### 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 a 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 individual allocations of each beneficiary member state from the modernisation fund shall be governed by the eligible beneficiary member state , assisted by the advisory board composed of representatives of the beneficiary member states , the commission , and the eib . individual decisions on financing particular projects shall be taken by the eligible beneficiary member state . day - to - day management of the fund shall be executed by the beneficiary member states . the advisory board shall be responsible for preparing the framework guidance on investment , including a union - level investment policy , appropriate financing instruments and investment selection criteria .


### 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 eur 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 . the cogeneration of heat and power should also be eligible for the optional free allocation to modernise the energy sector or in the case of electricity consumed by industry which is produced by high - efficiency industrial chp plants . use of high - efficiency chp allows industry to achieve industrial self - support in terms of energy with chp - produced electricity . investments with a value of less than eur 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 and the results should be made available to the public . the public should be duly kept informed at the stage of the selection of investment projects as well as of their implementation .


### ' 4 . it shall be for member states to determine the use to be made of revenues generated from the auctioning of allowances . those revenues should be used to tackle climate change in the eu and third countries , inter alia , to reduce greenhouse gas emissions , to adapt to the impacts of climate change in the eu and third countries , especially developing countries , to fund research and development for mitigation and adaptation , including in particular in the fields of aeronautics and air transport , to reduce emissions through low - emission transport and to cover the cost of administering the community scheme . the proceeds of auctioning should also be used to fund contributions to the global energy efficiency and renewable energy fund , and measures to avoid deforestation . ### in article 3d , subparagraph 1 is replaced by the following : ' 4 . all revenues shall be used to tackle climate change in the eu and third countries , inter alia , to reduce greenhouse gas emissions , to adapt to the impacts of climate change in the eu and third countries , especially developing countries , to fund research and development for mitigation and adaptation , including in particular in the fields of aeronautics and air transport , to reduce emissions through low - emission transport and to cover the cost of administering the community scheme . the proceeds of auctioning may also be used to fund contributions to the global energy efficiency and renewable energy fund , and measures to avoid deforestation .


### 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 a 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 the eib . the advisory board shall be responsible for the elaboration of guidelines in relation to the objectives of the union - level investment policy related to that fund and in relation to investment selection criteria which shall take into account national circumstances .


### ' the commission shall , as part of the measures adopted under paragraph 1 , include measures for defining installations that partially cease to operate or significantly reduce their capacity , and measures for adapting , as appropriate , the level of free allocations given to them accordingly . ' ### paragraph 20 is replaced by the following : ' the commission shall , as part of the measures adopted under paragraph 1 , include measures for defining installations that partially cease to operate or significantly reduce their capacity , and measures for adapting , as appropriate , the level of free allocations given to them accordingly . those measures shall provide flexibility for industry sectors where capacity is regularly transferred between operating installations in the same company . '


### ' 3a . an obligation to surrender allowances shall not arise in respect of emissions verified as captured and transported for permanent storage to a facility for which a permit is in force in accordance with directive 2009 / 31 / ec of the european parliament and of the council of 23 april 2009 on the geological storage of carbon dioxide . ' ### in article 12 , paragraph 3a is replaced by the following : ' 3a . an obligation to surrender allowances shall not arise in respect of emissions verified as captured and transported for permanent storage to a facility for which a permit is in force in accordance with directive 2009 / 31 / ec of the european parliament and of the council of 23 april 2009 on the geological storage of carbon dioxide , nor in respect of emissions verified as captured and / or re - used in an application ensuring a permanent bound of the co2 , for the purpose of carbon capture and re - use . '


### 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 ccu and innovative renewable energy technologies that are not yet commercially viable . projects shall be selected on the basis of their impact on energy systems or industrial processes within a member state , a group of member states or the union . in order to promote innovative projects , up to 75% of the relevant costs of projects may be supported , out of which up to 60% 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 allocated to support the relevant costs of individual projects according to the needs of those projects in relation to reaching pre - determined milestones .


### are additional , clearly respond to replacement and modernisation needs and do not supply a market - driven increase in energy demand ; ### are additional , clearly respond to replacement and modernisation needs , do not supply a market - driven increase in energy demand , are not included in the first national investment plan and are supplementary to the investments required to comply with the best available techniques reference document and bat conclusions for large combustion plants and other requirements in accordance with directive 2010 / 75 / eu1a ; __________________ 1a . directive 2010 / 75 / eu of the european parliament and of the council of 24 november 2010 on industrial emissions .


### ' 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 . ' ### 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 . the report shall also address the interaction of the eu ets with other union climate and energy policies , including how those policies impact upon the supply - demand balance of the eu ets . member states shall ensure that any relevant information is submitted to the commission at least two months before the commission adopts the report . '


### ' 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 . ' ### 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 report , 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 union and national level , and shall analyse the effects of various policy instruments on the level of demand for union allowances and its consequences on the supply - demand balance in the carbon market . the commission shall calculate the equivalent number of allowances for closures that are reported by member states . 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 . '


### on the basis of information submitted pursuant to article 11 , the commission shall identify whether the values for each benchmark calculated using the principles in article 10a differ from the annual reduction referred to above by more than 0 . 5% of the 2007 - 8 value higher or lower annually . if so , that benchmark value shall be adjusted either 0 . 5% or 1 . 5% in respect of each year between 2008 and the middle of the period for which free allocation is to be made ; ### benchmarks in individual sectors and subsectors shall be updated based on the average of the verified emissions of the top 10 % most efficient installations of the sector or subsector in the union during 2017 and 2018 . benchmarks shall be set on the basis of information submitted pursuant to article 11 . the benchmark values shall be adjusted by 1% in respect of each year between the latest reference period and the middle of the relevant period of free allocation . the commission shall identify whether the values for each benchmark calculated using the principles in article 10a differ from the annual reduction referred to above by more than 0 . 5% of the updated value higher or lower annually . if so , that benchmark value shall be adjusted either 0 . 5% or 1 . 5% in respect of each year between the update and the middle of the period for which free allocation is to be made . for sectors with unavoidable process emissions and where real production and efficiency data using best available technology proves that emissions cannot be lowered the benchmark shall not be adjusted ;


### 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 , however , full free allocation should be ensured for the most efficient installations in sectors at risk of carbon leakage .


### 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 allocation should be updated before the start of the trading period to ensure that free allocation is based on real technological progress . the update should be carried out on the basis of robust , objective and verified data from installations . for reasons of predictability , subsequent updates should be done through applying a factor that represents the best assessment of progress across sectors , which should 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 shows a significant difference from the factor reduction 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 .


### ' 2 . from 1 january 2013 , 15 % of allowances shall be auctioned . this percentage may be increased as part of the general review of this directive . ' ### in article 3d , paragraph 2 is replaced by the following : ' 2 . from 1 january 2021 , 50% of allowances shall be auctioned . '


### 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 eligible member states shall develop guidelines and investment selection criteria specific to such projects in line with the guidance elaborated by an advisory board referred to in paragraph 4 .


### 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 such a 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 eu ets and not subject to a risk of carbon leakage , in particular in the building sector and sustainable transport , will decrease the amount of effort needed from the union’s industry .


### 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 .


### 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 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 eur 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 . the cogeneration of heat and power should also be eligible for the optional free allocation to modernise the energy sector . investments with a value of less than eur 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 selection process should be subject to public consultation and the results of such selection process should be made publically available . the public should be duly kept informed at the stage of the selection of investment projects as well as of their implementation .


### 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 national rules and investment selection criteria specific to such projects , based on the guidance of the commission and eib .


### 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 benchmark values for free allocation shall be adjusted in order to avoid windfall profits and reflect technological progress in the period between 2007 - 8 and each later period for which free allocations are determined in accordance with article 11 . this adjustment shall reduce the benchmark values set by the act adopted pursuant to article 10a by 1 % of the value that was set based on 2007 - 8 data in respect of each year between 2008 and the middle of the relevant period of free allocation , unless : ### account being taken of the total carbon content of waste gas used for electricity production , the benchmark values for free allocation for the fourth trading period shall be laid down by the commission by 31 december 2017 and shall reflect technological progress in 2014 and 2015 . for the fourth trading period , the benchmark values shall be determined solely on the basis of average emissions from the most efficient 10% of installations . the benchmark values for the fourth period shall be developed with the involvement of a forum made up of member state representatives and the industries concerned . the forum shall be set up by the commission ; it shall be regularly convened and involved in the practical arrangements for the development of the benchmark values . the benchmark values shall be set on the basis of the forum ' s input . the commission shall document the development process and publish the documentation together with the benchmark values .


### ' report to ensure the better functioning of the carbon market if , on the basis of the regular reports on the carbon market referred to in article 10 , the commission has evidence that the carbon market is not functioning properly , it shall submit a report to the european parliament and to the council . the report may be accompanied , if appropriate , by proposals aiming at increasing transparency of the carbon market and addressing measures to improve its functioning . ' ### article 29 is amended as follows : ' report to ensure the better functioning of the carbon market if , on the basis of the regular reports on the carbon market referred to in article 10 , the commission has evidence that the carbon market is not functioning properly , it shall submit a report to the european parliament and to the council . the report shall include a section dedicated to the interaction of other union and national policies with the eu ets in terms of the volumes of emission reductions and the cost - effectiveness of such policies . the report may be accompanied , if appropriate , by proposals aiming at increasing transparency of the carbon market and addressing measures to improve its functioning . '


### 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 . ### 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 address the social aspects of decarbonising their economies and use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy .


### 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 . ### 2% of the total quantity of allowances to be auctioned between 2021 and 2030 shall be made available from the auctioning volume 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 .


### ' the measures referred to in the first subparagraph shall , to the extent feasible , determine community - wide ex - ante benchmarks so as to ensure that allocation takes place in a manner that provides incentives for reductions in greenhouse gas emissions and energy efficient techniques , by taking account of the most efficient techniques , substitutes , alternative production processes , high efficiency cogeneration , efficient energy recovery of waste gases , use of biomass and capture and storage of co2 , where such facilities are available , and shall not provide incentives to increase emissions . no free allocation shall be made in respect of any electricity production , except for cases falling within article 10c and electricity produced from waste gases . ' ### in paragraph 1 , subparagraph 3 is replaced by the following : ' the measures referred to in the first subparagraph shall , to the extent feasible , determine union - wide ex - ante benchmarks so as to ensure that allocation takes place in a manner that provides incentives for reductions in greenhouse gas emissions and energy efficient techniques , by taking account of the most efficient techniques , substitutes , alternative production processes , high efficiency cogeneration , efficient energy recovery of waste gases , use of biomass , ccs and ccu where such facilities are available , and shall not provide incentives to increase emissions . no free allocation shall be made in respect of any electricity production , except for cases falling within article 10c , for installations in remote or rural areas for the electricity produced for their own use , for non - grid connected offshore oil and gas platforms as well as electricity produced from waste gases . '


### ' article 29 report to ensure the better functioning of the carbon market if , on the basis of the regular reports on the carbon market referred to in article 10 , the commission has evidence that the carbon market is not functioning properly , it shall submit a report to the european parliament and to the council . the report may be accompanied , if appropriate , by proposals aiming at increasing transparency of the carbon market and addressing measures to improve its functioning . ' ### article 29 is amended as follows : ' article 29 report to ensure the better functioning of the carbon market if , on the basis of the regular reports on the carbon market referred to in article 10 , the commission has evidence that the carbon market is not functioning properly , it shall submit a report to the european parliament and to the council . the report may be accompanied , if appropriate , by proposals aiming at increasing transparency of the carbon market and addressing measures to improve its functioning , including measures to limit the impact of overlapping union - wide energy and climate policies on the supply - demand balance of the eu ets . ' ;


### 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 the risk of 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 . a study commissioned by the commission in 2013 concluded that during the years 2005 to2012 no carbon leakage had occurred .


### 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 / 1814 shall supplement any existing resources remaining under this paragraph for projects referred to in subparagraphs 1 and 2 , with projects in all member states including small - scale projects , from 2018 . projects shall be selected on the basis of objective and transparent criteria that include requirements for knowledge - sharing .


### ' 4 . it shall be for member states to determine the use to be made of revenues generated from the auctioning of allowances . those revenues should be used to tackle climate change in the eu and third countries , inter alia , to reduce greenhouse gas emissions , to adapt to the impacts of climate change in the eu and third countries , especially developing countries , to fund research and development for mitigation and adaptation , including in particular in the fields of aeronautics and air transport , to reduce emissions through low - emission transport and to cover the cost of administering the community scheme . the proceeds of auctioning should also be used to fund contributions to the global energy efficiency and renewable energy fund , and measures to avoid deforestation . member states shall inform the commission of actions taken pursuant to this paragraph . ' ### in article 3d , paragraph 4 is replaced by the following : ' 4 . all revenues shall be used to tackle climate actions in vulnerable developing countries , in particular to fund adaptation , through the united nations green climate fund . '


### ' ' new entrant ' means : - any installation carrying out one or more of the activities indicated in annex i , which has obtained a greenhouse gas emissions permit for the first time after 30 june 2011 , - any installation carrying out an activity which is included in the community scheme pursuant to article 24 or for the first time , or - any installation carrying out one or more of the activities indicated in annex i or an activity which is included in the community scheme pursuant to article 24 or , which has had a significant extension after 30 june 2011 , only in so far as this extension is concerned ; ' ### in article 3 , point h is replaced by the following : ' ' new entrant ' means : - any installation carrying out one or more of the activities indicated in annex i , which has obtained a greenhouse gas emissions permit for the first time after 30 june 2018 , - any installation carrying out an activity which is included in the community scheme pursuant to article 24 or for the first time , or - any installation carrying out one or more of the activities indicated in annex i or an activity which is included in the community scheme pursuant to article 24 or , which has had a significant extension after 30 june 2018 , only in so far as this extension is concerned ; '


### 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 national rules and guidelines and investment selection criteria specific to such projects , in line with the objectives of the fund and the guidelines and investment selection criteria elaborated by the advisory board referred to in paragraph 4 . the national rules shall be made available to the public .


### 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 / 1814 shall supplement any existing resources remaining under this paragraph as a consequence of funds resulting from ner300 allowance auctions for the period 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 sectors concerned . projects supported under this subparagraph may also receive further support under subparagraphs 1 and 2 .


### 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 a 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 , with the involvement of the commission . the eib shall be involved as an advisory body and provide guidelines on the principles for the project selection . adequate monitoring and reporting provisions shall be established to guarantee the transparency and efficient use of the fund by the beneficiary member states . the beneficiary member state shall select the projects which it finds appropriate based on the principles and purpose of the fund and shall notify the european commission about the list of the selected projects . the fund shall cooperate fully with established national implementing entities and programs .


### 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 .


### ' 1 . following consultation with the operator , member states may exclude from the community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and , where they carry out combustion activities , have a rated thermal input below 35 mw , excluding emissions from biomass , in each of the three years preceding the notification under point , 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 upon the operators 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 , 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 and specifying how those measures would not result in higher compliance costs for such installations , 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 which are 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 will achieve an equivalent contribution to emission reductions are no longer in place , the installation will be reintroduced into the eu ets ; it makes the information referred to in points , and available to the public . ' hospitals may also be excluded if they undertake equivalent measures . '


### ' 2 . from 1 january 2013 , 15 % of allowances shall be auctioned . this percentage may be increased as part of the general review of this directive . ' ### in article 3d , paragraph 2 is replaced by the following : ' 2 . from 1 january 2021 , 50% of allowances shall be auctioned . '


### ' 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 : ' following consultation with the operator , 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 , 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 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 which are 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 will achieve an equivalent contribution to emission reductions are no longer in place , the installation will be reintroduced into the eu ets ; it makes the information referred to in points , and available to the public . hospitals may also be excluded if they undertake equivalent measures . '


### are additional , clearly respond to replacement and modernisation needs and do not supply a market - driven increase in energy demand ; ### clearly respond to replacement and modernisation needs ;


### 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 such a 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 eu ets and not subject to a risk of carbon leakage , in particular in the building sector and sustainable transport , will decrease the amount of effort needed from the union’s industry .


### the benchmark values for free allocation shall be adjusted in order to avoid windfall profits and reflect technological progress in the period between 2007 - 8 and each later period for which free allocations are determined in accordance with article 11 . this adjustment shall reduce the benchmark values set by the act adopted pursuant to article 10a by 1 % of the value that was set based on 2007 - 8 data in respect of each year between 2008 and the middle of the relevant period of free allocation , unless : ### account being taken of the total carbon content of waste gas used for electricity production , the benchmark values for free allocation for the fourth trading period shall be laid down by the commission by 31 december 2017 and shall reflect technological progress in 2014 and 2015 . for the fourth trading period , the benchmark values shall be determined solely on the basis of average emissions from the most efficient 10% of installations . the benchmark values for the fourth period shall be developed with the involvement of a forum made up of member state representatives and the industries concerned . the forum shall be set up by the commission ; it shall be regularly convened and involved in the practical arrangements for the development of the benchmark values . the benchmark values shall be set on the basis of the forum ' s input . the commission shall document the development process and publish the documentation together with the benchmark values .


### ' 1 . following consultation with the operator , member states may exclude from the community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and , where they carry out combustion activities , have a rated thermal input below 35 mw , excluding emissions from biomass , in each of the three years preceding the notification under point , 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 applying to that installation that will achieve an equivalent contribution to emission reductions that are in place and specifying how those measures would not result in higher compliance costs for such installations , 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 . '


### 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 the capture and storage and carbon capture and use of co2 , new renewable energy technologies and breakthrough innovation in sustainable 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 sustainable 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 .


### ' ‘ new entrant ' means : - any installation carrying out one or more of the activities indicated in annex i , which has obtained a greenhouse gas emissions permit for the first time after 30 june 2011 , - any installation carrying out an activity which is included in the community scheme pursuant to article 24 or for the first time , or - any installation carrying out one or more of the activities indicated in annex i or an activity which is included in the community scheme pursuant to article 24 or , which has had a significant extension after 30 june 2011 , only in so far as this extension is concerned ; ' ### in article 3 , point h is replaced by the following : ' ‘ new entrant’ means : - any installation carrying out one or more of the activities indicated in annex i , which has obtained a greenhouse gas emissions permit for the first time after 30 june 2018 , - any installation carrying out an activity which is included in the community scheme pursuant to article 24 or for the first time , or - any installation carrying out one or more of the activities indicated in annex i or an activity which is included in the community scheme pursuant to article 24 or , which has had a significant extension after 30 june 2018 , only in so far as this extension is concerned ; '


### the investment board shall elect a representative from the commission as chairman . the investment board shall strive to take decisions by consensus . if the investment board is not able to decide by consensus within a deadline set by the chairman , the investment board shall take a decision by simple majority . ### the advisory board shall elect a representative from the commission as chairman . the advisory board shall strive to take decisions by consensus . if the investment board is not able to decide by consensus within a deadline set by the chairman , the investment board shall take a decision by simple majority .


### 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 of october 2014 made a commitment to reduce the overall greenhouse gas emissions of the union by at least 40% below 1990 levels by 2030 . all sectors of the economy should contribute to achieving these emission reductions and the target will be delivered in the most cost - effective manner through the union emission trading system delivering a reduction of 43% below 2005 levels by 2030 . this was confirmed in the intended nationally determined reduction commitment of the union and its member states submitted to the secretariat of the un framework convention on climate change on 6 march 201516 . __________________ 16 http : / / www4 . unfccc . int / submissions / indc / submission%20pages / submissions . aspx ### the european council of october 2014 made a commitment to reduce the overall greenhouse gas emissions of the union by at least 40% below 1990 levels by 2030 . all sectors of the economy should contribute to achieving these emission reductions and the target will be delivered in the most cost - effective manner through the union emission trading system delivering a reduction of 43% below 2005 levels by 2030 . this was confirmed in the intended nationally determined reduction commitment of the union and its member states submitted to the secretariat of the un framework convention on climate change on 6 march 201516 . the burden of the emission reductions should be fairly shared between the sectors falling under the eu ets , whilst taking into careful consideration the respective socio - economic situation of each sector in a transparent and quantitative way . __________________ 16 http : / / www4 . unfccc . int / submissions / indc / submission%20pages / submissions . aspx


### ' ' new entrant ' means : - any installation carrying out one or more of the activities indicated in annex i , which has obtained a greenhouse gas emissions permit for the first time after 30 june 2011 , - any installation carrying out an activity which is included in the community scheme pursuant to article 24 or for the first time , or - any installation carrying out one or more of the activities indicated in annex i or an activity which is included in the community scheme pursuant to article 24 or , which has had a significant extension after 30 june 2011 , only in so far as this extension is concerned ; ' ### in article 3 , point h is replaced by the following : ' ' new entrant ' means : - any installation carrying out one or more of the activities indicated in annex i , which has obtained a greenhouse gas emissions permit for the first time after 30 june 2018 , - any installation carrying out an activity which is included in the community scheme pursuant to article 24 or for the first time , or - any installation carrying out one or more of the activities indicated in annex i or an activity which is included in the community scheme pursuant to article 24 or , which has had a significant extension after 30 june 2018 , only in so far as this extension is concerned ; '


### the investment board shall elect a representative from the commission as chairman . the investment board shall strive to take decisions by consensus . if the investment board is not able to decide by consensus within a deadline set by the chairman , the investment board shall take a decision by simple majority . ### the chairmanship of the advisory board shall be held by the beneficiary member states and be based on a one - year - term rotation model . the advisory board shall strive to take decisions by consensus . if the advisory board is not able to decide by consensus within a deadline set by the chairman , the investment board shall take a decision by simple majority .


### ' allowances shall be set aside for the projects that meet the criteria referred to in the third subparagraph . support for these projects shall be given via member states and shall be complementary to substantial co - financing by the operator of the installation . they could also be co - financed by the member state concerned , as well as by other instruments . no project shall receive support via the mechanism under this paragraph that exceeds 15 % of the total number of allowances available for this purpose . these allowances shall be taken into account under paragraph 7 . ' ### in paragraph 8 , subparagraph 5 is replaced by the following : ' allowances shall be set aside for the projects that meet the criteria referred to in the third subparagraph . support for these projects shall be given via member states and shall be complementary to substantial co - financing by the operator of the installation . they could also be co - financed by the member state concerned , as well as by other instruments . no project shall receive support via the mechanism under this paragraph that exceeds 20 % of the total number of allowances available for this purpose . these allowances shall be taken into account under paragraph 7 . the cancellation of allowances in accordance with paragraph 19 shall be dispensed if the operator applies to take over the production from one or several of his production sites , and he proves in each case up to the 31st of january of one year that the actual increase of the activity rate of that site that has taken over a part of the transferred production amounts to a total of at least 50 % of the annual - average production amount of the whole transferred production of the ceased site in the year 2020 . the proof after sentence 1 is to be given for the first time in the following year after the application of the transfer . if the proof necessary after sentence 1 is not given in time , the allocation for the transferred production whose production activity was ceased will be recanted in that amount for the future . '


### 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 .


### 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 .


### ensure that only projects which contribute to the diversification of their energy mix and sources of supply , the necessary restructuring , environmental upgrading and retrofitting of the infrastructure , clean technologies and modernisation of the energy production , transmission and distribution sectors are eligible to bid ; ### ensure that are eligible to bid only projects which contribute to : - the diversification of their energy mix and sources of supply , - the necessary restructuring , environmental upgrading and retrofitting of the infrastructure , - clean technologies , - use of cogeneration and / or - modernisation of the energy production , transmission and distribution sectors ;


### 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 or activities which are at the relevant level of disaggregation based on public and sector specific data as appropriate to comprise those activities covered by the eu ets , as concerns paragraph 1 , in accordance with article 23 . the assessment of the intensity of trade shall be based on data for the three most recent calendar years available . for the calculation of the emission intensity the lowest value of kgco2 since the establishment of the eu ets shall be used .


### 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 , without reducing the share of allowances to be auctioned . there should be clarity on the amount of auctioned allowances 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 .


### 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 .


### 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 national rules and investment selection criteria specific to such projects based on the guidance from the commission . the national rules shall be communicated to the commission and be subject to public consultation before their adoption and publication . for the purpose of this paragraph a small - scale investment project means a project funded through loans provided by a national promotional bank or through grants contributing to the implementation of a national programme serving specific objectives that are in line with those of the modernisation fund , of a total amount not exceeding eur 20 million and provided that not more than 20% of the member states ' share set out in annex iib is used .


### 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 / 1814 shall supplement any existing resources remaining under this paragraph as a consequence of funds resulting from ner300 allowance auctions for the period 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 sectors concerned . projects supported under this subparagraph may also receive further support under subparagraphs 1 and 2 .


### ' 4 . it shall be for member states to determine the use to be made of revenues generated from the auctioning of allowances . those revenues should be used to tackle climate change in the eu and third countries , inter alia , to reduce greenhouse gas emissions , to adapt to the impacts of climate change in the eu and third countries , especially developing countries , to fund research and development for mitigation and adaptation , including in particular in the fields of aeronautics and air transport , to reduce emissions through low - emission transport and to cover the cost of administering the community scheme . the proceeds of auctioning should also be used to fund contributions to the global energy efficiency and renewable energy fund , and measures to avoid deforestation . ### in article 3d , subparagraph 1 is replaced by the following : ' 4 . all revenues shall be used to tackle climate change in the eu and third countries , inter alia , to reduce greenhouse gas emissions , to adapt to the impacts of climate change in the eu and third countries , especially developing countries , to fund research and development for mitigation and adaptation , including in particular in the fields of aeronautics and air transport , to reduce emissions through low - emission transport and to cover the cost of administering the community scheme . the proceeds of auctioning may also be used to fund contributions to the global energy efficiency and renewable energy fund , and measures to avoid deforestation .


### ensure that only projects which contribute to the diversification of their energy mix and sources of supply , the necessary restructuring , environmental upgrading and retrofitting of the infrastructure , clean technologies and modernisation of the energy production , transmission and distribution sectors are eligible to bid ; ### ensure that only renewable energy , energy storage , upgrading heat distribution networks and upgrading electricity transmission and distribution sectors are eligible to bid ;


### ' 2 . from 1 january 2013 , 15 % of allowances shall be auctioned . this percentage may be increased as part of the general review of this directive . ' ### in article 3d , paragraph 2 is replaced by the following : ' 2 . from 1 january 2021 , 50 % of allowances shall be auctioned . '


### ' 1 . following consultation with the operator , member states may exclude from the community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and , where they carry out combustion activities , have a rated thermal input below 35 mw , excluding emissions from biomass , in each of the three years preceding the notification under point , 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 upon the operators 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 , 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 and specifying how those measures would not result in higher compliance costs for such installations , 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 which are 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 will achieve an equivalent contribution to emission reductions are no longer in place , the installation will be reintroduced into the eu ets ; it makes the information referred to in points , and available to the public . ' hospitals may also be excluded if they undertake equivalent measures . '


### ' 1 . following consultation with the operator , member states may exclude from the community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and , where they carry out combustion activities , have a rated thermal input below 35 mw , excluding emissions from biomass , in each of the three years preceding the notification under point , 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 that are in place and specifying how those measures would not result in higher compliance costs for such installations , 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 which are 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 . '


### — 95 % shall be distributed in proportion to their share of elected members of the european parliament among the beneficiary european political parties . ### — 95 % shall be distributed among the beneficiary european political parties in proportion to their share of elected members of the european parliament who are full members of a european political party .


### in the event of such termination , payments by the authorising officer of the european parliament shall be limited to the eligible expenditure actually incurred by the european political party or european political foundation up to the date when the termination decision takes effect . ### in article 30 , the second subparagraph is replaced by the following : in the event of such termination , payments by the authorising officer of the european parliament shall be limited to the reimbursable expenditure incurred by the european political party or the eligible expenditure incurred by european political foundation up to the date when the termination decision takes effect .


### by the way of derogation from article 18 and as regards applications for funding for the financial year 2019 , the authorising officer of the european parliament shall , before deciding on an application on funding , request evidence from a european political party demonstrating that its member parties have continuously published on their websites , for a period beginning one month after the entry into force of regulation no . xx / 2018 , the political programme and logo of the european political party as well as information , in relation to each of the member parties of the european political party , on the gender representation among the candidates at the last elections to the european parliament and among the members of the european parliament . ### by the way of derogation from article 18 and as regards applications for funding for the financial year 2019 , the authorising officer of the european parliament shall , before deciding on an application on funding , request evidence from a european political party demonstrating that the majority of its member parties and in any event a minimum of seven of them have continuously published on their websites , for a period beginning one month after the entry into force of regulation no . xx / 2018 , the political programme and logo of the european political party as well as information , in relation to each of the member parties of the european political party , on the gender representation among the candidates at the last elections to the european parliament and among the members of the european parliament .


### a european political party shall include in its application evidence demonstrating that its member parties have continuously published on their websites , during 12 months preceding the moment at which the applications is made , the political programme and logo of the european political party as well as information , in relation to each of the member parties of the european political party , on the gender representation among the candidates at the last elections to the european parliament and among the members of the european parliament . ### a european political party shall include in its application evidence demonstrating that the majority of its member partiesand in any event a minimum of seven of them have continuously published on their websites , during 12 months preceding the moment at which the applications is made , the political programme and logo of the european political party as well as information , in relation to each of the member parties of the european political party , on the gender representation among the candidates at the last elections to the european parliament and among the members of the european parliament .


### the specific objective of the programme is to provide young people , including those with fewer opportunities , with easily accessible opportunities for engagement in solidarity activities in europe and abroad while improving and properly validating their competences as well as facilitating their employability and transition into the labour market . ### the specific objective of the programme is to provide young people , including those with fewer opportunities , with easily accessible opportunities for engagement in solidarity activities in europe and abroad , with particular emphasis on states receiving funds under the instrument for pre - accession assistance , while improving and properly validating their competences as well as facilitating their employability and transition into the labour market .


### the power to adopt delegated acts referred to in article 19a shall be conferred on the commission for an indeterminate period of time from the entry into force of this regulation . ### the power to adopt delegated acts referred to in article 19a shall be conferred on the commission for a period of five years from . . . [ date of entry into force of this amending regulation ] . the commission shall draw up a report in respect of the delegation of power not later than nine months before the end of the five - year period . the delegation of power shall be tacitly extended for periods of an identical duration , unless the european parliament or the council opposes such extension not later than three months before the end of each period .


### the power to adopt delegated acts referred to in article 31 shall be conferred on the commission for an indeterminate period of time from the entry into force of this regulation . ### the power to adopt delegated acts referred to in article 31 shall be conferred on the commission for a period of five years from . . . [ date of entry into force of this amending regulation ] . the commission shall draw up a report in respect of the delegation of power not later than nine months before the end of the five - year period . the delegation of power shall be tacitly extended for periods of an identical duration , unless the european parliament or the council opposes such extension not later than three months before the end of each period .


### when assessing whether restrictive and / or discriminatory procurement measures or practices exist in a third country , the commission should examine to what degree laws on public procurement and concessions of the country concerned ensure transparency in line with international standards in the field of public procurement and preclude any discrimination against union goods , services and economic operators . in addition , it should examine to what degree individual contracting authorities or contracting entities maintain or adopt discriminatory practices against union goods , services and economic operators . ### when assessing whether restrictive and / or discriminatory procurement measures or practices exist in a third country , the commission should examine to what degree the laws on public procurement and concessions of the country concerned ensure transparency in line with international standards in the field of public procurement and concessions and preclude any discrimination against union goods , services and economic operators . in addition , it should examine to what degree individual contracting authorities or contracting entities maintain or adopt discriminatory practices against union goods , services and economic operators .


### in accordance with article 21 of the treaty on european union , the union is to define and pursue common policies and actions , and improve cooperation in all fields in international relations in order , inter alia , to encourage the integration of all countries into the world economy , including through the progressive abolition of restrictions on international trade . ### in accordance with article 21 of the treaty on european union , the union is to define and pursue common policies and actions , and improve cooperation in all fields in international relations in order , inter alia , to safeguard its values , fundamental interests , security , independence and integrity and to encourage the integration of all countries into the world economy , including through the progressive abolition of restrictions on international trade .