### (10) this regulation identifies types of investments for which expenditure may be supported by the jtf. all supported activities should be pursued in full respect of the climate and environmental priorities of the union. the list of investments should include those that support local economies and are sustainable in the long-term , taking into account all the objectives of the green deal. the projects financed should contribute to a transition to a climate-neutral and circular economy. for declining sectors , such as energy production based on coal , lignite , peat and oil shale or extraction activities for these solid fossil fuels , support should be linked to the phasing out of the activity and the corresponding reduction in the employment level. as regards transforming sectors with high greenhouse gas emission levels , support should promote new activities through the deployment of new technologies , new processes or products , leading to significant emission reduction , in line with the eu 2030 climate objectives and eu climate neutrality by 205013while maintaining and enhancing employment and avoiding environmental degradation. particular attention should also be given to activities enhancing innovation and research in advanced and sustainable technologies , as well as in the fields of digitalisation and connectivity , provided that such measures help mitigate the negative side effects of a transition towards , and contribute to , a climate-neutral and circular economy. ### (10) this regulation identifies types of investments for which expenditure may be supported by the jtf. all supported activities should be pursued in full respect of the climate and environmental priorities of the union. the list of investments should include those that support local economies and are sustainable in the long-term , taking into account all the objectives of the green deal. the projects financed should contribute to a transition to a climate-neutral and circular economy. for declining sectors , such as energy production based on coal , lignite , peat and oil shale or extraction activities for these solid fossil fuels , support should be linked to the phasing out of the activity and the corresponding reduction in the employment level. as regards transforming sectors with high greenhouse gas emission levels , support should promote new activities through the deployment of new technologies , new processes or products , leading to significant emission reduction , in line with the eu 2030 climate objectives and eu climate neutrality by 205013 while maintaining and enhancing employment and avoiding environmental degradation. the jtf should also seek to bring about major shifts in mobility patterns , moving towards more environmentally-friendly modes of transport , investing in the modernisation and expansion of rail networks and providing more efficient public transport services in metropolitan areas and urban centres. particular attention should also be given to activities enhancing innovation and research in advanced and sustainable technologies , as well as in the fields of digitalisation and connectivity , provided that such measures help mitigate the negative side effects of a transition towards , and contribute to , a climate-neutral and circular economy.


### 1. this regulation establishes the just transition fund (‘jtf’) to provide support to territories facing serious socio-economic challenges deriving from the transition process towards a climate-neutral economy of the union by 2050. ### 1. this regulation establishes the just transition fund (‘jtf’) to provide support to territories facing serious socio-economic challenges deriving from the transition process towards a climate-neutral economy of the union by 2040.


### investments in the creation of new firms , including through business incubators and consulting services; ### investments in the creation of new firms , including through business incubators;


### the allocations resulting from the application of point (a) are adjusted to ensure that no member state receives an amount exceeding eur 2 billion. the amounts exceeding eur 2 billion per member state are redistributed proportionally to the allocations of all other member states. the member states shares are recalculated accordingly; ### the allocations resulting from the application of point (a) are adjusted to ensure that no member state receives an amount exceeding 20% of the principal amount. the amounts exceeding the 20% per member state are redistributed proportionally to the allocations of all other member states. the member states shares are recalculated accordingly


### (1) the regulatory framework governing the union’s cohesion policy for the period from 2021 to 2027 , in the context of the next multi-annual financial framework , contributes to the fulfilment of the union’s commitments to implement the paris agreement and the united nations sustainable development goals by concentrating union funding on green objectives. this regulation implements one of the priorities set out in the communication on the european green deal (‘the european green deal’)11 and is part of the sustainable europe investment plan12 providing dedicated financing under the just transition mechanism in the context of cohesion policy to address the economic and social costs of the transition to a climate-neutral and circular economy , where any remaining greenhouse gas emissions are compensated by equivalent absorptions. ### (1) the regulatory framework governing the union’s cohesion policy for the period from 2021 to 2027 , in the context of the next multi-annual financial framework , contributes to the fulfilment of the union’s commitments to implement the paris agreement and the united nations sustainable development goals by concentrating union funding on green and social objectives. this regulation implements one of the priorities set out in the communication on the european green deal (‘the european green deal’)11 and is part of the sustainable europe investment plan12 providing dedicated financing under the just transition mechanism in the context of cohesion policy to address the economic , social and regional challenges and divergences of the transition to a sustainable , climate-neutral , socially balanced and inclusive circular economy , where any remaining greenhouse gas emissions are compensated by equivalent absorptions.


### the resources for the jtf under the investment for jobs and growth goal available for budgetary commitment for the period 2021-2027 shall be eur 7.5 billion in 2018 prices , which may be increased , as the case may be , by additional resources allocated in the union budget , and by other resources in accordance with the applicable basic act. ### the resources for the jtf under the investment for jobs and growth goal available for budgetary commitment for the period 2021-2027 shall be eur xx billion in 2018 prices , which may be increased , as the case may be , by additional resources allocated in the union budget , and by other resources in accordance with the applicable basic act.


### having regard to the treaty on the functioning of the european union , and in particular the third paragraph of article 175 thereof , ### having regard to the treaty on the functioning of the european union , and in particular the third paragraph of article 175 , 192 (1) , 194 (1) , and 194 (2) thereof ,


### arrangements for involvement of partners in the preparation , implementation , monitoring and evaluation of the territorial just transition plan; ### arrangements for involvement of community representatives , civil society organisations , trade unions and any other relevant stakeholder in the preparation , implementation , monitoring and evaluation of the territorial just transition plan;


### 1. grants the commission discharge in respect of the implementation of the general budget of the european union for the financial year 2018 / postpones its decision on granting the commission discharge in respect of the implementation of the general budget of the european union for the financial year 2018; ### 1. postpones its decision on granting the commission discharge in respect of the implementation of the general budget of the european union for the financial year 2018;


### 1. welcomes the findings of the court of auditors concerning the financial year 2018; takes note of its remarks regarding the regularity of transactions under ‘natural resources’; highlights that transactions under the eagf were free from material errors and that most of the other errors were generated by complex eligibility rules; notes , furthermore , that the risk implied by errors is adequately covered under the corrective capacity of the commission; ### 1. welcomes the findings of the court of auditors concerning the financial year 2018; takes note of its remarks regarding the regularity of transactions under ‘natural resources’; highlights that transactions under the eagf were free from material errors and that most of the other errors were generated by complex eligibility rules , and asks that addressing this issue be a priority in the next reform; notes , furthermore , that the risk implied by errors is adequately covered under the corrective capacity of the commission;


### 3. welcomes the court’s special reports on the european union emergency trust fund for africa1 (‘eutf for africa’) and on the facility for refugees in turkey2 (‘turkey facility’); takes note of the court’s finding that the eutf for africa , which support activities in 26 african countries , is a flexible tool that is faster in launching projects than traditional funding instruments but lacks focus to efficiently steer action towards addressing the unprecedented challenges it faces; considers that the commission should review the design of the eutf for africa , in particular to increase its focus and accelerate its implementation , with a view to making it more effective; notes the court’s finding that the first tranche of eur 3 billion (out of a total of eur 6 billion) mobilised under the turkey facility provided a swift response to the refugee crisis but only half of the projects achieved the expected outcomes; believes that the efficiency of cash-assistance projects should be improved; urges the commission to act upon the court’s recommendations , including for more investments in municipal infrastructure and socio-economic support to address refugees’ needs and the development of a strategy to transition from humanitarian to development assistance; ### 3. notes the court’s special reports on the european union emergency trust fund for africa1 (‘eutf for africa’) and on the facility for refugees in turkey2 (‘turkey facility’); expresses concerns regarding findings that the eutf for africa lacks focus to efficiently steer action towards addressing the unprecedented challenges it faces and that the selection of projects is not fully consistent and clear; considers that the commission should review the design of the eutf for africa , with a view to making it more inclusive and responsive to the needs of displaced people , migrants and host communities; notes the court’s finding that the first tranche of eur 3 billion (out of a total of eur 6 billion) mobilised under the turkey facility provided a response to the refugee crisis but only half of the projects achieved the expected outcomes; believes that the efficiency of cash-assistance projects should be improved; urges the commission to act upon the court’s recommendations , including for more investments in emergency infrastructure and socio-economic support to address refugees’ rights and needs; urges the commission to propose clear guidelines on the appropriate situations in which special facilities should be established and to report in detail about the funding that has been allocated under this facility so far.


### 3. welcomes the launch of the first capacity building measures under the amended instrument contributing to stability and peace (icsp) in 2018; emphasises that these actions should take place in the context of an overall security sector reform process; encourages stronger follow-up of short-term stabilisation actions by longer-term actions funded by the icsp or other instruments; ### 3. rejects the launch of the first capacity building measures under the amended instrument contributing to stability and peace (icsp) in 2018; recalls that the amended scope of the icsp in order to finance military compromises its civilian character and breaches with art 41(2) teu and the prior aim of articles 209 and 208 tfeu and that the icsp financed from eu development aid should focus on civil measures only and on the root causes of instability and conflicts; therefore the instrument shall focus on poverty eradication , non-proliferation and disarmament , ddr , conflict prevention , mediation and peaceful conflict resolution;


### 4. welcomes the eca's analytical review on european defence and supports its recommendations; calls on the commission as guardian of the treaties to ensure the coherence of all union defence efforts carried out for the implementation of a union activity under the csdp (pesco , edidp , edf , card etc.) and to ensure synergies with nato; considers that a competitive european defence technological and industrial base , enhancing member states’ military capabilities and framing a european defence union must be the key objectives of the union under the next mff; ### 4. notes the eca's analytical review on european defence and its recommendations; calls on the commission as guardian of the treaties to ensure the strict application of art 41 (2) teu; therefore urges to terminate all union defence efforts carried out for the implementation of a union activity under the csdp (pesco , edidp , edf , card etc.);


### 4. calls on the commission to monitor closely trade agreements with third countries in respect of quality , health and animal welfare requirements; ### 4. calls on the commission to monitor closely trade agreements with third countries in respect of quality , health and animal welfare requirements; stresses that the globalisation of the food supply chain has not benefited primary producers , a sector that is characterised by below-cost production , low returns and exposure to unfair trading practices due to its fragmented nature;


### 5. recalls that the reasons behind this low absorption rate not only lie in the decommitment methodology (the so-called “n+3 rule”) , but also in the late adoption of the legislative framework enabling the implementation of the cohesion policy; therefore calls on the commission and the council to ensure proper measures in the next programming period 2021-2027 to avoid the repetition of delayed implementation of esi funds and its domino effect. ### 5. recalls that the reasons behind this low absorption rate lie mainly in the late adoption of the legislative framework enabling the implementation of the cohesion policy; therefore calls on the commission and the council to ensure proper measures in the next programming period 2021-2027 to avoid the repetition of delayed implementation of esi funds and its domino effect;


### 5. welcomes that the court did not find major flaws in the commission’s clearance procedures regarding the asylum , migration and integration fund (amif) and isf and that it agrees with the commission's clearance decisions; deplores , however , that three out of the 18 transactions examined by the court contained errors , of which one shared management transaction under amif showed an error rate of 9 ,4 %; urges the commission to address the systemic weaknesses identified by the court , such as a lack of ex post checks of supporting documents in case of ex ante administrative checks of payment claims; calls on the member states to improve legality and regularity checks of the procurement procedures organised by beneficiaries of funds. ### 5. welcomes that the court did not find major flaws in the commission’s clearance procedures regarding the asylum , migration and integration fund (amif) and isf and that it agrees with the commission's clearance decisions; deplores , however , that three out of the 18 transactions examined by the court contained errors of which one shared management transaction under amif showed a highly disturbing error rate of 9 ,4 %; urges the commission to address the systemic weaknesses identified by the court , such as a lack of ex post checks of supporting documents in case of ex ante administrative checks of payment claims; calls on the member states to improve legality and regularity checks of the procurement procedures organised by beneficiaries of funds.


### 5. is concerned by alleged cases of high-level conflicts of interest and land-grabbing by oligarchs with possible facilitation by governments and public authorities; calls on the commission to increase efforts to prevent and detect fraud; urges the commission to be extra vigilant on rule of law matters; ### 5. is concerned by alleged cases of high-level conflicts of interest and land-grabbing by oligarchs with possible facilitation by governments and public authorities; calls on the commission to increase efforts to prevent and detect fraud; urges the commission to be extra vigilant on rule of law matters; is of the opinion that the capping thresholds together with the introduction of labour cost offsets before capping that takes effect in the proposed new cap reform are not robust enough mechanisms to address those issues;


### 6. highlights that increased flexibility of member states in allocating cap subsidies risks further aggravating abuses , and urges therefore the commission to avoid renationalisation of the cap; ### 6. highlights that increased flexibility of member states in allocating cap subsidies , which adds complexity and allows the distribution of cap funds to be influenced by short-term national political interests , risks further aggravating abuses , and urges therefore the commission to avoid renationalisation of the cap;


### 11. welcomes the addition of a pillar of military mobility to ten-t policy with the adoption of the action plan in march 2018 and the proposal by the commission to include a new envelope dedicated to military mobility needs of eur 6 ,5 billion under the cef budget for 2021-2027; stresses the importance of analysis of gaps between the military and the ten-t requirements for generating the pipeline for dual-use infrastructure projects that could be supported under the cef 2021-2027 and strengthen ten-t; reiterates that this development reflects the strategic role played by the ten-t in integrating the union’s infrastructure in order to achieve rapid and seamless mobility across the continent , thus further developing the internal market; ### 11. is very much concerned about the addition of a pillar of military mobility to ten-t policy with the adoption of the action plan in march 2018 and the proposal by the commission to include a new envelope dedicated to military mobility needs of eur 6 ,5 billion under the cef budget for 2021-2027;


### 2. takes note that the source of those errors is mainly a result of reimbursements of ineligible costs , infringements of internal market rules and lack of support documentation , but is also due to the previous year’s overall low rates of reimbursement and payments as well as fewer financial instruments having been included in the audit; ### 2. takes note that the source of those errors , regarding both grants and - less closely audited - financial instruments is mainly a result of reimbursements of ineligible costs , as well as infringements of internal market rules and lack of support documentation , but is also due to the previous year’s overall low rates of reimbursement and payments as well as fewer financial instruments having been included in the audit;


### 2. notes that most rural development actions which were audited produced the expected results; asks the commission and member states to improve their performance framework where needed and to introduce further simplification measures , such as simplified cost options; regrets that the court of auditors identified weaknesses in the use of result indicators; ### 2. notes that most rural development actions which were audited produced the expected results; asks the commission and member states to improve their performance framework where needed and to introduce further simplification measures , such as simplified cost options; regrets that the focus of simplification in the last reform was on pillar i when it was clear that the more complex schemes , that were more prone to error , were in pillar ii; notes that the court of auditors identified weaknesses in the use of result indicators and also identified "gold plating" at national level as adding to the complexity of schemes;


### 17. welcomes that the commission has launched four thematic evaluations in 2018 (on support to youth employment , on esf support to employment and mobility , on esf support to education and training and on esf support to social inclusion); ### 17. welcomes that the commission has launched four thematic evaluations in 2018 (on support to youth employment , on esf support to employment and mobility , on esf support to education and training and on esf support to social inclusion); furthermore , highlights that transparency and citizens' awareness of the existence of the agencies are essential for their democratic accountability; considers that usability and ease of use of agency resources and data are of paramount importance; calls therefore for an assessment of how data and resources are currently presented and made available and of the degree to which citizens find them easy to identify , recognise and use;


### 17. highlights that the increasing use of financial mechanisms to deliver union policies in third countries alongside the union budget risks undermining the level of accountability and transparency of union action; insists that the commission ensures that the delivery of external aid is subject to the rule of law and respect for human rights in recipients countries; stresses , in particular , the need to guarantee that no union funds support forced child labour; ### 17. highlights that the increasing use of financial mechanisms to deliver union policies in third countries alongside the union budget risks undermining the level of accountability and transparency of union action; insists that the commission ensures that the delivery of external aid is subject to the rule of law and respect for human rights in recipients countries; stresses , in particular , the need to guarantee that no union funds support forced child labour; reminds the request that union funds reach its final beneficiaries and are not used to pay administrative fees , as those charged by the european investment bank for creating and administering financial instruments1a


### 23. notes that where payments are made on the basis of cost reimbursements , the court estimates the rate of error at 4 ,5 % (compared to 3 ,7 % in 2017 and 4 ,8 % in 2016) whilst the rate of error of entitlement payments85 was below the materiality threshold of 2 % excluding some rural development schemes; ### 23. notes that where payments are made on the basis of cost reimbursements , the court estimates the rate of error at 4 ,5 % (compared to 3 ,7 % in 2017 and 4 ,8 % in 2016) whilst the rate of error of entitlement payments85 was below the materiality threshold of 2 % excluding some rural development schemes; regrets that the error rate is not clearly quantified for the entitlement payments;


### 27. points out that the court did not estimate levels of error for areas of expenditure , under mff headings 3 security and citizenship and 4 global europe; notes , further , that the court did not issue specific error rates regarding rural development and market operations in cap , neither for the european social fund , the european regional and development fund and the cohesion funds; suggests that the court consider revising its sampling strategy in order to ensure a better comparability from one year to another; ### 27. regrets that the court did not estimate levels of error for areas of expenditure , under mff headings 3 security and citizenship and 4 global europe; considers that , although the figures under these headings are relatively low , they are of particular political importance; stresses that the audit of a representative sample size from under these two headings is essential for a rigorous and independent evaluation of financial transactions , as well as for better oversight on the use of union funds by the european parliament , and calls on the court to provide data on the error rate for payments under these headings in its next annual reports; notes , further , that the court did not issue specific error rates regarding rural development and market operations in cap , neither for the european social fund , the european regional and development fund and the cohesion funds; suggests that the court consider revising its sampling strategy in order to ensure a better comparability from one year to another;


### 28. notes that the court audited transactions worth a total of eur 120 ,6 billion and that ‘natural resources’ makes up the largest share of the overall population (48 %) , while the weight of mff 1b ‘cohesion’ is relatively small (around 20 %); ### 28. notes that the court audited transactions worth a total of eur 120 ,6 billion and that ‘natural resources’ makes up the largest share of the overall population (48 %) , while the weight of mff 1b ‘cohesion’ is relatively small (around 20 %); regrets this distribution of the audited population , considering the very high error rate for cohesion;


### 30. points out that the eca audit population for cohesion differed from previous years and consisted of final payments for the period 2007 to 2013 and expenditure covered by accounts accepted on an annual basis by the commission for the period 2014 to 2020; suggests that this means that the court tested transactions for which all relevant corrective actions had been implemented at member state level; ### 30. points out that the eca audit population for cohesion differed from previous years and consisted of final payments for the period 2007 to 2013 and expenditure covered by accounts accepted on an annual basis by the commission for the period 2014 to 2020; suggests that this means that the court tested transactions for which all relevant corrective actions had been implemented at member state level; regrets that despite this audit approach the error rate was quantified in a very high level of 5%;


### 42. shares the view expressed by the court (at point 6.74 of the court’s annual report for 2018) that in the ampr , the commission presents an estimated risk at payment for “economic , social and territorial cohesion that relates to expenditure which has not yet gone through the full control cycle”; ### 42. shares the view expressed by the court (at point 6.74 of the court’s annual report for 2018) that in the ampr , the commission presents an estimated risk at payment for “economic , social and territorial cohesion that relates to expenditure which has not yet gone through the full control cycle”; regrets to see that this means that the commission is evaluating the error rate for cohesion on the basis of pure estimations compared to the accounting year 2017-2018 and not on real figures that are verified for the financial year 2018 itself;


### 45. points out that if the risk at payment communicated by the commission already integrates financial corrections the corrective capacity of the union may be overestimated; ### 45. points out that if the risk at payment communicated by the commission already integrates financial corrections the corrective capacity of the union may be overestimated; regrets to see that this may have an impact on the reliability;


### 75. endorses the main recommendations made by the court in chapter 2 of its annual report for 2018; ### 75. endorses the main recommendations made by the court in chapter 2 of its annual report for 2018; in particular supports the request by the court to audit the eib’s non-union budget related operations.


### 170. considers it unsatisfactory that the court and the commission use different methodologies to establish their respective opinion on the legality and regularity of financial transactions; they therefore arrive at different results for the rer: ˃ 2 % (dg empl & dg regio) , 5 % (eca); ### 170. considers it unsatisfactory that the court and the commission use different methodologies to establish their respective opinion on the legality and regularity of financial transactions; they therefore arrive at different results for the rer: ˃ 2 % (dg empl & dg regio) , 5 % (eca); in this regard , requests that the court provides not an rer but an error rate at payments (before corrections are applied) , in order to improve the quality of the evaluation and the scrutiny of the parliament;


### 176. is surprised that the annual report 2018 on the “financial instruments under the esi funds” has not yet been published; ### 176. regrets that the annual report 2018 on the “financial instruments under the esi funds” has not yet been published;


### 215. insists that larger farm incomes do not necessarily need the same degree of support for stabilising farm incomes as smaller farms in time of income volatility crisis since they may benefit of potential economies of scale , which are likely to be resilient; ### 215. insists that larger farm incomes do not necessarily need the same degree of support for stabilising farm incomes as smaller farms in time of income volatility crisis since they may benefit of potential economies of scale , which are likely to be resilient; believes that the commission should take steps to ensure that cap funds are distributed in a weighted manner , such that the payments per hectare are on a reducing scale relative to the size of the holding/farm;


### 241. notes that the court considered that the number of audited transactions in 2018 was not sufficient to estimate the level of error and that it took this decision following its general strategy to reduce its substantive testing and partially rely on the so-called “work of others”; ### 241. regrets that the court considered that the number of audited transactions in 2018 was not sufficient to estimate the level of error and that it took this decision following its general strategy to reduce its substantive testing and partially rely on the so-called “work of others”;


### 250. points out that pooling resources from the edf , the union budget and other donors in trust funds should not have as consequence that money flagged for the development and cooperation policy do not reach their normal beneficiaries; ### 250. points out that pooling resources from the edf , the union budget and other donors in trust funds should not have as consequence that money flagged for the development and cooperation policy do not reach their normal beneficiaries; reminds that development policy is meant to eradicate poverty and reduce inequalities , and should not be conditional to migration control but rather on respect of human rights;


### 251. notes that if in order to lead a more efficient development cooperation policy it may happen that the commission uses union funds for security purposes; the funded actions should have a proper legal basis and be lead in full transparency; ### 251. expresses serious concern that union funds meant for development cooperation policy are used for security purposes; the funded actions should always have a proper legal basis and be lead in full transparency;


### 252. is concerned by the fact that , due to security risks , auditors are often not able to verify in many countries , as for instance in libya , whether the receivers of union funds are respecting high standards of human rights; ### 252. is concerned by the fact that , due to security risks , auditors are often not able to verify in many countries , as for instance in libya , whether the receivers of union funds are respecting high standards of human rights; expresses serious concern at the way in which the eutf for africa is being used to fund the libyan coast guard without showing consideration for the very serious human rights violations being committed in libya;


### court’s special report 35/2018: transparency of union funds implemented by ngos: more effort needed ### deleted


### 257. notes that the commission implements 1 ,7 % of the union budget and 6 ,8 % of the european development funds through ngos interventions; ### deleted


### 258. points out that transparency is one of the budgetary principles put forward by the financial regulation; it requires the commission to make available , in any appropriate and timely manner , information on recipients of union funds; ### deleted


### 259. stresses that the court identified five major problems hampering transparency: ### deleted


### - the unreliability of the classification of ngos in the commission’s accounting system abac; ### deleted


### - the lack of transparency in the selection of ngos to implement a programme; ### deleted


### - the lack of adequate information provided to the commission on funds and activities implemented by ngos; ### deleted


### - the lack of reliability of the information disclosed on actual payments or about entities receiving funding through sub-granting; ### deleted


### - the inadequacy of the information provided by united nations bodies on the contracts awarded to ngos. ### deleted


### 260. requests the commission to develop guidance and criteria to identify ngos in its accounting system and to verify the self-declared data submitted by the applicants; ### deleted


### 261. observes that there are different registration systems for each dg to register union funds applicants; calls on the commission to create a single entry point , in which the ngo field would be mandatory; asks the commission to make the proper verifications of the ngo status of the applicants; ### deleted


### 262. calls on the commission to exclude ngos applicants that present wrongful declarations of previous experience errors and to check them more thoroughly; ### deleted


### 263. requests the commission to ensure that the same sub-granting procedures is used and systematically applied by its services; ### deleted


### 264. asks the commission to provide information on actual payments or entities receiving funding through sub-granting in in its financial transparency system; ### deleted


### 265. regrets that the commission did not check whether united nations bodies disclose information on the grants awarded with union funding; demands the commission to perform those checks consistently; ### deleted


### 266. asks the commission , for indirectly managed funds , to do the necessary to obtain the appropriate information from the entrusted entities and from the sub-granted ngos , to be able to control the proper use of these funds and the compliance with the budgetary principles; ### deleted


### 268. points out that the public and political interest in this area is far much higher than its financial share; ### 268. points out that the public and political interest in this area is far much higher than its financial share; in this regard , insists that the court estimates the exact level of error for this chapter;


### special report 24 /2019 asylum , relocation and return of migrants: time to step up action to address disparities between objectives and results ### deleted


### 285. notes with concern that the court found in its special report 24/2019 that: ### deleted


### - implementation of the asylum procedures in greece and italy continues to be affected by long processing times and bottlenecks; ### deleted


### - as in the rest of the union , returns from greece and italy are low; ### deleted


### - whilst the registration and fingerprinting of migrants in the hotspots had improved significantly since the audit performed by the court in 2017 (court’s special report 6/2017) , the temporary emergency relocation schemes did not reach their targets and so did not effectively alleviate the pressure on the greek and italian asylum systems; ### deleted


### - although the 20 union support actions in greece and italy examined by the court addressed the needs identified , weaknesses remained in their design , most of the projects had not fully achieved their targets and the performance framework was set up late and without targets; moreover , not enough performance data was available; ### deleted


### - the capacity to process asylum cases had increased in both greece and italy , but that it was still not sufficient to tackle the increasing backlog in greece; ### deleted


### - since there are fewer new applications in italy , the backlog of asylum and return procedures is decreasing , but there is insufficient capacity to process the high number of appeals to the first decision; ### deleted


### - far fewer actual migrants are returned than return decisions made in both greece and italy , as in the union as a whole; this is due , for instance , to the length of time it takes to process asylum cases , insufficient capacity in detention centres , difficult cooperation with the migrants’ country of origin or migrants simply absconding once the decision is taken to return them; ### deleted


### 286. calls on the commission and the agencies to: ### deleted


### - use lessons learned to build on experience for any possible voluntary relocation mechanism in the future and to propose new measures to tackle effectively any emergency situation like the migration crisis of 2015 , which are acceptable for the member states; ### deleted


### - strengthen the management of emergency assistance and national programmes under the asylum migration and integration fund; ### deleted


### - enhance easo’s operational support to asylum procedures; ### deleted


### - adjust frontex’s return support and experts’ deployment in the hotspots; ### deleted


### - reinforce the management of the national asylum systems; ### deleted


### - support further national return procedures; ### deleted


### 287. calls on the commission to: ### deleted


### - improve the functioning of the hotspot system in order to make it more efficient in situation of emergency; ### deleted


### - carefully monitor the efficiency of the actions led by frontex in order to better protect the external borders of the european union; ### deleted


### - take the needed measures to address the root causes of migration; ### deleted


### 7. welcomes steps taken by the agency to achieve gender balance , such as encouragement of female applications during selection procedures , offering favourable working conditions and flexible arrangements linked to maternity; welcomes the formation of a gender balance advocacy group to raise awareness of gender balance issues; reiterates its call on the member states and the commission to take into account gender balance when nominating members of the board; ### 7. welcomes steps taken by the agency to achieve gender balance , such as encouragement of female applications during selection procedures , offering favourable working conditions and flexible arrangements linked to maternity; welcomes the formation of a gender balance advocacy group to raise awareness of gender balance issues;


### 11. notes that the internal audit service issued a very important recommendation to the undertaking for elaborating a consolidated risk register , which should cover risk affecting the programme and the undertaking as a stand-alone entity; notes that the internal audit officer (iao) declared to the management of the undertaking a lack of objectivity due to their repeated involvement in management tasks and due to the quality management processes; ### 11. notes that the internal audit service issued a very important recommendation to the undertaking for elaborating a consolidated risk register , which should cover risk affecting the programme and the undertaking as a stand-alone entity; notes that the internal audit officer (iao) declared to the management of the undertaking a lack of objectivity due to their repeated involvement in management tasks and due to the quality management processes; urges the undertaking to immediately resolve this issue and fully implement the recommendation of the internal audit officer;


### 13. notes that during the year 2018 , three cases of alleged fraudulent activities were detected in connection with beneficiaries receiving funds from the undertaking and were notified to olaf; calls on the undertaking to take all necessary measures to prevent cases of fraud in the future; ### 13. is shocked that during the year 2018 , three cases of alleged fraudulent activities were detected in connection with beneficiaries receiving funds from the undertaking and were notified to olaf; calls on the undertaking to develop a clear strategy to prevent fraud;


### (28) achieving the increased climate ambition will require substantial public resources in the eu as well as national budgets to be dedicated to the climate transition. to complement and reinforce the substantial climate-related spending in the eu budget , all auction revenues that are not attributed to the union budget should be used for climate-related purposes. this includes the use for financial support to address social aspects in lower- and middle-income households by reducing distortive taxes. further , to address distributional and social effects of the transition in low-income member states , an additional amount of 2 ,5 % of the union-wide quantity of allowances from [year of entry into force of the directive] to 2030 should be used to fund the energy transition of the member states with a gross domestic product (gdp) per capita below 65 % of the union average in 2016-2018 , through the modernisation fund referred to in article 10d of directive 2003/87/ec. ### (28) achieving the increased climate ambition will require substantial public resources in the eu as well as national budgets to be dedicated to the climate transition. to complement and reinforce the substantial climate-related spending in the eu budget , all auction revenues that are not attributed to the union budget should be used for climate-related purposes. this includes the use for financial support to address social aspects in lower- and middle-income households by reducing distortive taxes. further , to address distributional and social effects of the transition in low-income member states , an additional amount of 2 ,5 % of the union-wide quantity of allowances from [year of entry into force of the directive] to 2030 should be used to fund the energy transition of the member states with a gross domestic product (gdp) per capita below 65 % of the union average in 2016-2018 , through the modernisation fund referred to in article 10d of directive 2003/87/ec. both the use revenues from auctioning and funding through the modernisation fund should live up to the green oath to 'do no harm' to other environmental objectives of the union and be used according to social safeguards. furthermore , all member states which benefit from the fund have an obligation to respect the fundamental values enshrined in article 2 of the treaty on european union


### (43) the communication of the commission on stepping up europe’s 2030 climate ambition57 , underlined the particular challenge to reduce the emissions in the sectors of road transport and buildings. therefore , the commission announced that a further expansion of emissions trading could include emissions from road transport and buildings. emissions trading for these two new sectors would be established through separate but adjacent emissions trading. this would avoid any disturbance of the well-functioning emissions trading in the sectors of stationary installations and aviation. the new system is accompanied by complementary policies and measures safeguarding against undue price impacts , shaping expectations of market participants and aiming for a carbon price signal for the whole economy. previous experience has shown that the development of the new market requires setting up an efficient monitoring , reporting and verification system. in view of ensuring synergies and coherence with the existing union infrastructure for the eu ets covering the emissions from stationary installations and aviation , it is appropriate to set up emissions trading for the road transport and buildings sectors via an amendment to directive 2003/87/еc. ### (43) the communication of the commission on stepping up europe’s 2030 climate ambition57 , underlined the particular challenge to reduce the emissions in the sectors of road transport and buildings. the costs of the transition the increased volatility of energy and commodity prices sowing to transition-related adjustments and resource depletion , make it necessary to protect the most vulnerable households and micro-enterprises while maintaining a high level of investment to ensure the ecological transition is a success.


### (47) the regulated entities falling within the scope of the emissions trading in the sectors of buildings and road transport should be subject to similar greenhouse gas emissions permit requirements as the operators of stationary installations. it is necessary to establish rules on permit applications , conditions for permit issuance , content , and review , and any changes related to the regulated entity. in order for the new system to start in an orderly manner , member states should ensure that regulated entities falling within the scope of the new emissions trading have a valid permit as of the start of the system in 2025. ### deleted


### (48) the total quantity of allowances for the new emissions trading should follow a linear trajectory to reach the 2030 emissions reduction target , taking into account the cost-efficient contribution of buildings and road transport of 43 % emission reductions by 2030 compared to 2005. the total quantity of allowances should be established for the first time in 2026 , to follow a trajectory starting in 2024 from the value of the 2024 emissions limits (1 109 304 000 co2t) , calculated in accordance with article 4(2) of regulation (eu) 2018/842 of the european parliament and of the council59 on the basis of the reference emissions for these sectors for the period from 2016 to 2018. accordingly , the linear reduction factor should be set at 5 ,15 %. from 2028 , the total quantity of allowances should be set on the basis of the average reported emissions for the years 2024 , 2025 and 2026 , and should decrease by the same absolute annual reduction as set from 2024 , which corresponds to a 5 ,43 % linear reduction factor compared to the comparable 2025 value of the above defined trajectory. if those emissions are significantly higher than this trajectory value and if this divergence is not due to small-scale differences in emission measurement methodologies , the linear reduction factor should be adjusted to reach the required emissions reduction in 2030. ### deleted


### (49) the auctioning of allowances is the simplest and the most economically efficient method for allocating emission allowances , which also avoids windfall profits. both the buildings and road transport sectors are under relatively small or non-existent competitive pressure from outside the union and are not exposed to a risk of carbon leakage. therefore , allowances for buildings and road transport should only be allocated via auctioning without there being any free allocation. ### deleted


### (50) in order to ensure a smooth start to emissions trading in the buildings and road transport sectors and taking into account the need of the regulated entities to hedge or buy ahead allowances to mitigate their price and liquidity risk , a higher amount of allowances should be auctioned early on. in 2026 , the auction volumes should therefore be 30 % higher than the total quantity of allowances for 2026. this amount would be sufficient to provide liquidity , both if emissions decrease in line with reduction needs , and in the event emission reductions only materialise progressively. the detailed rules for this front-loading of auction volume are to be established in a delegated act related to auctioning , adopted pursuant to article 10(4) of directive 2003/87/ec. ### deleted


### (51) the distribution rules on auction shares are highly relevant for any auction revenues that would accrue to the member states , especially in view of the need to strengthen the ability of the member states to address the social impacts of a carbon price signal in the buildings and road transport sectors. notwithstanding the fact that the two sectors have very different characteristics , it is appropriate to set a common distribution rule similar to the one applicable to stationary installations. the main part of allowances should be distributed among all member states on the basis of the average distribution of the emissions in the sectors covered during the period from 2016 to 2018. ### deleted


### (52) the introduction of the carbon price in road transport and buildings should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes already specified for the existing emissions trading , but also for measures added specifically to address related concerns for the new sectors of road transport and buildings , including related policy measures under directive 2012/27/eu of the european parliament and of the council61 . auction revenues should be used to address social aspects of the emission trading for the new sectors with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the resources of the new fund will in principle correspond to 25 % of the expected revenues from new emission trading in the period 2026-2032 , and will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 . in addition , each member state should use their auction revenues inter alia to finance a part of the costs of their social climate plans. ### (52) eu ets should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes. auction revenues should be used to address social aspects of the emission trading with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the fund will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 .


### (52) the introduction of the carbon price in road transport and buildings should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes already specified for the existing emissions trading , but also for measures added specifically to address related concerns for the new sectors of road transport and buildings , including related policy measures under directive 2012/27/eu of the european parliament and of the council61 . auction revenues should be used to address social aspects of the emission trading for the new sectors with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the resources of the new fund will in principle correspond to 25 % of the expected revenues from new emission trading in the period 2026-2032 , and will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 . in addition , each member state should use their auction revenues inter alia to finance a part of the costs of their social climate plans. ### (52) the eu ets should be accompanied by effective social compensation , especially in view of the already existing levels of energy poverty. about 34 million europeans reported an inability to keep their homes adequately warm in 2018 , and 6 ,9 % of the union population have said that they cannot afford to heat their home sufficiently in a 2019 eu-wide survey60 . to achieve an effective social and distributional compensation , member states should be required to spend the auction revenues on the climate and energy-related purposes. auction revenues should be used to address social aspects of the emission trading with a specific emphasis in vulnerable households , micro-enterprises and transport users. in this spirit , a new social climate fund will provide dedicated funding to member states to support the european citizens most affected or at risk of energy or mobility poverty. this fund will promote fairness and solidarity between and within member states while mitigating the risk of energy and mobility poverty during the transition. it will build on and complement existing solidarity mechanisms. the fund will be implemented on the basis of the social climate plans that member states should put forward under regulation (eu) 20…/nn of the european parliament and the council62 .


### (53) reporting on the use of auctioning revenues should be aligned with the current reporting established by regulation (eu) 2018/1999 of the european parliament and of the council63 . ### (53) reporting on the use of auctioning revenues should be aligned with the current reporting established by regulation (eu) 2018/1999 of the european parliament and of the council and monitored by the commission and the european environment agency.


### (53) reporting on the use of auctioning revenues should be aligned with the current reporting established by regulation (eu) 2018/1999 of the european parliament and of the council63 . ### (53) reporting on the use of auctioning revenues should be aligned with the current reporting established by regulation (eu) 2018/1999 of the european parliament and of the council63 and monitored by the commission and the european environment agency.


### (54) innovation and development of new low-carbon technologies in the sectors of buildings and road transport are crucial for ensuring the cost-efficient contribution of these sectors to the expected emission reductions. therefore , 150 million allowances from emissions trading in the buildings and road transport sectors should also be made available to the innovation fund to stimulate the cost-efficient emission reductions. ### deleted


### (55) regulated entities covered by the buildings and road transport emissions trading should surrender allowances for their verified emissions corresponding to the quantities of fuels they have released for consumption. they should surrender allowances for the first time for their verified emissions in 2026. in order to minimise the administrative burden , a number of rules applicable to the existing emissions trading system for stationary installations and aviation should be made applicable to emissions trading for buildings and road transport , with the necessary adaptations. this includes , in particular , rules on transfer , surrender and cancellation of allowances , as well as the rules on the validity of allowances , penalties , competent authorities and reporting obligations of member states. ### deleted


### (56) for emissions trading in the buildings and road transport sectors to be effective , it should be possible to monitor emissions with high certainty and at reasonable cost. emissions should be attributed to regulated entities on the basis of fuel quantities released for consumption and combined with an emission factor. regulated entities should be able to reliably and accurately identify and differentiate the sectors in which the fuels are released for consumption , as well as the final users of the fuels , in order to avoid undesirable effects , such as double burden. to have sufficient data to establish the total number of allowances for the period from 2028 to 2030 , the regulated entities holding a permit at the start of the system in 2025 should report their associated historical emissions for 2024. ### deleted


### (57) it is appropriate to introduce measures to address the potential risk of excessive price increases , which , if particularly high at the start of the buildings and road transport emissions trading , may undermine the readiness of households and individuals to invest in reducing their greenhouse gas emissions. these measures should complement the safeguards provided by the market stability reserve established by decision (eu) 2015/1814 of the european parliament and of the council64 and that became operational in 2019. while the market will continue to determine the carbon price , safeguard measures will be triggered by rules-based automatism , whereby allowances will be released from the market stability reserve only if concrete triggering conditions based on the increase in the average allowance price are met. this additional mechanism should also be highly reactive , in order to address excessive volatility due to factors other than changed market fundamentals. the measures should be adapted to different levels of excessive price increase , which will result in different degrees of the intervention. the triggering conditions should be closely monitored by the commission and the measures should be adopted by the commission as a matter of urgency when the conditions are met. this is without prejudice to any accompanying measures that member states may adopt to address adverse social impacts. ### deleted


### (58) the application of emissions trading in the buildings and road transport sectors should be monitored by the commission , including the degree of price convergence with the existing ets , and , if necessary , a review should be proposed to the european parliament and the council to improve the effectiveness , administration and practical application of emissions trading for those sectors on the basis of acquired knowledge as well as increased price convergence. the commission should be required to submit the first report on those matters by 1 january 2028. ### deleted


### (59) in order to ensure uniform conditions for the implementation of articles 3gd(3) , 12(3b) and 14(1) of directive 2003/87/ec , implementing powers should be conferred on the commission. to ensure synergies with the existing regulatory framework , the conferral of implementing powers in articles 14 and 15 of that directive should be extended to cover the sectors of road transport and buildings. those implementing powers should be exercised in accordance with regulation (eu) no 182/2011 of the european parliament and of the council65 . ### deleted


### (60) in order to adopt non-legislative acts of general application to supplement or amend certain non-essential elements of a legislative act , the power to adopt acts in accordance with article 290 of the treaty on the functioning of the european union should be delegated to the commission in respect of articles 10(4) and 10a(8) of that directive. moreover , to ensure synergies with the existing regulatory framework , the delegation in articles 10(4) and 10a(8) of directive 2003/87/ec should be extended to cover the sectors of road transport and buildings. it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level , and that those consultations be conducted in accordance with the principles laid down in the interinstitutional agreement on better law-making of 13 april 2016. in particular , to ensure equal participation in the preparation of delegated acts , the european parliament and the council receive all documents at the same time as member states' experts , and their experts systematically have access to meetings of commission expert groups dealing with the preparation of delegated acts. in accordance with the joint political declaration of 28 september 2011 of member states and the commission on explanatory documents66 , member states have undertaken to accompany , in justified cases , the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. with regard to this directive , the legislator considers the transmission of such documents to be justified ### (60) in order to adopt non-legislative acts of general application to supplement or amend certain non-essential elements of a legislative act , the power to adopt acts in accordance with article 290 of the treaty on the functioning of the european union should be delegated to the commission in respect of articles 10(4) and 10a(8) of that directive. it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level , and that those consultations be conducted in accordance with the principles laid down in the interinstitutional agreement on better law-making of 13 april 2016. in particular , to ensure equal participation in the preparation of delegated acts , the european parliament and the council receive all documents at the same time as member states' experts , and their experts systematically have access to meetings of commission expert groups dealing with the preparation of delegated acts. in accordance with the joint political declaration of 28 september 2011 of member states and the commission on explanatory documents66 , member states have undertaken to accompany , in justified cases , the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. with regard to this directive , the legislator considers the transmission of such documents to be justified


### (63) furthermore , in order to ensure that the level of allowances that remains in the market stability reserve after the invalidation is predictable , the invalidation of allowances in the reserve should no longer depend on the auction volumes of the previous year. the number of allowances in the reserve should , therefore , be fixed at a level of 400 million allowances , which corresponds to the lower threshold for the value of the tnac. ### (63) furthermore , in order to ensure that the level of allowances that remains in the market stability reserve after the invalidation is predictable and the structural oversupply is eliminated , the invalidation of allowances in the reserve should no longer depend on the auction volumes of the previous year. the number of allowances in the reserve should , therefore , be fixed at a level of 200 million allowances , which corresponds to the lower threshold for the value of the tnac.


### (66) in order to mitigate the risk of supply and demand imbalances associated with the start of emissions trading for the buildings and road transport sectors , as well as to render it more resistant to market shocks , the rule-based mechanism of the market stability reserve should be applied to those new sectors. for that reserve to be operational from the start of the system , it should be established with an initial endowment of 600 million allowances for emissions trading in the road transport and buildings sectors. the initial lower and upper thresholds , which trigger the release or intake of allowances from the reserve , should be subject to a general review clause. other elements such as the publication of the total number of allowances in circulation or the quantity of allowances released or placed in the reserve should follow the rules of the reserve for other sectors. ### deleted


### 1. this directive shall apply to the activities listed in annexes i and iii , and to the of greenhouse gases listed in annex ii. where an installation that is included in the scope of the eu ets due to the operation of combustion units with a total rated thermal input exceeding 20 mw changes its production processes to reduce its greenhouse gas emissions and no longer meets that threshold , it shall remain in the scope of the eu ets until the end of the relevant five year period referred to in article 11(1) , second subparagraph , following the change to its production process. ### 1. this directive shall apply to the activities listed in annex i and greenhouse gases listed in annex ii. where an installation that is included in the scope of the eu ets due to the operation of combustion units with a total rated thermal input exceeding 20 mw , with the exception of municipal waste incinerators exceeding 10 mw , changes its production processes to reduce its greenhouse gas emissions and no longer meets that threshold , it shall remain in the scope of the eu ets until the end of the relevant five year period referred to in article 11(1) , second subparagraph , following the change to its production process.


### in addition , 2 ,5 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the modernisation fund. the beneficiary member states for this amount of allowances shall be the member states with a gdp per capita at market prices below 65 % of the union average during the period 2016 to 2018. the funds corresponding to this quantity of allowances shall be distributed in accordance with part b of annex iib. ### in addition , 3 % of the total quantity of allowances between [year following the entry into force of the directive] and 2030 shall be auctioned for the modernisation fund. the beneficiary member states for this amount of allowances shall be the member states with a gdp per capita at market prices below 65 % of the union average during the period 2016 to 2018. the funds corresponding to this quantity of allowances shall be distributed in accordance with part b of annex iib.


### 3. member states shall determine the use of revenues generated from the auctioning of allowances , except for the revenues established as own resources in accordance with article 311(3) tfeu and entered in the union budget. member states shall use their revenues generated from the auctioning of allowances referred to in paragraph 2 , with the exception of the revenues used for the compensation of indirect carbon costs referred to in article 10a(6) , for one or more of the following:; ### 3. member states shall determine the use of revenues generated from the auctioning of allowances , except for the revenues established as own resources in accordance with article 311(3) tfeu and entered in the union budget. member states shall use their revenues generated from the auctioning of allowances referred to in paragraph 2 for one or more of the following:;


### in the case of installations covered by the obligation to conduct an energy audit under article 8(4) of directive 2012/27/eu of the european parliament and of the council(*) [article reference to be updated with the revised directive] , free allocation shall only be granted fully if the recommendations of the audit report are implemented , to the extent that the pay-back time for the relevant investments does not exceed five years and that the costs of those investments are proportionate. otherwise , the amount of free allocation shall be reduced by 25 %. the amount of free allocation shall not be reduced if an operator demonstrates that it has implemented other measures which lead to greenhouse gas emission reductions equivalent to those recommended by the audit report. the measures referred to in the first subparagraph shall be adjusted accordingly. ### in the case of installations covered by the obligation to conduct an energy audit under article 8(4) of directive 2012/27/eu of the european parliament and of the council[1] [article reference to be updated with the revised directive] , free allocation shall only be granted fully if the recommendations of the audit report are implemented , to the extent that the pay-back time for the relevant investments does not exceed ten years and that the costs of those investments are proportionate. otherwise , the amount of free allocation shall be reduced by 100%.


### in the case of installations covered by the obligation to conduct an energy audit under article 8(4) of directive 2012/27/eu of the european parliament and of the council(*) [article reference to be updated with the revised directive] , free allocation shall only be granted fully if the recommendations of the audit report are implemented , to the extent that the pay-back time for the relevant investments does not exceed five years and that the costs of those investments are proportionate. otherwise , the amount of free allocation shall be reduced by 25 %. the amount of free allocation shall not be reduced if an operator demonstrates that it has implemented other measures which lead to greenhouse gas emission reductions equivalent to those recommended by the audit report. the measures referred to in the first subparagraph shall be adjusted accordingly. ### in the case of installations covered by the obligation to conduct an energy audit under article 8(4) of directive 2012/27/eu of the european parliament and of the council(*) [article reference to be updated with the revised directive] , free allocation shall only be granted fully if the recommendations of the audit report are implemented , to the extent that the pay-back time for the relevant investments does not exceed ten years and that the costs of those investments are proportionate. otherwise , the amount of free allocation shall be reduced by 100 %.


### no free allocation shall be given to installations in sectors or subsectors to the extent they are covered by other measures to address the risk of carbon leakage as established by regulation (eu) …./.. [reference to cbam](**). the measures referred to in the first subparagraph shall be adjusted accordingly ### deleted


### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. a factor reducing the free allocation for the production of these products shall be applied (cbam factor). the cbam factor shall be equal to 100 % for the period during the entry into force of [cbam regulation] and the end of 2025 , 90 % in 2026 and shall be reduced by 10 percentage points each year to reach 0 % by the tenth year. ### deleted


### the reduction of free allocation shall be calculated annually as the average share of the demand for free allocation for the production of products listed in annex i of regulation [cbam] compared to the calculated total free allocation demand for all installations , for the relevant period referred to in article 11 , paragraph 1. the cbam factor shall be applied. ### deleted


### no free allocation shall be given in relation to the production of products listed in annex i of regulation [cbam] as from the date of application of the carbon border adjustment mechanism. ### free allocation at benchmark level shall be given in relation to the production of products listed in annex i of regulation [cbam] until the full effectiveness of the cbam in tackling the carbon leakage risk both on the eu market and on export markets is assessed and positively verified.


### by way of derogation from the previous subparagraph , for the first years of operation of regulation [cbam] , the production of these products shall benefit from free allocation in reduced amounts. a factor reducing the free allocation for the production of these products shall be applied (cbam factor). the cbam factor shall be equal to 100 % for the period during the entry into force of [cbam regulation] and the end of 2025 , 90 % in 2026 and shall be reduced by 10 percentage points each year to reach 0 % by the tenth year. ### for this purpose , in 2029 the commission shall present to the european parliament and the council a report pursuant to regulation [cbam] regarding the effectiveness of the cbam. the report shall also include the selected option to address the carbon leakage risk on export markets.


### the reduction of free allocation shall be calculated annually as the average share of the demand for free allocation for the production of products listed in annex i of regulation [cbam] compared to the calculated total free allocation demand for all installations , for the relevant period referred to in article 11 , paragraph 1. the cbam factor shall be applied. ### the report by the commission shall be accompanied by a legislative proposal to amend this article in view of gradually phasing out free allocation after 2030 proportionally to the proven level of effectiveness of the cbam.


### allowances resulting from the reduction of free allocation shall be made available to support innovation in accordance with article 10a(8).; ### allowances resulting from the reduction of free allocation shall be made available to support innovation in relation to the production of products listed in annex i of regulation [cbam] in accordance with article 10a(8).;


### 365 million allowances from the quantity which could otherwise be allocated for free pursuant to this article , and 85 million allowances from the quantity which could otherwise be auctioned pursuant to article 10 , as well as the allowances resulting from the reduction of free allocation referred to in article 10a(1a) , shall be made available to a fund with the objective of supporting innovation in low-carbon technologies and processes , and contribute to zero pollution objectives (the ‘innovation fund’). allowances that are not issued to aircraft operators due to the closure of aircraft operators and which are not necessary to cover any shortfall in surrenders by those operators , shall also be used for innovation support as referred to in the first subparagraph. ### 465 million allowances from the quantity which could otherwise be allocated for free pursuant to this article , and 85 million allowances from the quantity which could otherwise be auctioned pursuant to article 10 , as well as the allowances resulting from the reduction of free allocation referred to in article 10a(1a) , shall be made available to a fund with the objective of supporting innovation in low-carbon techniques , processes and technologies , and contribute to a circular and zero pollution objectives (the ‘innovation fund’) , with a priority for solutions addressing multiple environmental impacts. allowances that are not issued to aircraft operators due to the closure of aircraft operators and which are not necessary to cover any shortfall in surrenders by those operators , shall also be used for innovation support as referred to in the first subparagraph.


### in addition , 50 million unallocated allowances from the market stability reserve shall supplement any remaining revenues from the 300 million allowances available in the period from 2013 to 2020 under commission decision 2010/670/eu(*) , and shall be used in a timely manner for innovation support as referred to in the first subparagraph. furthermore , the external assigned revenues referred to in article 21(2) of regulation (eu) [fueleu maritime] shall be allocated to the innovation fund and implemented in line with this paragraph. ### deleted


### the innovation fund shall cover the sectors listed in annex i and annex iii , including environmentally safe carbon capture and utilisation (“ccu”) that contributes substantially to mitigating climate change , as well as products substituting carbon intensive ones produced in sectors listed in annex i , and to help stimulate the construction and operation of projects aimed at the environmentally safe capture and geological storage (“ccs”) of co2 , as well as of innovative renewable energy and energy storage technologies; in geographically balanced locations. the innovation fund may also support break-through innovative technologies and infrastructure to decarbonise the maritime sector and for the production of low- and zero-carbon fuels in aviation , rail and road transport. special attention shall be given to projects in sectors covered by the [cbam regulation] to support innovation in low carbon technologies , ccu , ccs , renewable energy and energy storage , in a way that contributes to mitigating climate change. ### the innovation fund shall cover the sectors listed in annex i , prioritising solutions that address the root causes of high and rising greenhouse gas emissions including the resources or materials used and the volumes used. a set proportion of the innovation fund may fund environmentally safe carbon capture and utilisation (“ccu”) where greenhouse gases which are considered to have been captured and utilised to become permanently chemically bound in a product so that they do not enter the atmosphere under normal use and/or during the disposal phase of the product. ccu projects financed from the innovation fund shall contribute substantially to mitigating climate change. in addition , the innovation fund may be used to support products substituting carbon intensive ones produced in sectors listed in annex i , and to help stimulate the construction and operation of innovative renewable energy and energy storage technologies , in geographically balanced locations. also , a set proportion of the innovation fund may fund projects aimed at the environmentally safe and permanent capture and geological storage(“ccs”) of co2 , in geographically balanced locations. ccs projects that aim to abate emissions from fossil fuel power stations or are involved with enhanced oil recovery cannot be financed through the innovation fund. the innovation fund may also support break-through innovative technologies and infrastructure to decarbonise the rail transport. special attention shall be given to projects in sectors covered by the [cbam regulation] to support innovation in low carbon technologies , renewable energy and energy storage , in a way that contributes to mitigating climate change.


### projects shall be selected on the basis of objective and transparent criteria , taking into account , where relevant , the extent to which projects contribute to achieving emission reductions well below the benchmarks referred to in paragraph 2. projects shall have the potential for widespread application or to significantly lower the costs of transitioning towards a low-carbon economy in the sectors concerned. projects involving ccu shall deliver a net reduction in emissions and ensure avoidance or permanent storage of co2. in the case of grants provided through calls for proposals , up to 60 % of the relevant costs of projects may be supported , out of which up to 40 % need not be dependent on verified avoidance of greenhouse gas emissions , provided that pre-determined milestones , taking into account the technology deployed , are attained. in the case of support provided through competitive bidding and in the case of technical assistance support , up to 100 % of the relevant costs of projects may be supported. ### projects shall be selected on the basis of objective and transparent criteria , taking into account , where relevant , the extent to which projects contribute to achieving emission reductions well below the benchmarks referred to in paragraph 2. projects shall have the potential for widespread application or to significantly lower the costs of transitioning towards a low-carbon economy in the sectors concerned. projects involving ccu shall deliver a net reduction in emissions and ensure permanent storage of co2 under normal use and/or during the disposal phase of the product. in the case of grants provided through calls for proposals , up to 60 % of the relevant costs of projects may be supported , out of which up to 40 % need not be dependent on verified avoidance of greenhouse gas emissions , provided that pre-determined milestones , taking into account the technology deployed , are attained. in the case of support provided through competitive bidding and in the case of technical assistance support , up to 100 % of the relevant costs of projects may be supported.


### the investments supported shall be consistent with the aims of this directive , as well as the objectives of the communication from the commission of 11 december 2019 on the european green deal (*) and regulation (eu) 2021/1119 of the european parliament and of the council (**) and the long-term objectives as expressed in the paris agreement. no support from the modernisation fund shall be provided to energy generation facilities that use fossil fuels.”; ### the investments supported shall be consistent with the aims of this directive , as well as the objectives of the communication from the commission of 11 december 2019 on the european green deal (*) and regulation (eu) 2021/1119 of the european parliament and of the council (**) and the long-term objectives as expressed in the paris agreement. no support from the modernisation fund shall be provided to energy generation facilities that use solid fossil fuels.”;


### 2. at least 80 % of the financial resources from the modernisation fund shall be used to support investments in the following: ### 2. 100 % of the financial resources from the modernisation fund shall be used in accordance with the member state’s approved territorial just transition plan laid out in article 11 of regulation (eu) 2021/1056 of the european parliament and of the council and to support investments in the following:


### the improvement of demand side energy efficiency , including in transport , buildings , agriculture and waste; ### reduction of overall energy use through demand side management and energy efficiency , including in transport , buildings , agriculture and waste;


### a just transition in carbon-dependent regions in the beneficiary member states , so as to support the redeployment , re-skilling and up-skilling of workers , education , job-seeking initiatives and start-ups , in dialogue with the social partners.; ### a just transition in carbon-dependent regions in the beneficiary member states , so as to support the redeployment , re-skilling and up-skilling of workers , education , job-seeking initiatives and start-ups , in dialogue with the civil society and social partners.;


### emissions trading system for buildings and road transport ### deleted


### article 30a ### deleted


### the provisions of this chapter shall apply to emissions , greenhouse gas emission permits , issue and surrender of allowances , monitoring , reporting and verification in respect of the activity referred to in annex iii. this chapter shall not apply to any emissions covered by chapters ii , iia and iii. ### deleted


### in order to provide further incentives for reducing greenhouse gas emissions and improving energy efficiency , the determined union-wide ex-ante benchmarks shall be reviewed before the period from 2026 to 2030 in view of potentially modifying the definitions and system boundaries of existing product benchmarks.; ### in order to provide further incentives for reducing greenhouse gas emissions and improving energy efficiency , the determined union-wide ex-ante benchmarks shall be reviewed within six months from the entry into force of this directive in view of potentially modifying the definitions and system boundaries of existing product benchmarks , taking into account the full potential of product substitution , and the circular use of materials.;


### for the period from 2026 to 2030 , the benchmark values shall be determined in the same manner as set out in points (a) and (d) on the basis of information submitted pursuant to article 11 for the years 2021 and 2022 and on the basis of applying the annual reduction rate in respect of each year between 2008 and 2028.; ### for the period from 2026 to 2030 , the benchmark values shall be determined in the same manner as set out in points (a) and (d) on the basis of information submitted pursuant to article 11 for the years 2021 and 2022 and on the basis of applying the annual reduction rate in respect of each year between 2008 and 2028.


### where the annual reduction rate exceeds 2 ,5 % or is below 0 ,2 % , the benchmark values for the period from 2026 to 2030 shall be the benchmark values applicable in the period from 2013 to 2020 reduced by whichever of those two percentage rates is relevant , in respect of each year between 2008 and 2028.; ### where the annual reduction rate exceeds 2 ,5 % or is below 0 ,2 % , the benchmark values for the period from 2026 to 2030 shall be the benchmark values applicable in the period from 2013 to 2020 reduced by whichever of those two percentage rates is relevant , in respect of each year between 2008 and 2028.


### where the annual reduction rate exceeds 2 ,5 % or is below 0 ,2 % , the benchmark values for the period from 2026 to 2030 shall be the benchmark values applicable in the period from 2013 to 2020 reduced by whichever of those two percentage rates is relevant , in respect of each year between 2008 and 2028.; ### where the annual reduction rate exceeds 2 ,5 % or is below 1 % , the benchmark values for the period from 2026 to 2030 shall be the benchmark values applicable in the period from 2013 to 2020 reduced by whichever of those two percentage rates is relevant , in respect of each year between 2008 and 2028.;


### in paragraph 6 , the first subparagraph is replaced by the following: ### paragraph 6 is deleted.


### in paragraph 6 , the first subparagraph is replaced by the following: ### deleted


### member states should adopt financial measures in accordance with the second and fourth subparagraphs in favour of sectors or subsectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices , provided that such financial measures are in accordance with state aid rules , and in particular do not cause undue distortions of competition in the internal market. the financial measures adopted should not compensate indirect costs covered by free allocation in accordance with the benchmarks established pursuant to paragraph 1. where a member state spends an amount higher than the equivalent of 25 % of their auction revenues of the year in which the indirect costs were incurred , it shall set out the reasons for exceeding that amount.; ### member states shall adopt financial measures in accordance with the second and fourth subparagraphs in favour of sectors or subsectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices , provided that such financial measures are in accordance with state aid rules , and in particular do not cause undue distortions of competition in the internal market. the financial measures adopted should not compensate indirect costs covered by free allocation in accordance with the benchmarks established pursuant to paragraph 1. where a member state spends an amount higher than the equivalent of 25 % of their auction revenues of the year in which the indirect costs were incurred , it shall set out the reasons for exceeding that amount.;


### combustion of fuels in installations with a total rated thermal input exceeding 20 mw (except in installations for the incineration of hazardous or municipal waste) ### carbon dioxide


### allowances from the maximum amount referred to in paragraph 5 of this article which were not allocated for free by 2020 shall be set aside for new entrants , together with 200 million allowances placed in the market stability reserve pursuant to article 1(3) of decision (eu) 2015/1814. of the allowances set aside , up to 200 million shall be returned to the market stability reserve at the end of the period from 2021 to 2030 if not allocated for that period. ### 200 million allowances placed in the market stability reserve pursuant to article 1(3) of decision (eu) 2015/1814 shall be set aside for new entrants. of the allowances set aside , up to 200 million shall be returned to the market stability reserve at the end of the period from 2021 to 2030 if not allocated for that period.


### (13) in article 10c , paragraph 7 is replaced by the following: ### (13) article 10c is deleted


### (13) in article 10c , paragraph 7 is replaced by the following: ### deleted


### in [the year following entry into force of this amendment] , the union-wide quantity of allowances shall be decreased by [-- million allowances (to be determined depending on year of entry into force)]. in the same year , the union-wide quantity of allowances shall be increased by 79 million allowances for maritime transport. starting in [the year following entry into force of this amendment] , the linear factor shall be 4 ,2 %. the commission shall publish the union-wide quantity of allowances within 3 months of [date of entry into force of the amendment to be inserted].; ### in [the year following entry into force of this amendment] , the union-wide quantity of allowances shall be decreased by 450 million allowances. in the same year , the union-wide quantity of allowances shall be increased by 79 million allowances for maritime transport. starting in [the year following entry into force of this amendment] , the linear factor shall be adjusted with a 2030 emission reduction target for the sectors covered by the eu ets of at least 75 % compared to 2005 taking into account the cap adjustment. the commission shall publish the union-wide quantity of allowances within 3 months of [date of entry into force of the amendment to be inserted].


### measures intended to improve energy efficiency , district heating systems and insulation , or to provide financial support in order to address social aspects in lower- and middle-income households , including by reducing distortive taxes;; ### measures intended to improve energy efficiency and insulation and de-carbonize district heating systems or to provide financial support in order to address social aspects in lower- and middle-income households , including by reducing distortive taxes or by recycling auctioning revenues back to people in a form of a carbon dividend in order to reduce energy poverty caused by the eu ets;


### (61) a well-functioning , reformed eu ets comprising an instrument to stabilise the market is a key means for the union to reach its agreed target for 2030 and the commitments under the paris agreement. the market stability reserve seeks to address the imbalance between supply and demand of allowances in the market. article 3 of decision (eu) 2015/1814 provides that the reserve is to be reviewed three years after it becomes operational , paying particular attention to the percentage figure for the determination of the number of allowances to be placed in the market stability reserve , the threshold for the total number of allowances in circulation (tnac) that determines the intake of allowances , and the number of allowances to be released from the reserve. ### (61) a well-functioning , reformed eu ets comprising an instrument to stabilise the market is a key means for the union to reach its agreed target for 2030 , union’s climate-neutrality objective by 2050 at the latest and the aim to achieve negative emissions thereafter laid down in article 2(1) of regulation (eu) 2021/1119 and the commitments under the paris agreement , while reflecting the principles of equity and of common but differentiated responsibilities and respective capabilities of nations. the market stability reserve should address the oversupply of allowances in the market. article 3 of decision (eu) 2015/1814 provides that the reserve is to be reviewed three years after it becomes operational , paying particular attention to achieving the union’s objectives under regulation (eu) 2021/1119 and the paris agreement through adjusting the percentage figure for the determination of the number of allowances to be placed in the market stability reserve , the threshold for the total number of allowances in circulation (tnac) that determines the intake of allowances , and the number of allowances to be released from the reserve.


### (62) considering the need to deliver a stronger investment signal to reduce emissions in a cost-efficient manner and with a view to strengthening the eu ets , decision (eu) 2015/1814 should be amended so as to increase the percentage rate for determining the number of allowances to be placed each year in the market stability reserve. in addition , for lower levels of the tnac , the intake should be equal to the difference between the tnac and the threshold that determines the intake of allowances. this would prevent the considerable uncertainty in the auction volumes that results when the tnac is close to the threshold , and at the same time ensure that the surplus reaches the volume bandwidth within which the carbon market is deemed to operate in a balanced manner. ### (62) considering the need to deliver a stronger investment signal to reduce emissions in a cost-efficient manner and with a view to strengthening the eu ets , decision (eu) 2015/1814 should be amended so as to increase the percentage rate for determining the number of allowances to be placed each year in the market stability reserve. in addition , the intake should be always the same , regardless of the levels of the tnac. this would prevent the considerable uncertainty in the auction volumes that results when the tnac is close to the threshold.


### (67) it is necessary to amend regulation (eu) 2015/757 to take into account the inclusion of the maritime transport sector in the eu ets. regulation (eu) 2015/757 should be amended to oblige companies to report aggregated emissions data at company level and to submit for approval their verified monitoring plans and aggregated emissions data at company level to the responsible administering authority. in addition , the commission should be empowered to adopt delegated acts to amend the methods for monitoring co2 emissions and the rules on monitoring , as well as any other relevant information set out in regulation (eu) 2015/757 , to ensure the effective functioning of the eu ets at administrative level and to supplement regulation (eu) 2015/757 with the rules for the approval of monitoring plans and changes thereof by administering authorities , with the rules for the monitoring , reporting and submission of the aggregated emissions data at company level and with the rules for the verification of the aggregated emissions data at company level and for the issuance of a verification report in respect of the aggregated emissions data at company level. the data monitored , reported and verified under regulation (eu) 2015/757 might also be used for the purpose of compliance with other union law requiring the monitoring , reporting and verification of the same ship information. ### (67) it is necessary to amend regulation (eu) 2015/757 to take into account the inclusion of the maritime transport sector in the eu ets. regulation (eu) 2015/757 should be amended to oblige companies to report aggregated emissions data at company level and to submit for approval their verified monitoring plans and aggregated emissions data at company level to the responsible administering authority. in addition , the commission should be empowered to adopt delegated acts to amend the methods for monitoring co2 and other greenhouse gas emissions , including particles with a global warming potential , as well as any other relevant information set out in regulation (eu) 2015/757 , to ensure the effective functioning of the eu ets at administrative level and to supplement regulation (eu) 2015/757 with the rules for the approval of monitoring plans and changes thereof by administering authorities , with the rules for the monitoring , reporting and submission of the aggregated emissions data at company level and with the rules for the verification of the aggregated emissions data at company level and for the issuance of a verification report in respect of the aggregated emissions data at company level. the data monitored , reported and verified under regulation (eu) 2015/757 might also be used for the purpose of compliance with other union law requiring the monitoring , reporting and verification of the same ship information.