# Regulation (EU) No 662/2014 of the European Parliament and of the CouncilShow full title

Regulation (EU) No 662/2014 of the European Parliament and of the Council of 15 May 2014 amending Regulation (EU) No 525/2013            as regards the technical implementation of the Kyoto Protocol to the United Nations Framework Convention on Climate Change            (Text with EEA relevance)         

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U.K.

# Regulation (EU) No 662/2014 of the European Parliament and of the Council

# of 15 May 2014

# amending Regulation (EU) No 525/2013 as regards the technical implementation of the Kyoto Protocol to the United Nations Framework                        Convention on Climate Change                     

# (Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 192(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee(1),                        

After consulting the Committee of the Regions,

Acting in accordance with the ordinary legislative procedure(2),                        

Whereas:

(1)On 8 December 2012, at its eighth session, the Conference of the Parties to the United Nations Framework Convention on Climate                              Change (UNFCCC) serving as the meeting of the Parties to the Kyoto Protocol, adopted the Doha Amendment, establishing a second                              commitment period of the Kyoto Protocol, starting on 1 January 2013 and ending on 31 December 2020 (the ‘Doha Amendment’).

(2)Article 4 of the Kyoto Protocol provides for the possibility for Parties to fulfil their commitments under Article 3 of the                              Kyoto Protocol jointly. At the time of adoption of the Doha Amendment, the Union and its Member States, together with Croatia                              and Iceland, stated that the quantified emission limitation and reduction commitments for the Union, its Member States, Croatia                              and Iceland for the second commitment period under the Kyoto Protocol are based on the understanding that these will be fulfilled                              jointly in accordance with Article 4 of the Kyoto Protocol. That statement is reflected in the Report of the Conference and                              was endorsed by the Council on 17 December 2012.

(3)The Kyoto Protocol requires Parties that have reached an agreement to fulfil their commitments under Article 3 of the Kyoto                              Protocol jointly to set out in that agreement the respective emission level allocated to each of them. The Kyoto Protocol                              requires the Parties to a joint fulfilment agreement to notify the UNFCCC Secretariat of the terms of that agreement on the                              date of deposit of their instruments of acceptance.

(4)The conclusion of the Doha Amendment, the implementation of accompanying decisions of the Conference of the Parties to the                              UNFCCC serving as the meeting of the Parties to the Kyoto Protocol and a joint fulfilment agreement will require the establishment                              of rules to ensure the technical implementation of the second commitment period of the Kyoto Protocol in the Union, including                              the transition from the first to the second commitment period, to enable the effective operation of a joint fulfilment agreement,                              and to ensure its alignment with the operation of the Union’s Emissions Trading System (the ‘EU ETS’) established by Directive                              2003/87/EC of the European Parliament and of the Council(3) and Decision 406/2009/EC of the European Parliament and of the Council(4).

(5)During the first commitment period of the Kyoto Protocol, the internationally agreed requirements for the accounting and management                              of emissions and units and the joint fulfilment by the Union and its Member States were implemented pursuant to Decision No 280/2004/EC                              of the European Parliament and of the Council(5), Commission Regulation (EC) No 2216/2004(6) and Commission Regulation (EU) No 920/2010(7). Regulations (EC) No 2216/2004 and (EU) No 920/2010 have been replaced by Commission Regulation (EU) No 389/2013(8), which contains provisions on unit management related to the implementation and operation of the EU ETS and Decision No 406/2009/EC.                              The recently adopted Regulation (EU) No 525/2013 of the European Parliament and of the Council(9), which repealed and replaced Decision No 280/2004/EC, does not contain the legal basis that would enable the Commission to                              adopt the necessary technical implementation rules for the second commitment period of the Kyoto Protocol in accordance with                              the terms of the Doha Amendment, the decisions of the Conference of the Parties to the UNFCCC serving as the meeting of the                              Parties to the Kyoto Protocol and a joint fulfilment agreement.

(6)Where a Member State is seriously disadvantaged by a specific and exceptional situation, including accounting inconsistencies                              in matching the implementation of Union legislation with the rules agreed under the Kyoto Protocol, without prejudice to the                              fulfilment of the Member State’s obligations under Decision No 406/2009/EC, the Commission should, subject to the availability                              of units at the end of the second commitment period of the Kyoto Protocol, adopt measures to address that situation, by means                              of a transfer of certified emission reductions (CERs), emission reduction units (ERUs) or assigned amount units (AAUs) held                              in the Union registry to the registry of that Member State.

(7)In order to ensure uniform conditions for the implementation of Article 10(7) of Regulation (EU) No 525/2013, implementing                              powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011                              of the European Parliament and of the Council(10).

(8)Decision 1/CMP.8 of the Conference of the Parties to the UNFCCC serving as the meeting of the Parties to the Kyoto Protocol                              (‘Decision 1/CMP.8’) amends the rules for the establishment of eligibility to participate in the flexible mechanisms during                              the second commitment period of the Kyoto Protocol. It also sets limits on the carry-over of units from the first to the second                              commitment period, and includes a requirement for each Party to establish an account for the previous period surplus reserve.                              Moreover, that Decision provides for a 2 % share of the proceeds to be levied on the first international transfers of AAUs                              and on the issuance of ERUs for joint implementation projects immediately upon the conversion to ERUs of AAUs or of removal                              units (RMUs) previously held by Parties. Further rules for the implementation of the second commitment period of the Kyoto                              Protocol are currently being negotiated.

(9)In the delegated acts to be adopted in accordance with this Regulation, the Commission should provide for a clearing process                              at the end of the second commitment period of the Kyoto Protocol, whereby any net transfers of annual emission allocations                              in accordance with Decision No 406/2009/EC, and any net transfers of allowances with third countries participating in the                              EU ETS which are not part of a joint fulfilment agreement with the Union and its Member States, are followed by a transfer                              of a corresponding number of AAUs.

(10)The relevant international rules governing the accounting for emissions and progress towards achievement of commitments are                              expected to be adopted at the next climate conference to be held in Lima in December 2014. The Union and its Member States                              should work with third countries to help ensure this.

(11)Pursuant to Decision 1/CMP.8, which requires Parties to revisit their commitment for the second commitment period at the latest                              by 2014, cancelling a number of AAUs, CERs and ERUs in order to increase the ambition of their commitment could be considered.

(12)In order to establish coherent rules to ensure the technical implementation of the second commitment period of the Kyoto Protocol                              in the Union, including the transition from the first to the second commitment period, to enable the effective operation of                              the joint fulfilment of the commitments of the Union, its Member States and Iceland for the second commitment period, and                              to ensure its alignment with the operation of the EU ETS and Decision No 406/2009/EC, the power to adopt delegated acts in                              accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission,                              from the date of conclusion by the Union of the Doha Amendment to the end of the additional period for fulfilling commitments                              under the second commitment period of the Kyoto Protocol. It is of particular importance that the Commission carry out appropriate                              consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated                              acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and                              to the Council, as well as their consistency with internationally agreed accounting requirements, a joint fulfilment agreement                              concluded between the Union, its Member States and third countries under Articles 3 and 4 of the Kyoto Protocol, and relevant                              Union legislation.

(13)The Council conclusions of 9 March 2012 state that the Union’s quantified emission limitation or reduction objective during                              the second commitment period is determined on the basis of the Union’s total greenhouse gas emissions allowed during the period                              2013-20 under its climate and energy legislative package, thus reflecting the Union’s unilateral commitment to a 20 % reduction                              by 2020, and in this context confirm that with this approach, the emission reduction obligations of individual Member States                              should not exceed their obligations agreed in Union legislation.

(14)Compliance with the limits established by the relevant decisions of the UNFCCC or Kyoto Protocol bodies on the carry-over                              of ERUs and CERs from the first to the second commitment period should be ensured.

(15)Regulation (EU) No 525/2013 should therefore be amended accordingly,

HAVE ADOPTED THIS REGULATION:

# Article 1U.K.

Regulation (EU) No 525/2013 is amended as follows:

the following points are inserted in Article 3:

“commitment period reserve” or “CPR” means the reserve established pursuant to the Annex to Decision 11/CMP.1 or other relevant                                          decisions of the UNFCCC or Kyoto Protocol bodies;                                    

“previous period surplus reserve” or “PPSR” means the account established pursuant to Decision 1/CMP.8 of the Conference of                                          the Parties to the UNFCCC serving as the meeting of the Parties to the Kyoto Protocol (“Decision 1/CMP.8”) or other relevant                                          decisions of the UNFCCC or Kyoto Protocol bodies;                                    

“joint fulfilment agreement” means the terms of an agreement, in accordance with Article 4 of the Kyoto Protocol, between                                          the Union, its Member States and any third country to fulfil their commitments under Article 3 of the Kyoto Protocol, for                                          the second commitment period, jointly;’;                                    

Article 10 is amended as follows:

in paragraph 1, the following subparagraph is added:

‘The Union and the Member States shall each, in their respective registries set up pursuant to the first subparagraph, account                                          for their respective assigned amounts in the second commitment period of the Kyoto Protocol and perform the transactions referred                                          to in the first subparagraph, in accordance with Decision 1/CMP.8 or other relevant decisions of the UNFCCC or Kyoto Protocol                                          bodies and with a joint fulfilment agreement. To that effect, the Union and each Member State shall each in their respective                                          registries:                                    
                      -  set up and manage party holding accounts, including a deposit account, and issue an amount of AAUs corresponding to their                                                respective assigned amounts for the second commitment period of the Kyoto Protocol into those party holding accounts,                                           
                      -  account for the issue, holding, transfer, acquisition, cancellation, retirement, replacement or change of expiry date of AAUs,                                                RMUs, ERUs, CERs, tCERs and lCERs, as relevant, held in their respective registries for the second commitment period of the                                                Kyoto Protocol,                                           
                      -  establish and maintain a commitment period reserve,                                           
                      -  carry over AAUs, CERs and ERUs held in their respective registries from the first to the second commitment period of the Kyoto                                                Protocol, and establish a previous period surplus reserve and manage AAUs held therein,                                           
                      -  account for the transfer of AAUs or ERUs, as a share of proceeds following the issue of ERUs and on the first international                                                transfer of AAUs.’;                                           

the following paragraphs are added:

‘5.The Commission shall also be empowered to adopt delegated acts in accordance with Article 25 in order to give effect, by means                                             of the registries of the Union and of the Member States, to the necessary technical implementation of the Kyoto Protocol pursuant                                             to Decision 1/CMP.8 or other relevant decisions of the UNFCCC or Kyoto Protocol bodies and a joint fulfilment agreement, in                                             accordance with paragraph 1.                                    

6.The Commission shall also be empowered to adopt delegated acts in accordance with Article 25 to ensure that:                                    
                      -  any net transfers of annual emission allocations in accordance with Decision No 406/2009/EC and any net transfers of allowances                                                with third countries participating in the scheme established for greenhouse gas emissions trading within the Union by Directive                                                2003/87/EC which are not parties to a joint fulfilment agreement, are followed by a transfer of a corresponding number of                                                AAUs through a clearing process at the end of the second commitment period of the Kyoto Protocol,                                           
                      -  those transactions which are necessary to align the application of the limits established by decisions of the UNFCCC or Kyoto                                                Protocol bodies on the carry-over of ERUs and CERs from the first to the second commitment period of the Kyoto Protocol with                                                the implementation of Article 11a of Directive 2003/87/EC are performed; such transactions shall be without prejudice to the                                                ability of Member States to carry over further ERUs and CERs from the first to the second commitment period for other purposes,                                                provided that the limits for the carry-over of ERUs and CERs from the first to the second commitment period of the Kyoto Protocol                                                are not exceeded.                                           

7.Where a Member State is seriously disadvantaged by a specific and exceptional situation, including accounting inconsistencies                                             in matching the implementation of Union legislation with the rules agreed under the Kyoto Protocol, the Commission may, subject                                             to the availability of units at the end of the second commitment period of the Kyoto Protocol, adopt measures to address that                                             situation. For that purpose, the Commission shall be empowered to adopt implementing acts to transfer CERs, ERUs or AAUs held                                             in the Union registry to the registry of that Member State. Those implementing acts shall be adopted in accordance with the                                             examination procedure referred to in Article 26(2). The power to adopt those implementing acts shall be conferred on the Commission                                             from the date of conclusion by the Union of the Doha Amendment to the Kyoto Protocol.                                    

8.When adopting the delegated acts under paragraphs 5 and 6, the Commission shall ensure consistency with Directive 2003/87/EC                                             and Decision 406/2009/EC and a consistent implementation of internationally agreed accounting requirements, optimise transparency                                             and ensure accuracy of the accounting of AAUs, RMUs, ERUs, CERs, tCERs and lCERs by the Union and the Member States, while                                             avoiding, to the extent possible, administrative burdens and costs, including those relating to share of proceeds and IT development                                             and maintenance. It is of particular importance that the Commission follow its usual practice and carry out consultations                                             with experts, including Member States’ experts, before adopting those delegated acts.’;                                    

in Article 11, the following paragraph is added:

‘3.The Union and the Member States shall each, at the end of the second commitment period under the Kyoto Protocol, and in accordance                                    with Decision 1/CMP.8 or other relevant decisions of the UNFCCC or Kyoto Protocol bodies and a joint fulfilment agreement,                                    retire from their respective registries AAUs, RMUs, ERUs, CERs, tCERs or lCERs equivalent to the greenhouse gas emissions                                    from sources and removals by sinks covered by their respective assigned amounts.’;                           

Article 25 is amended as follows:

in paragraph 2, the first sentence is replaced by the following:

‘The power to adopt delegated acts referred to in Articles 6, 7 and Article 10(4) shall be conferred on the Commission for                                       a period of five years from 8 July 2013.’;                                    

the following paragraph is inserted:

‘2a.The power to adopt delegated acts referred to in Article 10(5) and (6) shall be conferred on the Commission from the date                                             of conclusion by the Union of the Doha Amendment to the Kyoto Protocol to the end of the additional period for fulfilling                                             commitments under the second commitment period of the Kyoto Protocol.’;                                    

in Article 26, the following paragraph is added:

‘3.In the case of Article 10(7), where the committee delivers no opinion, the Commission shall not adopt the draft implementing                                    act and the third subparagraph of Article 5(4) of Regulation (EU) No 182/2011 shall apply.’.                           

# Article 2U.K.

This Regulation shall enter into force on the twentieth day following that of its publication in the *Official Journal of the European Union*.                  

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 15 May 2014.

*For the European Parliament*                            

*The President*                            

M. Schulz                            

*For the Council*                            

*The President*                            

D. Kourkoulas                            

1

Opinion of 26 February 2014 (not yet published in the Official Journal).

2

Position of the European Parliament of 16 April 2014 (not yet published in the Official Journal) and decision of the Council                              of 13 May 2014.                           

3

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse                              gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).                           

4

Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce                              their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020 (OJ L 140, 5.6.2009, p. 136).                           

5

Decision No 280/2004/EC of the European Parliament and of the Council of 11 February 2004 concerning a mechanism for monitoring                              Community greenhouse gas emissions and for implementing the Kyoto Protocol (OJ L 49, 19.2.2004, p. 1).                           

6

Commission Regulation (EC) No 2216/2004 of 21 December 2004 for a standardised and secured system of registries pursuant to                              Directive 2003/87/EC of the European Parliament and of the Council and Decision No 280/2004/EC of the European Parliament                              and of the Council (OJ L 386, 29.12.2004, p. 1).                           

7

Commission Regulation (EU) No 920/2010 of 7 October 2010 establishing a Union Registry for the periods ending 31 December                              2012 of the Union emissions trading scheme pursuant to Directive 2003/87/EC of the European Parliament and of the Council                              and Decision No 280/2004/EC of the European Parliament and of the Council (OJ L 270, 14.10.2010, p. 1).                           

8

Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to Directive 2003/87/EC of the                              European Parliament and of the Council, Decisions No 280/2004/EC and No 406/2009/EC of the European Parliament and of the                              Council and repealing Commission Regulations (EU) No 920/2010 and (EU) No 1193/2011 (OJ L 122, 3.5.2013, p. 1).                           

9

Regulation (EU) No 525/2013 of the European Parliament and of the Council of 21 May 2013 on a mechanism for monitoring and                              reporting greenhouse gas emissions and for reporting other information at national and Union level relevant to climate change                              and repealing Decision No 280/2004/EC (OJ L 165, 18.6.2013, p. 13).                           

10

Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general                              principles concerning mechanisms for control by the Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).