### member states should partially compensate , in accordance with state aid rules , certain installations in sectors or sub - sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices . the protocol and accompanying decisions adopted by the conference of the parties in paris need to provide for the dynamic mobilisation of climate finance , technology transfer and capacity building for eligible parties , particularly those with least capabilities . public sector climate finance will continue to play an important role in mobilising resources after 2020 . therefore , auction revenues should also be used for climate financing actions in vulnerable third countries , including adaptation to the impacts of climate . the amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed intended nationally determined contributions , subsequent investment plans and national adaptation planning processes . member states should also use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy . ### member states should compensate indirect costs for sectors or sub - sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices . the protocol and accompanying decisions adopted by the conference of the parties in paris need to provide for the dynamic mobilisation of climate finance , technology transfer and capacity building for eligible parties , particularly those with least capabilities . public sector climate finance will continue to play an important role in mobilising resources after 2020 . therefore , auction revenues should also be used for climate financing actions in vulnerable third countries , including adaptation to the impacts of climate . the amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed intended nationally determined contributions , subsequent investment plans and national adaptation planning processes . member states should also use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy .


### in order to respect the auctioning share set out in article 10 , the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the member state auctioning share , the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the member state auctioning share in later years . where , nonetheless , the maximum level is reached , free allocations shall be adjusted accordingly . any such adjustment shall be done in a uniform manner . ### in order to respect the auctioning share set out in article 10 , the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the member state auctioning share , the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the member state auctioning share in later years . where , nonetheless , the maximum level is reached , free allocations shall be adjusted accordingly . any such adjustment shall be targeted in accordance with the carbon leakage risk and shall in any case guarantee that 100% free allocation up to the level of the benchmarks is maintained .


### if the eib recommends not financing an investment and provides reasons for this recommendation , a decision shall only be adopted if a majority of two - thirds of all members vote in favour . the member state in which the investment will take place and the eib shall not be entitled to cast a vote in this case . for small projects funded through loans provided by a national promotional bank or through grants contributing to the implementation of a national programme serving specific objectives in line with the objectives of the modernisation fund , provided that not more than 10% of the member states ' share set out in annex iib is used under the programme , the two preceding sentences shall not apply . ### if the eib recommends not financing an investment and provides reasons for this recommendation , a decision shall only be adopted if a majority of the beneficiary member states vote in favour . the member state in which the investment will take place and the eib shall not be entitled to cast a vote in this case .


### the allowances shall be made available for innovation in low - carbon industrial technologies and processes and support for demonstration projects for the development of a wide range of ccs and innovative renewable energy technologies that are not yet commercially viable in geographically balanced locations . in order to promote innovative projects , up to 60% of the relevant costs of projects may be supported , out of which up to 40% may not be dependent on verified avoidance of greenhouse gas emissions provided that pre - determined milestones are attained taking into account the technology deployed . ### the allowances shall be made available for innovation in low - carbon industrial technologies and processes and support for demonstration projects for the development of a wide range of ccs and innovative renewable energy technologies that are not yet commercially viable in geographically balanced locations . in order to promote innovative projects , up to 75% of the relevant costs of projects may be supported , out of which up to 25% may not be dependent on verified avoidance of greenhouse gas emissions provided that pre - determined milestones are attained taking into account the technology deployed . the commission shall publish the state aid guidelines for member state co - financing of eligible projects .


### the auctioning of allowances remains the general rule , with free allocation as the exception . consequently , and as confirmed by the european council , the share of allowances to be auctioned , which was 57% over the period 2013 - 2020 , should not be reduced . the commission ' s impact assessment18 provides details on the auction share and specifies that this 57% share is made up of allowances auctioned on behalf of member states , including allowances set aside for new entrants but not allocated , allowances for modernising electricity generation in some member states and allowances which are to be auctioned at a later point in time because of their placement in the market stability reserve established by decision 2015 / … of the european parliament and of the council19 . __________________ 18 secxx 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec . ### the auctioning of allowances remains the general rule , with free allocation as the exception . consequently , and as confirmed by the european council , the share of allowances to be auctioned , which was 52% over the period 2013 - 2020 , should not be reduced . the commission ' s impact assessment18 provides details on the auction share and specifies that this 52% share is made up of allowances auctioned on behalf of member states , including allowances for modernising electricity generation in some member states . __________________ 18 secxx 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec .


### sectors and sub - sectors where the product exceeds 0 . 2 from multiplying their intensity of trade with third countries , defined as the ratio between the total value of exports to third countries plus the value of imports from third countries and the total market size for the european economic area , by their emission intensity , measured in kgco2 divided by their gross value added , shall be deemed to be at risk of carbon leakage . such sectors and sub - sectors shall be allocated allowances free of charge for the period up to 2030 at 100% of the quantity determined in accordance with the measures adopted pursuant to article 10a . ### sectors and sub - sectors where the product from multiplying their intensity of trade with third countries by their emission intensity is above 0 . 01 , as well as sectors that were deemed at risk of carbon leakage between 2013 and 2020 , may be included in the group referred to in paragraph 1 , on the basis of a qualitative assessment using the following criteria


### the fund shall also finance small - scale investment projects in the modernisation of energy systems and energy efficiency . to this end , the investment board shall develop guidelines and investment selection criteria specific to such projects . ### the fund shall also finance small - scale investment projects in the modernisation of energy systems and energy efficiency , and projects in non - ets sector , with an aim to reduce ghg emissions . to this end , the beneficiary member states shall develop rules and investment selection criteria specific to such projects , in line with the objectives of the fund and the guidance elaborated by the eib referred to in paragraph 4 .


### a list of installations covered by this directive for the five years beginning on 1 january 2021 shall be submitted by 30 september 2018 , and lists for the subsequent five years shall be submitted every five years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the five calendar years preceding its submission . free allocations shall only be given to installations where such information is provided . ### a list of installations covered by this directive for the two years beginning on 1 january 2021 shall be submitted by 30 september 2018 , and lists for the subsequent two years shall be submitted every two years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the two calendar years preceding its submission . free allocations shall only be given to installations where such information is provided .


### 400 million allowances shall be available to support innovation in low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage of co2 as well as demonstration projects of innovative renewable energy technologies , in the territory of the union . ### 400 million allowances , taken from the auctioning share , shall be available to support and leverage investments , using different instruments offered by the european investment bank , in innovation in low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage of co2 as well as demonstration projects of innovative renewable energy technologies , in the territory of the union . additionally member states should dedicate auctioning revenues as equity investment to the european investment bank , for example via efsi , in order to leverage investments towards the further development of a competitive , innovative industrial base in europe ; taking into account the eu´s reindustrialisation goal of 20% gdp until 2020 and envisaging a share of 30% until 2030 ;


### in order to respect the auctioning share set out in article 10 , the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the member state auctioning share , the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the member state auctioning share in later years . where , nonetheless , the maximum level is reached , free allocations shall be adjusted accordingly . any such adjustment shall be done in a uniform manner . ### in order to respect the auctioning share set out in article 10 , the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the member state auctioning share , the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the member state auctioning share in later years . where , nonetheless , the maximum level is reached , allowances from the market stability reserve and the new entrants reserve shall be utilised to compensate for the respective lack of free allocations . any further adjustment of free allocation shall only be done thereafter and should not be applied on free allocations adjusted by a linear reduction factor as referred to in article 9 .


### the fund shall be governed by an investment board and a management committee , which shall be composed of representatives from the beneficiary member states , the commission , the eib and three representatives elected by the other member states for a period of 5 years . the investment board shall be responsible to determine an union - level investment policy , appropriate financing instruments and investment selection criteria . the management committee shall be responsible for the day - to - day management of the fund . ### the fund shall be governed by an investment board and a management committee , which shall be composed of representatives from the beneficiary member states , the commission , the eib and three representatives elected by the other member states for a period of 5 years . the investment board shall be responsible to determine an union - level investment policy , appropriate financing instruments and investment selection criteria which should take into account national circumstances . the management committee shall be responsible for the day - to - day management of the fund .


### the fund shall also finance small - scale investment projects in the modernisation of energy systems and energy efficiency . to this end , the investment board shall develop guidelines and investment selection criteria specific to such projects . ### the fund shall also finance small - scale investment projects in the modernisation of energy systems and energy efficiency . to this end , the beneficiary member states shall develop rules and investment selection criteria specific to such projects , in line with the objectives of the fund and the guidance elaborated by an advisory board referred to in paragraph 4 .


### 400 million allowances shall be available to support innovation in low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage of co2 as well as demonstration projects of innovative renewable energy technologies , in the territory of the union . ### 400 million allowances , taken from the share of allowances to be auctioned , shall be available to support and leverage investments , using different instruments managed by the european investment bank , in innovation in low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at environmentally safe ccs and ccu as well as demonstration projects of innovative renewable energy technologies , energy conversion and storage , as well as electric battery development in the territory of the union .


### a list of installations covered by this directive for the five years beginning on 1 january 2021 shall be submitted by 30 september 2018 , and lists for the subsequent five years shall be submitted every five years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the five calendar years preceding its submission . free allocations shall only be given to installations where such information is provided . ### a list of installations covered by this directive for the two years beginning on 1 january 2021 shall be submitted by 30 september 2018 , and lists for the subsequent two years shall be submitted every two years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the five calendar years preceding its submission . free allocations shall only be given to installations where such information is provided .


### the fund shall be governed by an investment board and a management committee , which shall be composed of representatives from the beneficiary member states , the commission , the eib and three representatives elected by the other member states for a period of 5 years . the investment board shall be responsible to determine an union - level investment policy , appropriate financing instruments and investment selection criteria . the management committee shall be responsible for the day - to - day management of the fund . ### each of the beneficiary member states shall be responsible for the governance of its own allocation share of the fund . each of the beneficiary member states shall be assisted by an advisory board , which shall be composed of representatives from the beneficiary member states and the eib . the advisory board shall be responsible to determine guidance in relation to objectives of an union - level investment policy with regard to this fund , appropriate financing instruments and role of national financing institutions as well as investment selection criteria , taking into account technological neutrality of projects and specific needs of the beneficiary member states as well as transparency and effectiveness of the selection process . the beneficiary member states shall be responsible for the day - to - day management of the fund . the rules elaborated by member states shall be made public . upon a request by a beneficiary member state , the ebi shall take over the day - to - day management as mentioned above in the member state concerned . the chairmanship of the advisory board shall be held by the beneficiary member states and be based on a one - year - term rotation model . decisions on financing particular projects in beneficiary member states is taken by member state concerned on the basis of the agreed guidance . member states may decide to use all or part of the proceeds from the fund in order to finance the projects contributing to the implementation of a national programmes serving specific objectives in line with the objectives of the modernisation fund . simplified arrangements for both small - scale projects and projects contributing to implementation of national programs shall be ensured .


### the main long - term incentive from this directive for the capture and storage of co2 , new renewable energy technologies and breakthrough innovation in low - carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for co2 emissions which are permanently stored or avoided . in addition , to supplement the resources already being used to accelerate demonstration of commercial ccs facilities and innovative renewable energy technologies , eu ets allowances should be used to provide guaranteed rewards for deployment of ccs facilities , new renewable energy technologies and industrial innovation in low - carbon technologies and processes in the union for co2 stored or avoided on a sufficient scale , provided an agreement on knowledge sharing is in place . the majority of this support should be dependent on verified avoidance of greenhouse gas emissions , while some support may be given when pre - determined milestones are reached taking into account the technology deployed . the maximum percentage of project costs to be supported may vary by category of project . ### the main long - term incentive from this directive for carbon capture and storage and carbon capture and use , new renewable energy technologies and breakthrough innovation in low - carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for co2 emissions which are permanently stored or avoided . in addition , to supplement the resources already being used to accelerate demonstration of commercial ccs and ccu facilities and innovative renewable energy technologies , eu ets allowances should be used to provide guaranteed rewards for deployment of ccs and ccu facilities , new renewable energy technologies and industrial innovation in low - carbon technologies and processes in the union for co2 stored or avoided on a sufficient scale , provided an agreement on knowledge sharing is in place . the majority of this support should be dependent on verified avoidance of greenhouse gas emissions , while some support may be given when pre - determined milestones are reached taking into account the technology deployed . the maximum percentage of project costs to be supported may vary by category of project .


### the european council confirmed that the modalities , including transparency , of the optional free allocation to modernise the energy sector in certain member states should be improved . investments with a value of €10 million or more should be selected by the member state concerned through a competitive bidding process on the basis of clear and transparent rules to ensure that free allocation is used to promote real investments modernising the energy sector in line with the energy union objectives . investments with a value of less than €10 million should also be eligible for funding from the free allocation . the member state concerned should select such investments based on clear and transparent criteria . the results of this selection process should be subject to public consultation . the public should be duly kept informed at the stage of the selection of investment projects as well as of their implementation . ### the european council confirmed that the modalities , including transparency , of the optional free allocation to modernise the energy sector in certain member states should be improved . investments with a value of €20 million or more should be selected by the member state concerned through a competitive bidding process on the basis of clear and transparent rules to ensure that free allocation is used to promote real investments modernising the energy sector in line with the energy union objectives . investments with a value of less than €20 million should also be eligible for funding from the free allocation . the member state concerned should select such investments based on clear and transparent criteria . the results of this selection process should be subject to public consultation . the public should be duly kept informed at the stage of the selection of investment projects as well as of their implementation .


### member states should partially compensate , in accordance with state aid rules , certain installations in sectors or sub - sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices . the protocol and accompanying decisions adopted by the conference of the parties in paris need to provide for the dynamic mobilisation of climate finance , technology transfer and capacity building for eligible parties , particularly those with least capabilities . public sector climate finance will continue to play an important role in mobilising resources after 2020 . therefore , auction revenues should also be used for climate financing actions in vulnerable third countries , including adaptation to the impacts of climate . the amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed intended nationally determined contributions , subsequent investment plans and national adaptation planning processes . member states should also use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy . ### member states shall fully compensate certain installations in sectors or sub - sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices . this objective must be achieved through a harmonized eu approach . the protocol and accompanying decisions adopted by the conference of the parties in paris need to provide for the dynamic mobilisation of climate finance , technology transfer and capacity building for eligible parties , particularly those with least capabilities . public sector climate finance will continue to play an important role in mobilising resources after 2020 . therefore , auction revenues should also be used for climate financing actions in vulnerable third countries , including adaptation to the impacts of climate . the amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed intended nationally determined contributions , subsequent investment plans and national adaptation planning processes . member states should also use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy .


### the fund shall be governed by an investment board and a management committee , which shall be composed of representatives from the beneficiary member states , the commission , the eib and three representatives elected by the other member states for a period of 5 years . the investment board shall be responsible to determine an union - level investment policy , appropriate financing instruments and investment selection criteria . the management committee shall be responsible for the day - to - day management of the fund . ### the fund shall be governed by the beneficiary member states assisted by an advisory board , which shall be composed of representatives from the beneficiary member states and bei . the advisory board shall be responsible to elaborate guidelines in relation to objectives of the union - level investment policy related to this fund and investment selection criteria which should take into account national circumstances .


### the funds shall be distributed based on a combination of a 50% share of verified emissions and a 50% share of gdp criteria , leading to the distribution set out in annex iib . ### the eib is responsible for the monetization of the 2% allowances referred to in article 10 in equal volumes each year of the period 2021 - 2030 . the monetization calendar should be defined in consultation with the beneficiary member states . the funds shall be distributed among the beneficiary member states based on a combination of a 50% share of verified emissions and a 50% share of gdp criteria , leading to the distribution set out in annex iib .


### the investments supported shall be consistent with the aims of this directive and the european fund for strategic investments . ### the investments supported shall be consistent with the aims of this directive .


### the auctioning of allowances remains the general rule , with free allocation as the exception . consequently , and as confirmed by the european council , the share of allowances to be auctioned , which was 57 % over the period 2013 - 2020 , should not be reduced . the commission ' s impact assessment provides details on the auction share and specifies that this 57 % share is made up of allowances auctioned on behalf of member states , including allowances set aside for new entrants but not allocated , allowances for modernising electricity generation in some member states and allowances which are to be auctioned at a later point in time because of their placement in the market stability reserve established by decision 2015 / … of the european parliament and of the council19 . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec . ### contrary to the decision of the european council , the share of allowances to be auctioned , which was 57 % over the period 2013 - 2020 , should be reduced , while the proportion of allowances allocated free of charge should be increased in order to ensure that enough of them can be allocated free of charge in the fourth trading period and thus significantly limit the risk of application of the correction factor . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec .


### the fund shall be governed by an investment board and a management committee , which shall be composed of representatives from the beneficiary member states , the commission , the eib and three representatives elected by the other member states for a period of 5 years . the investment board shall be responsible to determine an union - level investment policy , appropriate financing instruments and investment selection criteria . the management committee shall be responsible for the day - to - day management of the fund . ### beneficiary member states shall be responsible for the governance of its own allocation share of the fund . each of the beneficiary member states shall be assisted by an advisory board which shall be composed of representatives from the beneficiary member states and the eib . the advisory board shall be responsible to determine framework guidance which shall include an union - level investment policy , appropriate financing instruments and investment selection criteria . day - to - day management shall be provided by the beneficiary member states . the chairmanship of the advisory board shall be annually held by the beneficiary member state . the individual decision on financing particular projects is taken by member state .


### in addition , 50 million unallocated allowances from the market stability reserve established by decision 2015 / … shall supplement any existing resources remaining under this paragraph for projects referred to above , with projects in all member states including small - scale projects , before 2021 . projects shall be selected on the basis of objective and transparent criteria . ### in addition , 50 million unallocated allowances from the market stability reserve established by decision 2015 / … shall supplement any existing resources remaining under this paragraph as a consequence of funds resulting from ner300 allowance auctions between 2013 and 2020 not having been used , for projects referred to in subparagraphs 1 and 2 , with projects in all member states including small - scale projects , before 2021 and from 2018 onwards . projects shall be selected on the basis of objective and transparent criteria , taking into account their relevance in relation to the decarbonisation of the related sectors . projects supported under this subparagraph may also receive further support under sub - paragraphs 1 and 2 .


### a list of installations covered by this directive for the five years beginning on 1 january 2021 shall be submitted by 30 september 2018 , and lists for the subsequent five years shall be submitted every five years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the five calendar years preceding its submission . free allocations shall only be given to installations where such information is provided . ### a list of installations covered by this directive for the two years beginning on 1 january 2021 shall be submitted by 30 september 2018 , and lists for the subsequent two years shall be submitted every two years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the two calendar years preceding its submission . free allocations shall only be given to installations where such information is provided .


### the auctioning of allowances remains the general rule , with free allocation as the exception . consequently , and as confirmed by the european council , the share of allowances to be auctioned , which was 57% over the period 2013 - 2020 , should not be reduced . the commission ' s impact assessment18 provides details on the auction share and specifies that this 57% share is made up of allowances auctioned on behalf of member states , including allowances set aside for new entrants but not allocated , allowances for modernising electricity generation in some member states and allowances which are to be auctioned at a later point in time because of their placement in the market stability reserve established by decision 2015 / … of the european parliament and of the council19 . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec . 18 secxx ### the auctioning of allowances remains the general rule , with free allocation as the exception . consequently , and as confirmed by the european council , the share of allowances to be auctioned , which was 52% over the period 2013 - 2020 , should not be reduced . the commission ' s impact assessment18 provides details on the auction share . allowances originally covered by the transitional community - wide rules for harmonized free allocation should not be considered to be auctioned allowances for the purposes of the calculation of the auction share . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec . 18 secxx


### a list of installations covered by this directive for the five years beginning on 1 january 2021 shall be submitted by 30 september 2018 , and lists for the subsequent five years shall be submitted every five years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the five calendar years preceding its submission . free allocations shall only be given to installations where such information is provided . ### a list of installations covered by this directive for the five years beginning on 1 january 2021 shall be submitted by 31 may 2019 , and lists for the subsequent five years shall be submitted every five years thereafter . each list shall include information on production activity , transfers of heat and gases , electricity production and emissions at sub - installation level over the five calendar years preceding its submission . free allocations shall only be given to installations where such information is provided .


### the auctioning of allowances remains the general rule , with free allocation as the exception . consequently , and as confirmed by the european council , the share of allowances to be auctioned , which was 57% over the period 2013 - 2020 , should not be reduced . the commission ' s impact assessment18 provides details on the auction share and specifies that this 57% share is made up of allowances auctioned on behalf of member states , including allowances set aside for new entrants but not allocated , allowances for modernising electricity generation in some member states and allowances which are to be auctioned at a later point in time because of their placement in the market stability reserve established by decision 2015 / … of the european parliament and of the council19 . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec . ### the auctioning of allowances remains the general rule , with free allocation as the exception . the share of allowances to be auctioned should not be fixed in order to guarantee long - term sustainability of the ets system , introduce flexibility for different decarbonisation sectors and therefore enable the transfer of allowances from the auctioning share to the free allowances share . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec .


### the fund shall be governed by an investment board and a management committee , which shall be composed of representatives from the beneficiary member states , the commission , the eib and three representatives elected by the other member states for a period of 5 years . the investment board shall be responsible to determine an union - level investment policy , appropriate financing instruments and investment selection criteria . the management committee shall be responsible for the day - to - day management of the fund . ### the fund shall be governed primarily by the beneficiary member states and the eib should act as an advisory body providing appropriate assistance . adequate monitoring and reporting provisions shall be established to guarantee transparent and efficient use of the proceeds of the fund by beneficiary member states . the investment and projects financed from the fund shall be put forward by the beneficiary member state . this will reduce excessive and costly administrative burden and will ensure the most effective implementation possible .


### a modernisation fund should be established from 2% of the total eu ets allowances , and auctioned in accordance with the rules and modalities for auctions taking place on the common auction platform set out in regulation 1031 / 2010 . member states who in 2013 had a gdp per capita at market exchange rates of below 60% below the union average should be eligible for funding from the modernisation fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector while avoiding distortions of the internal energy market . the rules for governing the modernisation fund should provide a coherent , comprehensive and transparent framework to ensure the most efficient implementation possible , taking into account the need for easy access by all participants . the function of the governance structure should be commensurate with the purpose of ensuring the appropriate use of the funds . that governance structure should be composed of an investment board and a management committee and due account should be taken of the expertise of the eib in the decision - making process unless support is provided to small projects through loans from a national promotional banks or through grants via a national programme sharing the objectives of the modernisation fund . investments financed from the fund should be proposed by the member states . to ensure that the investment needs in low income member states are adequately addressed , the distribution of funds will take into account in equal shares verified emissions and gdp criteria . the financial assistance from the modernisation fund could be provided through different forms . ### a modernisation fund should be established from 2% of the total eu ets allowances , and auctioned in accordance with the rules and modalities for auctions taking place on the common auction platform set out in regulation 1031 / 2010 . member states who in 2013 had a gdp per capita at market exchange rates of below 60% below the union average should be eligible for funding from the modernisation fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector while avoiding distortions of the internal energy market . the rules for governing the modernisation fund should provide a coherent , comprehensive and transparent framework to ensure the most efficient implementation possible , taking into account the need for easy access by all participants . the function of the governance structure should be commensurate with the purpose of ensuring the appropriate use of the funds . that fund should be governed primarily by beneficiary member states . the beneficiary member states shall be advised by the eib as an advisory body . the eib should provide appropriate assistance , including monetizing of the allowances and serve as a trustee of the fund . investments financed from the fund should be proposed by the beneficiary member states . to ensure that the investment needs in low income member states are adequately addressed , the distribution of funds will take into account in equal shares verified emissions and gdp criteria . the financial assistance from the modernisation fund could be provided through different forms .


### in order to reflect technological progress in the sectors concerned and adjust them to the relevant period of allocation , provision should be made for the values of the benchmarks for free allocations to installations , determined on the basis of data from the years 2007 - 8 , to be updated in line with observed average improvement . for reasons of predictability , this should be done through applying a factor that represents the best assessment of progress across sectors , which should then take into account robust , objective and verified data from installations so that sectors whose rate of improvement differs considerably from this factor have a benchmark value closer to their actual rate of improvement . where the data shows a difference from factor reduction of more than 0 . 5% of the 2007 - 8 value higher or lower per year over the relevant period , the related benchmark value shall be adjusted by that percentage . to ensure a level playing field for the production of aromatics , hydrogen and syngas in refineries and chemical plants , the benchmark values for aromatics , hydrogen and syngas should continue to be aligned to the refineries benchmarks . ### in order to reflect technological progress in the sectors concerned and adjust them to the relevant period of allocation , benchmarks for free allocations to installations , should be updated before the start of the fourth trading period in order to base free allocations on actual technological progress . that update should be carried out on the basis of robust , objective and verified data from installations . for reasons of predictability , further updates should be done through applying a factor that represents the best assessment of progress across sectors , which should also be based on robust , objective and verified data from installations so that sectors whose rate of improvement differs considerably from this factor have a benchmark value closer to their actual rate of improvement . where the data show a substantial difference from that factor reduction over the relevant period , the related benchmark value shall be adjusted . to ensure a level playing field for the production of aromatics , hydrogen and syngas in refineries and chemical plants , the benchmark values for aromatics , hydrogen and syngas should continue to be aligned to the refineries benchmarks .


### the existing provisions which are in place for small installations to be excluded from the eu ets allow the installations which are excluded to remain so , and it should be made possible for member states to update their list of excluded installations and for member states currently not making use of this option to do so at the beginning of each trading period . ### the existing provisions which are in place for small installations to be excluded from the eu ets allow the installations which are excluded to remain so , and it should be made possible for member states to update their list of excluded installations and for member states currently not making use of this option to do so at the beginning of each trading period . the administrative burden , for example reporting requirements , should be significantly reduced , particularly in the case of small installations .


### 400 million allowances shall be available to support innovation in low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage of co2 as well as demonstration projects of innovative renewable energy technologies , in the territory of the union . ### 400 million allowances shall be available to support innovation in the whole range of low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage of co2 as well as demonstration projects of innovative renewable energy technologies , in the territory of the union .


### by 31 december 2019 , the commission shall adopt a delegated act for the preceding paragraphs for activities at a 4 - digit level as concerns paragraph 1 , in accordance with article 23 , based on data for the three most recent calendar years available . ### by 31 december 2019 , the commission shall adopt a delegated act for the preceding paragraphs for activities at a 8 - digit level as concerns paragraph 1 , in accordance with article 23 , based on data for the three most recent calendar years available .


### by 31 december 2019 , the commission shall adopt a delegated act for the preceding paragraphs for activities at a 4 - digit level as concerns paragraph 1 , in accordance with article 23 , based on data for the three most recent calendar years available . ### by 31 december 2019 , the commission shall adopt a delegated act for the preceding paragraphs for activities at a 4 - digit level as concerns paragraph 1 , in accordance with article 23 , based on data for the three most recent calendar years available , using for each sector or sub - sector the 4 - , 6 - , 8 - digit level code that comprises only those activities and production covered by the eu ets .


### the european council confirmed that a well - functioning , reformed eu ets with an instrument to stabilise the market will be the main european instrument to achieve this target , with an annual reduction factor of 2 . 2 % from 2021 onwards , free allocation not expiring but existing measures continuing after 2020 to prevent the risk of carbon leakage due to climate policy , as long as no comparable efforts are undertaken in other major economies , without reducing the share of allowances to be auctioned . the auction share should be expressed as a percentage figure in the legislation , to enhance planning certainty as regards investment decisions , to increase transparency and to render the overall system simpler and more easily understandable . ### the european council confirmed that a well - functioning , reformed eu ets with an instrument to stabilise the market will be the main european instrument to achieve this target , with an annual reduction factor of 2 . 2 % from 2021 onwards , free allocation not expiring but existing measures continuing after 2020 to prevent the risk of carbon leakage due to climate policy , as long as no comparable efforts are undertaken in other major economies , while the share of allowances to be auctioned should be reduced . the auction share should be expressed as a percentage figure in the legislation , to enhance planning certainty as regards investment decisions , to increase transparency and to render the overall system simpler and more easily understandable .


### the commission shall be empowered to adopt a delegated act in accordance with article 23 . this act shall also provide for additional allocation from the new entrants reserve for significant production increases by applying the same thresholds and allocation adjustments as apply in respect of partial cessations of operation . ### the commission shall be empowered to adopt a delegated act in accordance with article 23 . this act shall also provide for additional allocation from the new entrants reserve for production increases by applying a production threshold of 15% .


### sectors and sub - sectors where the product exceeds 0 . 2 from multiplying their intensity of trade with third countries , defined as the ratio between the total value of exports to third countries plus the value of imports from third countries and the total market size for the european economic area , by their emission intensity , measured in kgco2 divided by their gross value added , shall be deemed to be at risk of carbon leakage . such sectors and sub - sectors shall be allocated allowances free of charge for the period up to 2030 at 100% of the quantity determined in accordance with the measures adopted pursuant to article 10a . ### sectors and sub - sectors where the product from multiplying their intensity of trade with third countries by their emission intensity is above 0 . 01 , as well as sectors that were deemed at risk of carbon leakage between 2013 and 2020 , may be included in the group referred to in paragraph 1 , on the basis of a qualitative assessment using the following criteria


### a modernisation fund should be established from 2% of the total eu ets allowances , and auctioned in accordance with the rules and modalities for auctions taking place on the common auction platform set out in regulation 1031 / 2010 . member states who in 2013 had a gdp per capita at market exchange rates of below 60% below the union average should be eligible for funding from the modernisation fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector while avoiding distortions of the internal energy market . the rules for governing the modernisation fund should provide a coherent , comprehensive and transparent framework to ensure the most efficient implementation possible , taking into account the need for easy access by all participants . the function of the governance structure should be commensurate with the purpose of ensuring the appropriate use of the funds . that governance structure should be composed of an investment board and a management committee and due account should be taken of the expertise of the eib in the decision - making process unless support is provided to small projects through loans from a national promotional banks or through grants via a national programme sharing the objectives of the modernisation fund . investments financed from the fund should be proposed by the member states . to ensure that the investment needs in low income member states are adequately addressed , the distribution of funds will take into account in equal shares verified emissions and gdp criteria . the financial assistance from the modernisation fund could be provided through different forms . ### a modernisation fund should be established from 2% of the total eu ets allowances , and auctioned in accordance with the rules and modalities for auctions taking place on the common auction platform set out in regulation 1031 / 2010 . member states who in 2013 or 2014 had a gdp per capita at market exchange rates of below 60% below the union average should be eligible for funding from the modernisation fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector while avoiding distortions of the internal energy market . the rules for governing the modernisation fund should provide a coherent , comprehensive and transparent framework to ensure the most efficient implementation possible , taking into account the need for easy access by all participants . such rules should be transparent , balanced and commensurate with the purpose of ensuring the appropriate use of the funds . the governance structure should be composed of an investment board and a management committee and due account should be taken of the expertise of the eib in the decision - making process unless support is provided to small projects through loans from a national promotional banks or through grants via a national programme sharing the objectives of the modernisation fund . investments financed from the fund should be proposed by the member states . to ensure that the investment needs in low income member states are adequately addressed , the distribution of funds will take into account in equal shares verified emissions and gdp criteria . the financial assistance from the modernisation fund could be provided through different forms .


### ' article 27 exclusion of small installations subject to equivalent measures 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 , 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 : 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 has to be submitted and at the latest when this list is submitted to the commission ; 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 ; 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 ; it publishes the information referred to in points , and for public comment . hospitals may also be excluded if they undertake equivalent measures . ' ### in article 27 , paragraph 1 is replaced by the following : ' 1 ' following consultation with the operator and subject to its agreement , member states may exclude from the eu ets installations which have reported to the competent authority emissions of less than 50 000 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 , 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 : it notifies the commission of each such installation , specifying the equivalent measures that are in place applying to that installation and that are aimed at making an equivalent contribution to emission reductions , before the list of installations pursuant to article 11 has to be submitted and at the latest when this list is submitted to the commission ; it confirms that monitoring arrangements are in place to assess whether any installation emits 50 000 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 below 5 000 tonnes a year , in accordance with article 14 ; it confirms that if any installation emits 50 000 tonnes or more of carbon dioxide equivalent , excluding emissions from biomass , in any one calendar year or the measures applying to that installation that are aimed at making an equivalent contribution to emission reductions are no longer in place , the installation will be reintroduced into the eu ets ; it publishes the information referred to in points , and for public comment . hospitals may also be excluded if they undertake equivalent measures . ' '


### a modernisation fund should be established from 2% of the total eu ets allowances , and auctioned in accordance with the rules and modalities for auctions taking place on the common auction platform set out in regulation 1031 / 2010 . member states who in 2013 had a gdp per capita at market exchange rates of below 60% below the union average should be eligible for funding from the modernisation fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector while avoiding distortions of the internal energy market . the rules for governing the modernisation fund should provide a coherent , comprehensive and transparent framework to ensure the most efficient implementation possible , taking into account the need for easy access by all participants . the function of the governance structure should be commensurate with the purpose of ensuring the appropriate use of the funds . that governance structure should be composed of an investment board and a management committee and due account should be taken of the expertise of the eib in the decision - making process unless support is provided to small projects through loans from a national promotional banks or through grants via a national programme sharing the objectives of the modernisation fund . investments financed from the fund should be proposed by the member states . to ensure that the investment needs in low income member states are adequately addressed , the distribution of funds will take into account in equal shares verified emissions and gdp criteria . the financial assistance from the modernisation fund could be provided through different forms . ### a modernisation fund should be established from 2% of the total eu ets allowances , and auctioned in accordance with the rules and modalities for auctions taking place on the common auction platform set out in regulation 1031 / 2010 . member states who in 2013 had a gdp per capita at market exchange rates of below 60% below the union average should be eligible for funding from the modernisation fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector while avoiding distortions of the internal energy market . the rules for governing the modernisation fund should provide a coherent , comprehensive and transparent framework to ensure the most efficient implementation possible in line with the needs of beneficiary member states . the function of the governance structure should be commensurate with the purpose of ensuring the appropriate use of the funds . each of the beneficiary member states shall be responsible for the governance of its own allocation share and should be assisted by an advisory board composed of representatives from the beneficiary member states and the eib . investments financed from the fund should be proposed by the beneficiary member states . to ensure that the investment needs in low income member states are adequately addressed , the distribution of funds will take into account in equal shares verified emissions and gdp criteria . the financial assistance from the modernisation fund could be provided through different forms .


### a fund to support investments in modernising energy systems and improving energy efficiency in member states with a gdp per capita below 60% of the union average in 2013 shall be established for the period 2021 - 30 and financed as set out in article 10 . ### a fund to support and leverage investments in modernising energy systems , including district heating , and improving energy efficiency in member states with a gdp per capita below 60% of the union average in 2013 or 2014 shall be established for the period 2021 - 30 and financed as set out in article 10 .


### ' 5 . the commission shall monitor the functioning of the european carbon market . each year , it shall submit a report to the european parliament and to the council on the functioning of the carbon market including the implementation of the auctions , liquidity and the volumes traded . if necessary , member states shall ensure that any relevant information is submitted to the commission at least two months before the commission adopts the report . ' ### article 10 paragraph 5 is amended as follows : ' 5 . the commission shall monitor the functioning of the european carbon market . each year , it shall submit a report to the european parliament and to the council on the functioning of the carbon market including the implementation of the auctions , liquidity and the volumes traded . this report shall identify all impacts on companies of the implementation of all climate and energy eu legislation , monitor carbon and investment leakage and identify all reliable carbon markets throughout the world . if necessary , member states shall ensure that any relevant information is submitted to the commission at least two months before the commission adopts the report . '


### in order to respect the auctioning share set out in article 10 , the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the member state auctioning share , the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the member state auctioning share in later years . where , nonetheless , the maximum level is reached , free allocations shall be adjusted accordingly . any such adjustment shall be done in a uniform manner . ### in order to respect the auctioning share set out in article 10 , the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the member state auctioning share , the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the member state auctioning share in later years . where , nonetheless , the maximum level is reached , allowances from the market stability reserve and the new entrants reserve shall be utilised to compensate for the respective lack of free allocations . any further adjustment of free allocation shall only be done thereafter and should not be applied on free allocations adjusted by a linear reduction factor as referred to in article 9 .


### the fund shall be governed by an investment board and a management committee , which shall be composed of representatives from the beneficiary member states , the commission , the eib and three representatives elected by the other member states for a period of 5 years . the investment board shall be responsible to determine an union - level investment policy , appropriate financing instruments and investment selection criteria . the management committee shall be responsible for the day - to - day management of the fund . ### the fund shall be governed by the beneficiary member states assisted by an advisory board , which shall be composed of representatives from the beneficiary member states and bei . the advisory board shall be responsible to elaborate guidelines in relation to objectives of the union - level investment policy related to this fund and investment selection criteria which should take into account national circumstances .


### article 191 of the treaty on the functioning of the european union requires that union policy is based on the principle that the polluter should pay and , on this basis , directive 2003 / 87 / ec provides for a transition to full auctioning over time . avoiding carbon leakage is a justification to postpone full transition , and targeted free allocation of allowances to industry is justified in order to address genuine risks of increases in greenhouse gas emissions in third countries where industry is not subject to comparable carbon constraints as long as comparable climate policy measures are not undertaken by other major economies . ### article 191 of the treaty on the functioning of the european union requires that union policy is based on the principle that the polluter should pay and , on this basis , directive 2003 / 87 / ec provides for a transition to full auctioning over time . avoiding carbon and investment leakage is a justification to postpone full transition , and targeted free allocation of allowances to industry is justified in order to address genuine risks of increases in global greenhouse gas emissions and diversion of investments to third countries where industry is not subject to comparable carbon constraints as long as comparable climate policy measures are not undertaken by other major economies . additional achievements in sectors not falling under the scope of the ets and not subject to a risk of carbon leakage , such as is the case in the building sector , would lessen the efforts needed from union industry .


### the auctioning of allowances remains the general rule , with free allocation as the exception . consequently , and as confirmed by the european council , the share of allowances to be auctioned , which was 57% over the period 2013 - 2020 , should not be reduced . the commission ' s impact assessment18 provides details on the auction share and specifies that this 57% share is made up of allowances auctioned on behalf of member states , including allowances set aside for new entrants but not allocated , allowances for modernising electricity generation in some member states and allowances which are to be auctioned at a later point in time because of their placement in the market stability reserve established by decision 2015 / … of the european parliament and of the council19 . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec . ### the auctioning of allowances remains the general rule , with free allocation as the exception . the share of allowances to be auctioned should not be fixed in order to guarantee long - term sustainability of the ets system , introduce flexibility for different decarbonisation sectors and therefore enable the transfer of allowances from the auctioning share to the free allowances share . __________________ 19 decision 2015 / … of the european parliament and of the council of … concerning the establishment and operation of a market stability reserve for the union greenhouse gas emission trading scheme and amending directive 2003 / 87 / ec .


### the main long - term incentive from this directive for the capture and storage of co2 , new renewable energy technologies and breakthrough innovation in low - carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for co2 emissions which are permanently stored or avoided . in addition , to supplement the resources already being used to accelerate demonstration of commercial ccs facilities and innovative renewable energy technologies , eu ets allowances should be used to provide guaranteed rewards for deployment of ccs facilities , new renewable energy technologies and industrial innovation in low - carbon technologies and processes in the union for co2 stored or avoided on a sufficient scale , provided an agreement on knowledge sharing is in place . the majority of this support should be dependent on verified avoidance of greenhouse gas emissions , while some support may be given when pre - determined milestones are reached taking into account the technology deployed . the maximum percentage of project costs to be supported may vary by category of project . ### the main long - term incentive from this directive for carbon capture and storage or carbon capture and use , new renewable energy technologies and breakthrough innovation in low - carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for co2 emissions which are permanently stored , reused in industrial processes or avoided . in addition , to supplement the resources already being used to accelerate demonstration of commercial ccs / ccu facilities and innovative renewable energy technologies , eu ets allowances should be used to provide guaranteed rewards for deployment of ccs / ccu facilities , new renewable energy technologies and industrial innovation in low - carbon technologies and processes in the union for co2 stored , reused or avoided on a sufficient scale , provided an agreement on knowledge sharing is in place . this support should be dependent on verified avoidance of greenhouse gas emissions or when pre - determined milestones are reached taking into account the technology deployed . the maximum percentage of project costs to be supported may vary by category of project .


### in addition , 50 million unallocated allowances from the market stability reserve established by decision 2015 / … shall supplement any existing resources remaining under this paragraph for projects referred to above , with projects in all member states including small - scale projects , before 2021 . projects shall be selected on the basis of objective and transparent criteria . ### in addition , 50 million unallocated allowances from the market stability reserve established by decision 2015 / … shall supplement any existing resources remaining under this paragraph as a consequence of funds resulting from ner300 allowance auctions between 2013 and 2020 not having been used , for projects referred to in subparagraphs 1 and 2 , with projects in all member states including small - scale projects , before 2021 and from 2018 onwards . projects shall be selected on the basis of objective and transparent criteria , taking into account their relevance in relation to the decarbonisation of the related sectors . projects supported under this subparagraph may also receive further support under sub - paragraphs 1 and 2 .


### the main long - term incentive from this directive for the capture and storage of co2 , new renewable energy technologies and breakthrough innovation in low - carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for co2 emissions which are permanently stored or avoided . in addition , to supplement the resources already being used to accelerate demonstration of commercial ccs facilities and innovative renewable energy technologies , eu ets allowances should be used to provide guaranteed rewards for deployment of ccs facilities , new renewable energy technologies and industrial innovation in low - carbon technologies and processes in the union for co2 stored or avoided on a sufficient scale , provided an agreement on knowledge sharing is in place . the majority of this support should be dependent on verified avoidance of greenhouse gas emissions , while some support may be given when pre - determined milestones are reached taking into account the technology deployed . the maximum percentage of project costs to be supported may vary by category of project . ### the main long - term incentive from this directive for carbon capture and storage and carbon capture and use , new renewable energy technologies and breakthrough innovation in low - carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for co2 emissions which are permanently stored or avoided . in addition , to supplement the resources already being used to accelerate demonstration of commercial ccs and ccu facilities and innovative renewable energy technologies , eu ets allowances should be used to provide guaranteed rewards for deployment of ccs and ccu facilities , new renewable energy technologies and industrial innovation in low - carbon technologies and processes in the union for co2 stored or avoided on a sufficient scale , provided an agreement on knowledge sharing is in place . the majority of this support should be dependent on verified avoidance of greenhouse gas emissions , while some support may be given when pre - determined milestones are reached taking into account the technology deployed . the maximum percentage of project costs to be supported may vary by category of project .


### 400 million allowances shall be available to support innovation in low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage of co2 as well as demonstration projects of innovative renewable energy technologies , in the territory of the union . ### 400 million allowances shall be available to support innovation in low - carbon technologies and processes in industrial sectors listed in annex i , and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage of co2 as well as demonstration projects of innovative renewable energy technologies and innovative technologies for transmission and distribution , in the territory of the union .


### article 191 of the treaty on the functioning of the european union requires that union policy is based on the principle that the polluter should pay and , on this basis , directive 2003 / 87 / ec provides for a transition to full auctioning over time . avoiding carbon leakage is a justification to postpone full transition , and targeted free allocation of allowances to industry is justified in order to address genuine risks of increases in greenhouse gas emissions in third countries where industry is not subject to comparable carbon constraints as long as comparable climate policy measures are not undertaken by other major economies . ### article 191 of the treaty on the functioning of the european union requires that union policy is based on the principle that the polluter should pay and , on this basis , directive 2003 / 87 / ec provides for a transition to full auctioning over time . avoiding carbon and investment leakage is a justification to postpone full transition , and targeted free allocation of allowances to industry is justified in order to address genuine risks of increases in greenhouse gas emissions in third countries where industry is not subject to comparable carbon constraints as long as comparable climate policy measures are not undertaken by other major economies .


### ' 5 . the commission shall monitor the functioning of the european carbon market . each year , it shall submit a report to the european parliament and to the council on the functioning of the carbon market including the implementation of the auctions , liquidity and the volumes traded . if necessary , member states shall ensure that any relevant information is submitted to the commission at least two months before the commission adopts the report . ' ### in article 10 , paragraph 5 is replaced by the following : ' 5 . the commission shall monitor the functioning of the european carbon market . each year , it shall submit a report to the european parliament and to the council on the functioning of the carbon market including the implementation of the auctions , liquidity and the volumes traded . in its monitoring , the commission shall give particular attention to the risk of carbon and investment leakage . the report shall also address the interaction between the eu ets , non - ets and other climate and energy measures at european and national level , and shall analyse the implication of various policy instruments on the level of demand for union allowances and its consequences on the supply - demand balance in the carbon market . if necessary , member states shall ensure that any relevant information is submitted to the commission at least two months before the commission adopts the report . . '


### 2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain member states as set out in article 10d of this directive . ### 4% of the total quantity of allowances , deducting half of the quantity of allowances from the auctioning share and half from the free allowances share , between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain member states as set out in article 10d of this directive .


### three new subparagraphs are added to paragraph 1 : ### four new subparagraphs are added to paragraph 1 :


### specific conservation measures for groups 3 to 7 ### specific conservation measures


### when scientific advice indicates that for a given year the spawning biomass of any of the stocks in group 1 is below the msy btrigger or that the abundance of any of the functional units in group 2 is below the abundancebuffer set out in annex ii , column a , all appropriate remedial measures shall be adopted to ensure rapid return of the stock or functional unit concerned to levels above those capable of producing maximum sustainable yield . in particular , by way of derogation from article 4 fishing opportunities shall be set at levels consistent with a fishing mortality , taking into account the decrease in biomass or abundance , that is reduced below the range laid down in annex i , column a . ### when scientific advice indicates that for a given year the spawning biomass of any of the stocks in group 1 is below the msy btrigger or that the abundance of any of the functional units in group 2 is below the abundancebuffer set out in annex ii , column a , all appropriate remedial measures shall be adopted to ensure rapid return of the stock or functional unit concerned to levels above those capable of producing maximum sustainable yield . in particular , by way of derogation from article 4 fishing opportunities shall be set at levels consistent with a fishing mortality , taking into account the decrease in biomass or abundance , that is reduced below the range laid down in annex i , column b .


### no less than five years after the entry into force of this regulation , and every five years thereafter , the commission shall ensure an evaluation of the impact of the plan on the stocks to which this regulation applies and on the fisheries exploiting those stocks . it shall submit the results of this evaluation to the european parliament and to the council . ### no less than three years after the entry into force of this regulation , and every five years thereafter , the commission shall ensure an evaluation of the impact of the plan on the stocks to which this regulation applies and on the fisheries exploiting those stocks . it shall submit the results of this evaluation to the european parliament and to the council .


### provisions linked to the landing obligation for groups 1 to 7 ### provisions linked to the landing obligation


### no less than five years after the entry into force of this regulation , and every five years thereafter , the commission shall ensure an evaluation of the impact of the plan on the stocks to which this regulation applies and on the fisheries exploiting those stocks . it shall submit the results of this evaluation to the european parliament and to the council . ### no less than five years after the entry into force of this regulation , and every five years thereafter , the commission shall ensure an evaluation of the impact of the plan on the stocks to which this regulation applies and on the fisheries exploiting those stocks . it shall submit the results of this evaluation to the european parliament and to the council . the commission may , where this is considered necessary by all of the member states concerned and itself , report on an earlier date .


### in the absence of scientific advice on fishing mortality rate consistent with maximum sustainable yield , fishing opportunities shall be consistent with scientific advice to ensure the sustainability of the stocks in line with the precautionary approach . ### management measures , including , where appropriate , fishing opportunities for the stocks referred to in article 1 , shall be determined taking into account the best available scientific advice and in line with the objectives laid down in article 3 .


### when scientific advice indicates that the spawning stock biomass of any of the stocks concerned is below the blim or the abundance of any of the norway lobster functional units is below abundancelimit as set out in annex ii , column b to this regulation , further remedial measures shall be taken to ensure rapid return of the stock or functional unit concerned to levels above the level capable of producing maximum sustainable yield . in particular , those remedial measures shall include , by way of derogation from paragraphs 2 and 4 of article 4 , suspending the targeted fishery for the stock concerned and the adequate reduction of fishing opportunities . ### when scientific advice indicates that the spawning stock biomass of any of the stocks concerned is below the blim or the abundance of any of the norway lobster functional units is below abundancelimit as set out in annex ii , column b to this regulation , further remedial measures shall be taken to ensure rapid return of the stock or functional unit concerned to levels above the level capable of producing maximum sustainable yield . in particular , those remedial measures may include , by way of derogation from paragraphs 2 and 4 of article 4 , suspending the targeted fishery for the stock concerned and the adequate reduction of fishing opportunities .


### proposal for a regulation of the european parliament and of the council on establishing a multi - annual plan for demersal stocks in the north sea and the fisheries exploiting those stocks and repealing council regulation 676 / 2007 and council regulation 1342 / 2008 ### proposal for a regulation of the european parliament and of the council on establishing a multi - annual plan for certain demersal stocks in the north sea and adjoining waters , and the fisheries exploiting those stocks , adopting provisions concerning the implementation of the landing obligation in the north sea and in all other waters of the union and outside it which do not fall under the sovereignty or jurisdiction of third countries , and repealing council regulation 676 / 2007 and council regulation 1342 / 2008


### in zones not complying with eu air quality limit values laid down in directive 2008 / 50 / ec , member states shall apply , for individual medium combustion plants in those zones , emission limit values based on the benchmark values laid down in annex iii or on stricter values established by the member states , unless it is demonstrated to the commission that applying such emission limit values would entail disproportionate costs and that other measures ensuring compliance with the air quality limit values have been included in the air quality plans required under article 23 of directive 2008 / 50 / ec . ### in zones not complying with eu air quality limit values laid down in directive 2008 / 50 / ec , member states may apply , for individual medium combustion plants in those zones , stricter emission limit values which may be based on the benchmark values laid down in annex iii .


### ‘ operating hours’ means the time , expressed in hours , during which a combustion plant is discharging emissions into the air ; ### ‘ operating hours’ means the time , expressed in hours , during which a combustion plant is operating and discharging emissions into the air , excluding start - up and shut - down periods ;


### in order to ensure the control of emissions of sulphur dioxide , nitrogen oxides and particulate matter into the air , each medium combustion plant should operate only if it is at least registered by the competent authority , based on notification by the operator . ### in order to ensure the control of emissions of sulphur dioxide , nitrogen oxides and particulate matter into the air , each medium combustion plant should operate only if it is at least registered by the competent authority or if it has been granted a permit by that authority , based on notification by the operator .


### ‘ particulate matter’ means particles , of any shape , structure or density , dispersed in the gas phase at the sampling point conditions which may be collected by filtration under specified conditions after representative sampling of the gas to be analysed , and which remain upstream of the filter and on the filter after drying under specified conditions ; ### ‘ dust’ means particles , of any shape , structure or density , dispersed in the gas phase at the sampling point conditions which may be collected by filtration under specified conditions after representative sampling of the gas to be analysed , and which remain upstream of the filter and on the filter after drying under specified conditions ;


### energy related products which are covered by implementing measures adopted in accordance with directive 2009 / 125 / ec where those implementing acts are setting emission limit values for the pollutants listed in annex ii of this directive ; ### combustion plants which are covered by implementing measures adopted in accordance with directive 2009 / 125 / ec where those implementing acts are setting emission limit values for the pollutants listed in annex ii of this directive ;


### the commission in its communication a digital single market strategy for europe30 and in its communication eu e - government action plan 2016 - 2020 : accelerating the digital transformation of government31 stressed the role of public administrations in helping businesses to easily set up business , operate online and expand across borders . the eu e - government action plan specifically recognised the importance of improving the use of digital tools when complying with company law related requirements . furthermore , in the 2017 tallinn declaration on egovernment , member states made a strong call to step up efforts for the provision of efficient , user - centric electronic procedures in the union . __________________ 30 com 192 final of 6 may 2015 . 31 com 179 final of 19 april 2016 . ### the commission in its communication a digital single market strategy for europe30 and in its communication eu e - government action plan 2016 - 2020 : accelerating the digital transformation of government31 stressed the role of public administrations in helping entrepreneurs to easily set up business , operate online and expand across borders . the eu e - government action plan specifically recognised the importance of improving the use of digital tools when complying with company law related requirements . furthermore , in the 2017 tallinn declaration on egovernment , member states made a strong call to step up efforts for the provision of efficient , user - centric electronic procedures in the union . __________________ 30 com 192 final of 6 may 2015 . 31 com 179 final of 19 april 2016 .


### furthermore , in order to tackle fraud and company hijacking and to provide safeguards for the reliability and trustworthiness of documents and information contained within national registers , provisions concerning the online registration of companies and their branches should also include controls on the identity and legal capacity of persons seeking to establish a company or branch . however , the means and methods to achieve these controls should be left to member states to develop and adopt . those rules could include , amongst others , verification by means of video - conference or other online means that provide a real - time audio - visual connection . to that effect member states should be able to require the involvement of notaries or lawyers as a part of the online registration process , however , such involvement should not prevent the completion of the registration procedure in its entirety online . ### furthermore , in order to tackle fraud , money - laundering and company hijacking and to provide safeguards for the reliability and trustworthiness of documents and information contained within national registers , provisions concerning the online registration of companies and their branches and subsequent online filing should also include legality controls and controls on the identity and legal capacity of persons seeking to establish a company or branch or to file documents and information . however , the means and methods to achieve these controls should be left to member states to develop and adopt . those rules could include , amongst others , verification by means of video - conference or other online means that provide a real - time audio - visual connection . to that effect member states should be able to require the involvement of notaries or lawyers as a part of the online registration and filing process , however , such involvement should not prevent the completion of the registration and filing procedure in its entirety online .


### where the completion of a procedure laid down in this chapter requires a payment , member states shall ensure that the payment can be made by means of a payment service widely available in cross - border payment services . ### where the completion of a procedure laid down in this chapter requires a payment , member states shall ensure that the payment can be made by means of a cross - border payment service that permits identification of the payer .


### member states shall ensure that documents and information , referred to in article 30 or any modification thereof , may be filed online within the period provided by the laws of the member state where the branch is established . member states shall ensure that such filing may be completed online in its entirety without the necessity for the applicant or its representative to appear in person before any competent authority or before any other person dealing with the online filing , subject to the proviso laid down in article 13b . ### member states shall ensure that documents and information , referred to in article 30 or any modification thereof , may be filed online within the period provided by the laws of the member state where the branch is established . member states shall ensure that such filing may be completed online in its entirety without the necessity for the applicant , or his representative to appear in person before any competent authority or before any other person or body dealing with the online filing , subject to the proviso laid down in article 13b . national legal provisions on the genuineness , accuracy and form of the documents and information submitted shall remain unaffected .


### member states shall ensure that companies are able to file online the documents and information , as referred to in article 14 , including any modification thereof , with the register within the time limit provided by the laws of the member state where the company is to be registered . member states shall ensure that such filing may be completed online in its entirety without the necessity for the applicant , or his representative to appear in person before any competent authority or before any other person or body dealing with the online filing , subject to the proviso laid down in article 13b . ### member states shall ensure that companies are able to file online the documents and information , as referred to in article 14 , including any modification thereof , with the register within the time limit provided by the laws of the member state where the company is to be registered . member states shall ensure that such filing may be completed online in its entirety without the necessity for the applicant , or his representative to appear in person before any competent authority or before any other person or body dealing with the online filing , subject to the proviso laid down in article 13b . member states may lay down rules to provide safeguards as regards the reliability and trustworthiness of documents and information to be filed online .


### in order to assist businesses , in particular start - ups , in setting - up their business , it should be possible to register a private limited liability company with the use of templates which are model instruments of constitution which should be available online . such models may contain a pre - defined set of options in accordance with national law . the applicants should be able to choose between using this model or registering a company with bespoke instruments of constitution and member states should have the option to provide templates also for other types of companies . ### in order to assist businesses , in particular small , medium - sized and micro - enterprises , in setting - up their business , it should be possible to register a private limited liability company with the use of templates which are model instruments of constitution which should be available online . such models may contain a pre - defined set of options in accordance with national law . the applicants should be able to choose between using this model or registering a company with bespoke instruments of constitution and member states should have the option to provide templates also for other types of companies .


### member states shall ensure that the registration of companies may be carried out fully online without the necessity for the applicants , or their representatives , to appear in person before any competent authority or before any other person or body dealing with the application for registration , subject to the proviso laid down in article 13b . however , member states may decide not to provide fully online registration procedures for those types of companies listed in annex i . ### member states shall ensure that the registration of the companies listed in annex iia may be carried out fully online without the necessity for the applicants , to appear in person before any competent authority or before any other person or body dealing with the application for registration , subject to the proviso laid down in article 13b . however , member states may decide to provide fully online registration procedures for those types of companies listed in annex ii member states may limit the provision of online registration procedures to companies fulfilling any of the following requirements : all members are natural persons and residents in a member state , all members act in their own name and on their own behalf , the company is set up by a single member , all the contributions to the share capital are paid in cash .


### furthermore , in order to tackle fraud and company hijacking and to provide safeguards for the reliability and trustworthiness of documents and information contained within national registers , provisions concerning the online registration of companies and their branches should also include controls on the identity and legal capacity of persons seeking to establish a company or branch . however , the means and methods to achieve these controls should be left to member states to develop and adopt . those rules could include , amongst others , verification by means of video - conference or other online means that provide a real - time audio the central employment services of member states - visual connection . to that effect member states should be able to require the involvement of notaries or lawyers as a part of the online registration process , however , such involvement should not prevent the completion of the registration procedure in its entirety online . ### furthermore , in order to tackle fraud and company hijacking and to provide safeguards for the reliability and trustworthiness of documents and information contained within national registers , provisions concerning the online registration of companies and their branches and the online filing of documents and information should also include controls on legality and controls on the identity and legal capacity of persons seeking to establish a company or branch or file documents and information . those rules could include , amongst others , verification by means of video - conference or other online means that provide a real - time audio the central employment services of member states - visual connection . to that effect member states should be able to require the involvement of notaries or lawyers as a part of the online registration and filing process , however , such involvement should not prevent the completion of the registration and filing procedure in its entirety online .