consumption data is missing. [EU Press Release on the Cap] [FAQs on the Cap] [EU Press Release on the Tool] [The Tool]