Common Position (EC) No 28/2003 of 18 March 2003 adopted by the Council, acting in accordance with the procedure to in Article 251 of the Treaty establishing the European Community, with a view to adopting a directive of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance)
Date: 2003-03-18
Institutions: Council of the European Union
Subjects: EU environmental policy, air quality, greenhouse gas, industrial pollution, pollution control measures, tradeable emission permit

C 125 E/72

EN

Official Journal of the European Union

27.5.2003

COMMON POSITION (EC) No 28/2003

adopted by the Council on 18 March 2003

with a view to adopting Directive 2003/. . ./CE of the European Parliament and of the Council
establishing a scheme for greenhouse gas emission allowance trading within the Community and
amending Council Directive 96/61/EC

(2003/C 125 E/05)

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 175(1) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the Opinion of the European Economic and
Social Committee (2),

Having regard to the Opinion of
Regions (3),

the Committee of

the

Acting in accordance with the procedure laid down in Article
251 of the Treaty (4),

Whereas:

(1) The Green Paper on greenhouse gas emissions trading
within the European Union launched a debate across
Europe on the suitability and possible functioning of
greenhouse gas emissions trading within the European
Union. The European Climate Change Programme has
considered Community policies and measures through a
multi-stakeholder
for
greenhouse gas emission allowance trading within the
Community (the Community scheme) based on the
In its Conclusions of 8 March 2001, the
Green Paper.
Council
the
European Climate Change Programme and of work
based on the Green Paper, and underlined the urgent
need for concrete action at Community level.

recognised the particular

importance of

including

process,

scheme

a

(1) OJ C 75 E, 26.3.2002, p. 33.
(2) OJ C 221, 17.9.2002, p. 27.
(3) OJ C 192, 12.8.2002, p. 59.
(4) Opinion of the European Parliament of 10 October 2002 (not yet
published in the Official Journal), Council Common Position of 18
March 2003 and Decision of the European Parliament of . . . (not
yet published in the Official Journal).

the Council (5)

(2) The Sixth Community Environment Action Programme
the
established by Decision No 1600/2002/EC of
identifies
European Parliament and of
climate change as a priority for action and provides for
the establishment of a Community-wide emissions trading
scheme by 2005. That Programme recognises that
the
Community is committed to achieving an 8 % reduction
in emissions of greenhouse gases by 2008 to 2012
compared to 1990 levels, and that,
in the longer-term,
global emissions of greenhouse gases will need to be
reduced by approximately 70 % compared to 1990 levels.

(3) The ultimate objective of the United Nations Framework
Convention on Climate Change, which was approved by
Council Decision 94/69/EC of 15 December 1993
the United Nations
concerning
conclusion of
Framework Convention on Climate Change (6),
to
achieve stabilisation of greenhouse gas concentrations in
the atmosphere at a level which prevents dangerous
anthropogenic interference with the climate system.

the

is

(4) Once it enters into force, the Kyoto Protocol, which was
approved by Council Decision 2002/358/EC of 25 April
2002 concerning the approval, on behalf of the European
Community, of the Kyoto Protocol to the United Nations
Framework Convention on Climate Change and the joint
fulfilment of commitments thereunder (7), will commit the
Community and its Member States to reducing their
aggregate anthropogenic emissions of greenhouse gases
listed in Annex A to the Protocol by 8 % compared to
1990 levels in the period 2008 to 2012.

to

their

reduce

commitments

(5) The Community and its Member States have agreed to
anthropogenic
fulfil
the Kyoto Protocol
greenhouse gas emissions under
jointly,
in accordance with Decision 2002/358/EC. This
Directive aims to contribute to fulfilling the commitments
of the European Community and its Member States more
in
effectively,
least
greenhouse gas
possible diminution of
and
employment.

emission allowances, with the
economic development

through an efficient European market

(5) OJ L 242, 10.9.2002, p. 1.
(6) OJ L 33, 7.2.1994, p. 11.
(7) OJ L 130, 15.5.2002, p. 1.

27.5.2003

EN

Official Journal of the European Union

C 125 E/73

(6) Council Decision 93/389/EEC of 24 June 1993 for a
monitoring mechanism of Community CO2 and other
greenhouse gas emissions (1), established a mechanism
for monitoring greenhouse gas emissions and evaluating
progress towards meeting commitments in respect of these
emissions. This mechanism will assist Member States in
determining the total quantity of allowances to allocate.

(7) Community provisions relating to allocation of allowances
by the Member States are necessary to contribute to
preserving the integrity of
the internal market and to
avoid distortions of competition.

(14) The inclusion of additional installations in the Community
scheme should be in accordance with the provisions laid
down in this Directive.

(15) This Directive should not prevent any Member State from
maintaining or establishing national trading schemes regu-
lating emissions of greenhouse gases from activities other
than those listed in Annex I or included in the Community
scheme, or from installations temporarily excluded from
the Community scheme.

that

(8) Member States may provide

they only

issue
allowances valid for a five-year period beginning in
2008 to persons in respect of allowances cancelled, corre-
sponding to emission reductions made by those persons
on their national
territory during a three-year period
beginning in 2005.

transfers of
(9) Starting with the said five-year period,
allowances to another Member State will
involve corre-
sponding adjustments of assigned amount units under
the Kyoto Protocol.

(10) Member States should ensure that the operators of certain
specified activities hold a greenhouse gas emissions permit
and that
their emissions of
greenhouse gases specified in relation to those activities.

they monitor and report

(11) Member States

should lay down rules on penalties
applicable to infringements of this Directive and ensure
that
they are implemented. Those penalties must be
effective, proportionate and dissuasive.

to information relating to the

(12) In order to ensure transparency, the public should have
allocation of
access
allowances and to the results of monitoring of emissions,
in Directive
subject only to restrictions provided for
2003/4/EC of
the
Council of 28 January 2003 on public access to environ-
mental information (2).

the European Parliament and of

(16) Member States may participate in international emissions
trading as Parties to the Kyoto Protocol with any other
Party included in Annex B thereto.

(17) Linking the Community scheme

to greenhouse gas
emission trading schemes in third countries will increase
the Community
the
emission reductions
laid down in Decision
target as
2002/358/EC on the joint fulfilment of commitments.

cost-effectiveness of

achieving

(18) The recognition of credits from project-based mechanisms
for fulfilling obligations under this Directive as from 2005
will increase the cost-effectiveness of achieving reductions
of global greenhouse gas emissions and will be provided
for by a Directive for linking Project-based mechanisms
including Joint Implementation (JI) and the Clean Devel-
opment Mechanism (CDM) with the Community scheme.

(19) Council Directive 96/61/EC of 24 September 1996
concerning integrated pollution prevention and control (4)
establishes a general framework for pollution prevention
and control,
through which greenhouse gas emissions
permits may be issued. Directive 96/61/EC should be
amended to ensure that emission limit values are not set
for direct emissions of greenhouse gases from an instal-
lation subject to this Directive and that Member States
may choose not
relating to
energy efficiency in respect of combustion units or other
site, without
units
prejudice
to
pursuant
Directive 96/61/EC.

emitting carbon dioxide on the
requirements

to impose requirements

to any other

(13) Member States should submit a report on the implemen-
tation of this Directive drawn up on the basis of Council
Directive 91/692/EEC of 23 December 1991 standardising
and rationalising reports on the implementation of certain
Directives relating to the environment (3).

(1) OJ L 167, 9.7.1993, p. 31. Decision as amended by Decision

1999/296/EC (OJ L 117, 5.5.1999, p. 35).

(2) OJ L 41, 14.2.2003, p. 26.
(3) OJ L 377, 31.12.1991, p. 48.

(20) This Directive is compatible with the United Nations
Framework Convention on Climate Change and the
Kyoto Protocol. It should be reviewed in the light of devel-
in that context and to take into account
opments
experience in its implementation and progress achieved
in monitoring of emissions of greenhouse gases.

(4) OJ L 257, 10.10.1996, p. 26.

C 125 E/74

EN

Official Journal of the European Union

27.5.2003

(21) Emission allowance trading should form part of a compre-
hensive and coherent package of policies and measures
implemented at Member State and Community level.
Without prejudice to the application of Articles 87 and
the Treaty, where activities are covered by the
88 of
Community scheme, Member States may consider the
implications of regulatory,
fiscal or other policies that
pursue the same objectives. The review of the Directive
should consider the extent to which these objectives have
been attained.

referred to as the ‘Community scheme’) in order to promote
reductions of greenhouse gas emissions in a cost-effective and
economically efficient manner.

Article 2

Scope

This Directive shall apply to emissions from the activities

1.
listed in Annex I and greenhouse gases listed in Annex II.

(22) The instrument of taxation can be a national policy to
limit emissions from installations temporarily excluded.

This Directive shall apply without prejudice to any

2.
requirements pursuant to Directive 96/61/EC.

(23) Policies and measures should be implemented at Member
State and Community level across all sectors of
the
European Union economy, and not only within the
industry and energy
to generate
sectors,
substantial emissions reductions.

in order

(24) Notwithstanding

the

multifaceted

of
market-based mechanisms, the European Union strategy
for climate change mitigation should be built on a
balance between the Community scheme and other types
of Community, domestic and international action.

potential

(25) This Directive

and
the
observes the principles recognised in particular by the
Charter of Fundamental Rights of the European Union.

fundamental

respects

rights

Article 3

Definitions

For the purposes of this Directive the following definitions
shall apply:

(a)

‘allowance’ means an allowance to emit one tonne of
carbon dioxide
equivalent during a specified period,
which shall be valid only for the purposes of meeting the
requirements of this Directive and shall be transferable in
accordance with the provisions of this Directive;

(b) ‘emissions’ means the release of greenhouse gases into the

atmosphere from sources in an installation;

(26) The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the
procedures
implementing powers
the exercise of
conferred on the Commission (1).

for

(c)

‘greenhouse gases’ means the gases listed in Annex II;

(d)

‘greenhouse gas emissions permit’ means the permit issued
in accordance with Articles 5 and 6;

(27) Since the objective of

the proposed action,

the scale and effects of

the estab-
lishment of a Community scheme, cannot be sufficiently
achieved by the Member States acting individually, and can
therefore by reason of
the
proposed action be better achieved at Community level,
the Community may adopt measures, in accordance with
the principle of subsidiarity as set out in Article 5 of the
Treaty. In accordance with the principle of proportionality,
this Directive does not go
as set out
to achieve that
beyond what
objective,

is necessary in order

in that Article,

(e)

(f)

‘installation’ means a stationary technical unit where one or
more activities listed in Annex I are carried out and any
other directly associated activities which have a technical
connection with the activities carried out on that site and
which could have an effect on emissions and pollution;

‘operator’ means any person who operates or controls an
installation or, where this is provided for in national legis-
lation,
the
technical functioning of the installation has been delegated;

economic power over

to whom decisive

HAVE ADOPTED THIS DIRECTIVE:

(g)

‘person’ means any natural or legal person;

Article 1

Subject matter

This Directive
for greenhouse gas
emission allowance trading within the Community (hereinafter

establishes a scheme

(1) OJ L 184, 17.7.1999, p. 23.

(h) ‘new entrant’ means any installation carrying out one or
more of the activities indicated in Annex I, which has
obtained a greenhouse gas emissions permit or an update
of its greenhouse gas emissions permit because of a change
in the nature or functioning or an extension of the instal-
lation, subsequent to the notification to the Commission of
the national allocation plan;

27.5.2003

EN

Official Journal of the European Union

C 125 E/75

(i)

(j)

‘the public’ means one or more persons and, in accordance
with national
legislation or practice, associations, organi-
sations or groups of persons;

Greenhouse gas emissions permits

2.
following:

shall contain the

‘tonne of carbon dioxide equivalent’ means one metric
tonne of carbon dioxide (CO2) or an amount of any
other greenhouse gas listed in Annex II with an equivalent
global-warming potential.

(a) the name and address of the operator;

(b) a description of the activities and emissions from the instal-

lation;

Article 4

Greenhouse gas emissions permits

(c) monitoring

requirements,
methodology and frequency;

specifying

monitoring

Member States shall ensure that, from 1 January 2005, no
installation undertakes any activity listed in Annex I resulting
in emissions specified in relation to that activity unless its
operator holds a permit issued by a competent authority in
the installation is
accordance with Articles 5 and 6, or
temporarily excluded from the Community scheme pursuant
to Article 27.

Article 5

(d) reporting requirements; and

(e) an obligation to surrender allowances equal to the total
emissions of
the installation in each calendar year, as
verified in accordance with Article 15, within four
months following the end of that year.

Applications for greenhouse gas emissions permits

Article 7

An application to the competent authority for a greenhouse
gas emissions permit shall include a description of:

Changes relating to installations

(a) the installation and its activities including the technology

used;

(b) the raw and auxiliary materials, the use of which is likely to

lead to emissions of gases listed in Annex I;

the

The operator shall
inform the competent authority of any
changes planned in the nature or functioning, or an extension,
of
the
installation which may require updating of
the
greenhouse gas emissions permit. Where appropriate,
competent authority shall update the permit. Where there is
a change in the identity of
the
competent authority shall update the permit to include the
name and address of the new operator.

the installation's operator,

(c) the sources of emissions of gases listed in Annex I from the

installation; and

Article 8

Coordination with Directive 96/61/EC

(d) the measures planned to monitor and report emissions in
accordance with the guidelines adopted pursuant to Article
14.

The application shall also include a non-technical summary of
the details referred to in the first subparagraph.

Article 6

Conditions

for and contents of

the greenhouse gas

emissions permit

The competent authority shall

1.
issue a greenhouse gas
emissions permit granting authorisation to emit greenhouse
gases from all or part of an installation if it is satisfied that
the operator is capable of monitoring and reporting emissions.

A greenhouse gas emissions permit may cover one or more
installations on the same site operated by the same operator.

to Directive 96/61/EC,

Member States shall take the necessary measures to ensure that,
where installations carry out activities that are included in
Annex I
the conditions of, and
the issue of a greenhouse gas emissions
procedure for,
permit are coordinated with those for the permit provided
for in that Directive. The requirements of Articles 5, 6 and 7
of
this Directive may be integrated into the procedures
provided for in Directive 96/61/EC.

Article 9

National allocation plan

1.
For each period referred to in Article 11(1) and (2), each
Member State shall develop a national plan stating the total
quantity of allowances that it intends to allocate for that period
and how it proposes to allocate them. The plan shall be based
on objective and transparent criteria, including those listed in
Annex III, taking due account of comments from the public.
The Commission shall, without prejudice to the Treaty, by
31 December 2003 at
the latest develop guidance on the
implementation of the criteria listed in Annex III.

C 125 E/76

EN

Official Journal of the European Union

27.5.2003

For the period referred to in Article 11(1), the plan shall be
published and notified to the Commission and to the other
Member States by 31 March 2004 at the latest. For subsequent
periods,
the plan shall be published and notified to the
Commission and to the other Member States at least eighteen
months before the beginning of the relevant period.

National allocation plans shall be considered within the

2.
committee referred to in Article 23(1).

3. Within three months of notification of a national allo-
cation plan by a Member State under paragraph 1,
the
Commission may reject that plan, or any aspect thereof, on
the basis that it
is incompatible with the criteria listed in
Annex III or with Article 10. The Member State shall only
if proposed
take a decision under Article 11(1) or
amendments are accepted by the Commission. Reasons shall
be given for any rejection decision by the Commission.

(2)

Article 10

Method of allocation

The competent authority shall issue a proportion of the
4.
total quantity of allowances each year of the period referred to
in paragraph 1 or 2, by 28 February of that year.

Article 12

Transfer, surrender and cancellation of allowances

1. Member States shall ensure that allowances can be trans-
ferred between:

(a) persons within the Community;

(b) persons within the Community and persons

in third
countries, where
recognised in
such allowances
accordance with the procedure referred to in Article 25
without
than those contained in, or
restrictions other
adopted pursuant to, this Directive.

are

2. Member States shall ensure that allowances issued by a
competent authority of another Member State are recognised
for the purpose of meeting an operator's obligations under
paragraph 3.

For the three-year period beginning 1 January 2005 Member
States shall allocate allowances free of charge. For the five-year
period beginning 1 January 2008, Member States shall allocate
at least 90 % of the allowances free of charge.

3. Member States shall ensure that, by 30 April each year at
the latest, the operator of each installation surrenders a number
of allowances equal to the total emissions from that installation
during the preceding calendar year as verified in accordance
with Article 15, and that these are subsequently cancelled.

Article 11

Allocation and issue of allowances

shall decide upon the

For the three-year period beginning 1 January 2005, each
1.
Member State
total quantity of
allowances it will allocate for that period and the allocation
of those allowances to the operator of each installation. This
three months before the
least
decision shall be taken at
beginning of the period and be based on its national allocation
plan developed pursuant to Article 9 and in accordance with
Article 10, taking due account of comments from the public.

2.
For the five-year period beginning 1 January 2008, and
for each subsequent five-year period, each Member State shall
decide upon the total quantity of allowances it will allocate for
that period and initiate the process for the allocation of those
allowances to the operator of each installation. This decision
shall be taken at least twelve months before the beginning of
the relevant period and be based on the Member State's
national allocation plan developed pursuant to Article 9 and
in accordance with Article 10,
taking due account of
comments from the public.

3.
Decisions taken pursuant to paragraph 1 or 2 shall be in
accordance with the requirements of the Treaty, in particular
Articles 87 and 88 thereof. When deciding upon allocation,
Member States shall take into account the need to provide
access to allowances for new entrants.

4. Member States shall take the necessary steps to ensure
that allowances will be cancelled at any time at the request of
the person holding them.

Article 13

Validity of allowances

Allowances shall be valid for emissions during the period
1.
referred to in Article 11(1) or (2) for which they are issued.

2.
Four months after the beginning of the first five-year
period referred to in Article 11(2), allowances which are no
longer valid and have not been surrendered and cancelled in
accordance with Article 12(3)
shall be cancelled by the
competent authority.

Member States may issue allowances to persons for the current
period to replace any allowances held by them which are
cancelled in accordance with the first subparagraph.

3.
Four months after the beginning of each subsequent
five-year period referred to in Article 11(2), allowances which
are no longer valid and have not been surrendered and
cancelled in accordance with Article 12(3) shall be cancelled
by the competent authority.

Member States shall issue allowances to persons for the current
period to replace any allowances held by them which are
cancelled in accordance with the first subparagraph.

27.5.2003

EN

Official Journal of the European Union

C 125 E/77

Article 14

Guidelines for monitoring and reporting of emissions

1.
The Commission shall adopt guidelines for monitoring
and reporting of emissions resulting from the activities listed
in Annex I of greenhouse gases specified in relation to those
activities,
in accordance with the procedure referred to in
Article 23(2), by 30 September 2003. The guidelines shall be
based on the principles for monitoring and reporting set out in
Annex IV.

2. Member States shall ensure that emissions are monitored
in accordance with the guidelines.

3. Member States shall ensure that each operator of an
installation reports the emissions from that installation during
each calendar year to the competent authority after the end of
that year in accordance with the guidelines.

Article 15

Verification

the reports submitted by
Member States shall ensure that
operators pursuant to Article 14(3) are verified in accordance
with the criteria set out in Annex V, and that the competent
authority is informed thereof.

Member States shall ensure that an operator whose report has
not been verified as satisfactory in accordance with the criteria
set out in Annex V by 31 March each year for emissions
during the preceding year cannot make further transfers of
allowances until a report
from that operator has been
verified as satisfactory.

Article 16

Penalties

to infringements of

lay down the rules on penalties
1. Member States shall
applicable
the national provisions
adopted pursuant to this Directive and shall take all measures
necessary to ensure that such rules are implemented. The
penalties provided for must be effective, proportionate and
dissuasive. Member States shall notify these provisions to the
Commission by 31 December 2003 at the latest, and shall
notify it without delay of
amendment
affecting them.

any subsequent

2. Member States shall ensure publication of the names of
operators who are in breach of requirements to surrender
sufficient allowances under Article 12(3).

3. Member States shall ensure that any operator who does
not surrender sufficient allowances by 30 April of each year to
cover its emissions during the preceding year shall be held

liable for the payment of an excess emissions penalty. The
excess emissions penalty shall be EUR 100 for each tonne of
carbon dioxide equivalent emitted by that installation for which
the operator has not surrendered allowances. Payment of the
excess emissions penalty shall not release the operator from the
obligation to surrender an amount of allowances equal to those
excess emissions when surrendering allowances in relation to
the following calendar year.

4.
During the three-year period beginning 1 January 2005,
Member States shall apply a lower excess emissions penalty of
EUR 40 for each tonne of carbon dioxide equivalent emitted
by that installation for which the operator has not surrendered
allowances. Payment of the excess emissions penalty shall not
release the operator
from the obligation to surrender an
amount of allowances equal to those excess emissions when
surrendering allowances in relation to the following calendar
year.

Article 17

Access to information

Decisions relating to the allocation of allowances and the
reports of emissions
the greenhouse gas
required under
emissions permit and held by the competent authority shall
be made available to the public by that authority subject to
the restrictions laid down in Article 3(3) and Article 4 of
Directive 2003/4/EC (1).

Article 18

Competent authority

shall make the appropriate administrative
Member States
arrangements,
the appropriate
including the designation of
competent authority or authorities, for the implementation of
the rules of this Directive. Where more than one competent
authority
authorities
undertaken pursuant to this Directive must be coordinated.

the work of

is designated,

these

Article 19

Registries

1. Member States shall provide for the establishment and
maintenance of a registry in order to ensure the accurate
accounting of the issue, holding, transfer and cancellation of
allowances. Member States may maintain their registries in a
consolidated system, together with one or more other Member
States.

2.
Any person may hold allowances. The registry shall be
accessible to the public and shall contain separate accounts to
record the allowances held by each person to whom and from
whom allowances are issued or transferred.

(1) OJ L . . .

C 125 E/78

EN

Official Journal of the European Union

27.5.2003

In order to implement this Directive, the Commission
3.
shall adopt a Regulation in accordance with the procedure
referred to in Article 23(2) for a standardised and secured
system of registries in the form of standardised electronic
databases containing common data elements to track the
issue, holding,
to
provide for public access and confidentiality as appropriate
and to ensure that there are no transfers incompatible with
obligations resulting from the Kyoto Protocol.

transfer and cancellation of allowances,

Article 22

Amendments to Annex III

The Commission may amend Annex III for the period from
2008 to 2012 in the light of the reports provided for in Article
21 and of the experience of the application of this Directive, in
accordance with the procedure referred to in Article 23(2).

Article 20

Central Administrator

1.
The Commission shall designate a Central Administrator
to maintain an independent transaction log recording the issue,
transfer and cancellation of allowances.

2.
The Central Administrator shall conduct an automated
check on each transaction in registries through the independent
transaction log to ensure there are no irregularities in the issue,
transfer and cancellation of allowances.

irregularities are identified through the automated
3.
If
inform the Member
the Central Administrator shall
check,
State or Member States concerned who shall not register the
transactions in question or any further transactions relating to
the allowances concerned until
the irregularities have been
resolved.

Article 21

Reporting by Member States

shall

submit

Each year

the Member States

to the
1.
Commission a report on the application of
this Directive.
This report shall pay particular attention to the arrangements
for the allocation of allowances, the operation of registries, the
application of the monitoring and reporting guidelines, verifi-
cation and issues relating to compliance with the Directive and
on the fiscal treatment of allowances, if any. The first report
shall be sent to the Commission by 30 June 2005. The report
shall be drawn up on the basis of a questionnaire or outline
drafted by the Commission in accordance with the procedure
laid down in Article 6 of Directive 91/692/EEC. The ques-
tionnaire or outline shall be sent to Member States at least
six months before the deadline for the submission of the first
report.

2.
On the basis of the reports referred to in paragraph 1, the
Commission shall publish a report on the application of this
Directive within three months of receiving the reports from the
Member States.

The Commission shall organise

of
3.
information between the
the
Member States concerning developments relating to issues of
allocation, the operation of registries, monitoring, reporting,
verification and compliance.

an exchange
authorities of

competent

Article 23

Committee

The Commission shall be assisted by the committee

1.
instituted by Article 8 of Decision 93/389/EEC.

2. Where reference is made to this paragraph, Articles 5 and
7 of Decision 1999/468/EC shall apply, having regard to the
provisions of Article 8 thereof.

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

3.

The Committee shall adopt its rules of procedure.

Article 24

Procedures for unilateral inclusion of additional activities
and gases

apply

States may

From 2008, Member

trading in accordance with this Directive

1.
emission
allowance
to
installations and greenhouse gases which are not
activities,
listed in Annex I, provided that inclusion of such activities,
installations
approved by the
Commission in accordance with the procedure referred to in
in
Article 23(2),
particular effects on the internal market, potential distortions
of competition, the environmental integrity of the scheme and
reliability of the planned monitoring and reporting system.

taking into account all

and greenhouse gases

relevant criteria,

is

From 2005 Member States may under the same conditions
apply emissions allowance trading to installations carrying
out activities listed in Annex I below the capacity limits
referred to in that Annex.

2.
such
Allocations made to installations carrying out
activities shall be specified in the national allocation plan
referred to in Article 9.

for emissions

3.
The Commission may, on its own initiative, or shall, on
request by a Member State, adopt monitoring and reporting
guidelines
installations and
greenhouse gases which are not listed in Annex I in accordance
with the procedure referred to in Article 23(2), if monitoring
and reporting of
these emissions can be carried out with
sufficient accuracy.

from activities,

27.5.2003

EN

Official Journal of the European Union

C 125 E/79

In the event that such measures are introduced, reviews
4.
carried out pursuant to Article 30 shall also consider whether
Annex I should be amended to include emissions from these
activities in a harmonised way throughout the Community.

Article 25

Links with other greenhouse gas emissions

trading

schemes

1.
Agreements should be concluded with third countries
listed in Annex B to the Kyoto Protocol which have ratified
the Protocol
recognition of
for
and other
allowances between the Community scheme
greenhouse gas emissions trading schemes in accordance with
the rules set out in Article 300 of the Treaty.

the mutual

to provide

2. Where an agreement referred to in paragraph 1 has been
concluded,
the Commission shall draw up any necessary
provisions relating to the mutual recognition of allowances
under
in accordance with the procedure
referred to in Article 23(2).

that agreement

Article 26

Amendment of Directive 96/61/EC

In Article 9(3)
subparagraphs shall be added:

of Directive

96/61/EC the

following

‘Where emissions of a greenhouse gas from an installation
are specified in Annex I to Directive 2003/. . ./EC of the
European Parliament and of the Council of . . . establishing
a scheme for greenhouse gas emission allowance trading
within the Community and amending Council Directive
96/61/EC (*) in relation to an activity carried out in that
installation, the permit shall not include an emission limit
value for direct emissions of that gas unless it is necessary
to ensure that no significant local pollution is caused.

For activities listed in Annex I to Directive 2003/. . ./EC,
Member States may choose not to impose requirements
relating to energy efficiency in respect of combustion
units or other units emitting carbon dioxide on the site.

Where necessary, the competent authorities shall amend
the permit as appropriate.

The three preceding subparagraphs shall not apply to
installations temporarily excluded from the scheme for
greenhouse gas emission allowance trading within the
Community in accordance with Article 27 of Directive
2003/. . ./EC.

___________
(*) OJ L . . .’

Article 27

Temporary exclusion of certain installations

1. Member States may apply to the Commission for certain
installations and activities to be temporarily excluded until
31 December 2007 at
from the Community
the latest
scheme. Any such application shall list each such installation
and shall be published.

If, having considered any comments made by the public
2.
on that application, the Commission decides,
in accordance
with the procedure referred to in Article 23(2), that the instal-
lations and activities will:

(a) as a result of national policies,

limit their emissions as
much as would be the case if they were subject to the
provisions of this Directive;

(b) be

subject

to monitoring,

reporting and verification
requirements which are equivalent to those provided for
pursuant to Articles 14 and 15, and

(c) be subject to penalties at least equivalent to those referred
to in Article 16(1) and (4) in the case of non-fulfilment of
national requirements;

it shall provide for the temporary exclusion of those instal-
lations from the Community scheme.

It must be ensured that there will be no distortion of the
internal market.

Article 28

Pooling

1. Member States may allow operators of
installations
carrying out one of the activities listed in Annex I to form a
pool of
installations from the same activity for the period
referred to in Article 11(1) and/or the first five-year period
referred to in Article 11(2) in accordance with paragraphs 2
to 6 of this Article.

2.
Operators carrying out an activity listed in Annex I who
wish to form a pool shall apply to the competent authority,
specifying the installations and the period for which they want
the pool and supplying evidence that a trustee will be able to
fulfil the obligations referred to in paragraphs 3 and 4.

Operators wishing to form a pool shall nominate a

3.
trustee:

(a) to be issued with the total quantity of allowances calculated
by installation of the operators, by way of derogation from
Article 11;

C 125 E/80

EN

Official Journal of the European Union

27.5.2003

(b) to be responsible for surrendering allowances equal to the
total emissions from installations in the pool, by way of
derogation from Articles 6(2)(e) and 12(3); and

emissions of greenhouse gases and in the light of developments
in the international context, the Commission shall draw up a
report on the application of this Directive, considering:

(c) to be restricted from making further transfers in the event
that an operator's report has not been verified as satis-
factory in accordance with the second paragraph of
Article 15.

(a) whether Annex I should be amended to include other
activities and emissions of other greenhouse gases listed
in Annex II, with a view to further
improving the
economic efficiency of the scheme;

4.
The trustee shall be subject to the penalties applicable for
breaches of requirements to surrender sufficient allowances to
cover the total emissions from installations in the pool, by way
of derogation from Article 16(2), (3) and (4).

A Member State that wishes to allow one or more pools
5.
to be formed shall submit
the application referred to in
paragraph 2 to the Commission. Without prejudice to the
Treaty, the Commission may within three months of receipt
reject an application that does not fulfil the requirements of
this Directive. Reasons shall be given for any such decision. In
the case of rejection the Member State may only allow the pool
to be formed if proposed amendments are accepted by the
Commission.

6.
In the event that the trustee fails to comply with penalties
referred to in paragraph 4, each operator of an installation in
the pool shall be responsible under Articles 12(3) and 16 in
respect of emissions from its own installation.

(b) the relationship of Community emission allowance trading
with the international emissions trading that will start in
2008;

(c)

further harmonisation of the method of allocation and of
the criteria for national allocation plans referred to in
Annex III;

(d) the use of credits from project mechanisms;

(e)

the relationship of emissions trading with other policies
and measures
and
State
Community level,
that pursue the
same objectives;

including taxation,

implemented

at Member

(f) whether

it
Community registry;

is appropriate

for

there

to be a single

(g) the level of excess emissions penalties, taking into account,

inter alia, inflation;

Article 29

Force majeure

(h) the functioning of

the allowance market, covering in

particular any possible market disturbances;

During the period referred to in Article 11(1), Member States
may apply to the Commission for certain installations to be
issued with additional allowances in cases of force majeure. The
Commission shall determine whether force majeure is demon-
strated, in which case it shall authorise the issue of additional
and non-transferable allowances by that Member State to the
operators of those installations.

Article 30

Review and further development

On the basis of progress achieved in the monitoring of
1.
emissions of greenhouse gases, the Commission may make a
to the European Parliament and the Council by
proposal
31 December 2004 to amend Annex I
to include other
activities and emissions of other greenhouse gases listed in
Annex II.

2.
On the basis of experience of the application of this
Directive and of progress achieved in the monitoring of

(i) how to adapt

the Community scheme to an enlarged

European Union;

(j) pooling.

The Commission shall submit
to the European
Parliament and the Council by 30 June 2006, accompanied
by proposals as appropriate.

this report

is desirable

Linking the project-based mechanisms,

3.
including Joint
Implementation (JI) and the Clean Development Mechanism
(CDM), with the Community scheme
and
important
to achieve the goals of both reducing global
greenhouse gas emissions and increasing the cost-effective
the
functioning of
emission credits from the project-based mechanisms will be
recognised for their use in this scheme subject to provisions
adopted by the European Parliament and the Council on a
proposal
from the Commission, which should apply in
parallel with the Community scheme in 2005.

scheme. Therefore,

the Community

27.5.2003

EN

Official Journal of the European Union

C 125 E/81

Article 31

Implementation

Article 32

Entry into force

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive by 31 December 2003 at
the latest. They shall
forthwith inform the Commission thereof. The Commission
shall notify the other Member States of these laws, regulations
and administrative provisions.

When Member States adopt these measures, they shall contain
a reference to this Directive or be accompanied by such a
reference on the occasion of their official publication. The
methods of making such reference shall be laid down by
Member States.

2. Member States shall communicate to the Commission the
text of the provisions of national law which they adopt in the
field covered by this Directive. The Commission shall inform
the other Member States thereof.

This Directive shall enter into force on the day of its publi-
cation in the Official Journal of the European Union.

Article 33

Addressees

This Directive is addressed to the Member States.

Done at . . .

For the European Parliament

For the Council

The President

The President

C 125 E/82

EN

Official Journal of the European Union

27.5.2003

CATEGORIES OF ACTIVITIES REFERRED TO IN ARTICLES 2(1), 3, 4, 14(1), 28 AND 30

ANNEX I

1. Installations or parts of installations used for research, development and testing of new products and processes are

not covered by this Directive.

2. The threshold values given below generally refer to production capacities or outputs. Where one operator carries out
several activities falling under the same subheading in the same installation or on the same site, the capacities of such
activities are added together.

Activities

Greenhouse gases

Energy activities

Combustion installations with a rated thermal
hazardous or municipal waste installations)

input exceeding 20 MW (except

Carbon dioxide

Mineral oil refineries

Coke ovens

Production and processing of ferrous metals

Metal ore (including sulphide ore) roasting or sintering installations

Installations for the production of pig iron or steel (primary or secondary fusion)
including continuous casting, with a capacity exceeding 2,5 tonnes per hour

Carbon dioxide

Carbon dioxide

Carbon dioxide

Carbon dioxide

Mineral industry

Installations for the production of cement clinker in rotary kilns with a production
capacity exceeding 500 tonnes per day or lime in rotary kilns with a production
capacity exceeding 50 tonnes per day or in other furnaces with a production
capacity exceeding 50 tonnes per day

Carbon dioxide

Installations for the manufacture of glass including glass fibre with a melting
capacity exceeding 20 tonnes per day

Carbon dioxide

Installations for the manufacture of ceramic products by firing, in particular roofing
tiles, bricks, refractory bricks, tiles, stoneware or porcelain, with a production
capacity exceeding 75 tonnes per day, and/or with a kiln capacity exceeding
4 m3 and with a setting density per kiln exceeding 300 kg/m3

Carbon dioxide

Other activities

Industrial plants for the production of

(a) pulp from timber or other fibrous materials

Carbon dioxide

(b) paper and board with a production capacity exceeding 20 tonnes per day

Carbon dioxide

27.5.2003

EN

Official Journal of the European Union

C 125 E/83

ANNEX II

GREENHOUSE GASES REFERRED TO IN ARTICLES 3 AND 30

Carbon dioxide (CO2)

Methane (CH4)

Nitrous Oxide (N2O)

Hydrofluorocarbons (HFCs)

Perfluorocarbons (PFCs)

Sulphur Hexafluoride (SF6)

C 125 E/84

EN

Official Journal of the European Union

27.5.2003

ANNEX III

CRITERIA FOR NATIONAL ALLOCATION PLANS REFERRED TO IN ARTICLES 9, 22 AND 30

(1) The total quantity of allowances to be allocated for the relevant period shall be consistent with the Member State's
obligation to limit its emissions pursuant to Decision 2002/358/EC and the Kyoto Protocol, taking into account,
on the one hand, the proportion of overall emissions that these allowances represent in comparison with emissions
from sources not covered by this Directive and, on the other hand, national energy policies, and should be
consistent with the national climate change programme.

(2) The total quantity of allowances to be allocated shall be consistent with assessments of actual and projected
progress towards fulfilling the Member States' contributions to the Community's commitments made pursuant
to Decision 93/389/EEC.

(3) Quantities of allowances to be allocated shall be consistent with the potential, including the technological potential,
of activities covered by this scheme to reduce emissions. Member States may base their distribution of allowances
on average emissions of greenhouse gases by product in each activity and achievable progress in each activity.

(4) The plan shall be consistent with other Community legislative and policy instruments. Account should be taken of

unavoidable increases in emissions resulting from new legislative requirements.

(5) The plan shall not discriminate between companies or sectors in such a way as to unduly favour certain under-
takings or activities in accordance with the requirements of the Treaty, in particular Articles 87 and 88 thereof.

(6) The plan shall contain information on the manner in which new entrants will be able to begin participating in the

Community scheme in the Member State concerned.

(7) The plan may accommodate early action and shall contain information on the manner in which early action is

taken into account.

(8) The plan shall contain information on the manner in which clean technology, including energy efficient tech-

nologies, are taken into account.

(9) The plan shall include provisions for comments to be expressed by the public, and contain information on the
arrangements by which due account will be taken of these comments before a decision on the allocation of
allowances is taken.

(10) The plan shall contain a list of the installations covered by this Directive with the quantities of allowances intended

to be allocated to each.

(11) The plan may contain information on the manner in which the existence of competition from countries or entities

outside the Union will be taken into account.

27.5.2003

EN

Official Journal of the European Union

C 125 E/85

PRINCIPLES FOR MONITORING AND REPORTING REFERRED TO IN ARTICLE 14(1)

ANNEX IV

M o n i t o r i n g o f c a r b o n d i o x i d e e m i s s i o n s

Emissions shall be monitored either by calculation or on the basis of measurement.

C a l c u l a t i o n

Calculations of emissions shall be performed using the formula:

Activity data × Emission factor × Oxidation factor

Activity data (fuel used, production rate etc.) shall be monitored on the basis of supply data or measurement.

Accepted emission factors shall be used. Activity-specific emission factors are acceptable for all fuels. Default factors are
acceptable for all fuels except non-commercial ones (waste fuels such as tyres and industrial process gases). Seam-specific
defaults for coal, and EU-specific or producer country-specific defaults for natural gas shall be further elaborated. IPCC
default values are acceptable for refinery products. The emission factor for biomass shall be zero.

If the emission factor does not take account of the fact that some of the carbon is not oxidised, then an additional
oxidation factor shall be used. If activity-specific emission factors have been calculated and already take oxidation into
account, then an oxidation factor need not be applied.

Default oxidation factors developed pursuant to Directive 96/61/EC shall be used, unless the operator can demonstrate
that activity-specific factors are more accurate.

A separate calculation shall be made for each activity, installation and for each fuel.

M e a s u r e m e n t

Measurement of emissions shall use standardised or accepted methods, and shall be corroborated by a supporting
calculation of emissions.

M o n i t o r i n g o f e m i s s i o n s o f o t h e r g r e e n h o u s e g a s e s

Standardised or accepted methods shall be used, developed by the Commission in collaboration with all relevant
stakeholders and adopted in accordance with the procedure referred to in Article 23(2).

R e p o r t i n g o f e m i s s i o n s

Each operator shall include the following information in the report for an installation:

A. Data identifying the installation, including:

— Name of the installation;

— Its address, including postcode and country;

— Type and number of Annex I activities carried out in the installation;

— Address, telephone, fax and email details for a contact person; and

— Name of the owner of the installation, and of any parent company.

B. For each Annex I activity carried out on the site for which emissions are calculated:

— Activity data;

— Emission factors;

— Oxidation factors;

— Total emissions; and

— Uncertainty.

C 125 E/86

EN

Official Journal of the European Union

27.5.2003

C. For each Annex I activity carried out on the site for which emissions are measured:

— Total emissions;

— Information on the reliability of measurement methods; and

— Uncertainty.

D. For emissions from combustion, the report shall also include the oxidation factor, unless oxidation has

already been taken into account in the development of an activity-specific emission factor.

Member States shall take measures to coordinate reporting requirements with any existing reporting requirements in
order to minimise the reporting burden on businesses.

27.5.2003

EN

Official Journal of the European Union

C 125 E/87

ANNEX V

CRITERIA FOR VERIFICATION REFERRED TO IN ARTICLE 15

G e n e r a l P r i n c i p l e s

(1) Emissions from each activity listed in Annex I shall be subject to verification.

(2) The verification process shall include consideration of the report pursuant to Article 14(3) and of monitoring
during the preceding year. It shall address the reliability, credibility and accuracy of monitoring systems and the
reported data and information relating to emissions, in particular:

(a) the reported activity data and related measurements and calculations;

(b) the choice and the employment of emission factors;

(c) the calculations leading to the determination of the overall emissions; and

(d) if measurement is used, the appropriateness of the choice and the employment of measuring methods.

(3) Reported emissions may only be validated if reliable and credible data and information allow the emissions to be
determined with a high degree of certainty. A high degree of certainty requires the operator to show that:

(a) the reported data is free of inconsistencies;

(b) the collection of the data has been carried out in accordance with the applicable scientific standards; and

(c) the relevant records of the installation are complete and consistent.

(4) The verifier shall be given access to all sites and information in relation to the subject of the verification.

(5) The verifier shall take into account whether the installation is registered under the Community eco-management

and audit scheme (EMAS).

M e t h o d o l o g y

S t r a t e g i c a n a l y s i s

(6) The verification shall be based on a strategic analysis of all the activities carried out in the installation. This requires

the verifier to have an overview of all the activities and their significance for emissions.

P r o c e s s a n a l y s i s

(7) The verification of the information submitted shall, where appropriate, be carried out on the site of the installation.

The verifier shall use spot-checks to determine the reliability of the reported data and information.

R i s k a n a l y s i s

(8) The verifier shall submit all the sources of emissions in the installation to an evaluation with regard to the

reliability of the data of each source contributing to the overall emissions of the installation.

(9) On the basis of this analysis the verifier shall explicitly identify those sources with a high risk of error and other
aspects of the monitoring and reporting procedure which are likely to contribute to errors in the determination of
the overall emissions. This especially involves the choice of the emission factors and the calculations necessary to
determine the level of the emissions from individual sources. Particular attention shall be given to those sources
with a high risk of error and the abovementioned aspects of the monitoring procedure.

(10) The verifier shall take into consideration any effective risk control methods applied by the operator with a view to

minimising the degree of uncertainty.

C 125 E/88

EN

Official Journal of the European Union

27.5.2003

R e p o r t

(11) The verifier shall prepare a report on the validation process stating whether the report pursuant to Article 14(3) is
satisfactory. This report shall specify all
issues relevant to the work carried out. A statement that the report
pursuant to Article 14(3) is satisfactory may be made if, in the opinion of the verifier, the total emissions are
not materially misstated.

M i n i m u m c o m p e t e n c y r e q u i r e m e n t s f o r t h e v e r i f i e r

(12) The verifier shall be independent of the operator, carry out his activities in a sound and objective professional

manner, and understand:

(a) the provisions of this Directive, as well as relevant standards and guidance adopted by the Commission

pursuant to Article 14(1);

(b) the legislative, regulatory, and administrative requirements relevant to the activities being verified; and

(c) the generation of all information related to each source of emissions in the installation, in particular, relating to

the collection, measurement, calculation and reporting of data.

27.5.2003

EN

Official Journal of the European Union

C 125 E/89

STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 23 October 2001, the Commission submitted to the Council its proposal on Directive of the
the Council establishing a scheme for greenhouse gas emission

European Parliament and of
allowance trading within the Community and amending Council Directive 96/61/EC.

2. The Committee of the Regions delivered its Opinion on 14 March 2002.

3. The Economic and Social Committee delivered its Opinion on 29 May 2002.

4. The European Parliament adopted its Opinion at first reading on 10 October 2002.

5. On 18 March 2003, the Council adopted its common position in accordance with Article 251(2) of

the Treaty.

II. OBJECTIVE

The general objective of the proposed Directive is to create a scheme for greenhouse gas emission
allowance trading within the Community by establishing an EU framework and ensuring an EU-wide
market for emission allowances. Such an instrument is a cornerstone in the Commission's strategy for
reaching the Kyoto target in the most cost-effective way. Emissions trading will reduce the cost of
emission reductions by ensuring that these reductions are made where they are least costly. At the same
time, emissions trading is environmentally effective by achieving a pre-determined emission reduction
from the activities covered. The proposal ensures the proper functioning of the internal market and
avoids unacceptable distortions of competition.

The Directive is particularly important to ensure that legal commitments to reduce greenhouse gas
emissions pursuant to the Kyoto Protocol, which was ratified by the European Community (1) and its
Member States on 31 May 2002, are fulfilled more cost-effectively.

III. ANALYSIS OF THE COMMON POSITION

1. General

Of the 73 amendments proposed by the European Parliament in first reading, the common position
incorporates 23 (totally, in part or in principle, by means of identical or similar wording, or in
spirit). The Council considers that the common position does not alter the approach and aims of the
original proposal from the Commission and notes that the Commission also supports the common
position as it stands.

2. European Parliament Amendments

In its Plenary vote on 10 October 2002, the EP adopted 73 amendments to the proposal. 23 of
these have been incorporated into the Council's common position (18 to the Articles, 3 to the
Recitals and 2 to the Annexes), either verbatim, in part or in spirit.

(1) Council Decision 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community,
of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of
commitments thereunder (OJ L 130, 15.5.2002, p. 1).

C 125 E/90

EN

Official Journal of the European Union

27.5.2003

(a) The accepted amendments are listed below in order of their inclusion in the common position.

A m e n d m e n t 1 0 : First sentence accepted and incorporated in recital 24.

A m e n d m e n t 1 3 : Accepted and incorporated in recital 25.

A m e n d m e n t 1 5 : Reflected in recital 5.

A m e n d m e n t 1 0 2 : Reflected in principle and in part in Article 10. Relevant also is Article
30(c), and note the statement to the minutes made by the Council and the Commission, of the
understanding that ‘any revenues arising from any allocation for the five year period beginning
1 January 2008 shall accrue to the benefit of the allocating Member State.’

A m e n d m e n t 3 5 : Reflected in Article 19(3).

A m e n d m e n t 3 9 : Reflected in principle in Article 14(3).

A m e n d m e n t 4 0 : Accepted in Article 16(2).

A m e n d m e n t 4 1 : Accepted.

A m e n d m e n t 4 2 : Accepted.

A m e n d m e n t 4 6 : Reflected in Article 17.

A m e n d m e n t 4 3 : Reflected in Article 21.

A m e n d m e n t 4 9 : Accepted in principle and in part in Article 22 by the clear limitation in
time set out for the use of comitology.

A m e n d m e n t s 5 1 a n d 1 0 3 : Accepted in principle and in part in Article 24(1) (Note also
recital 17).

A m e n d m e n t 1 6 : Reflected and incorporated in part in Article 24. Note also Recital 14.

A m e n d m e n t 1 7 : Reflected and incorporated in part in Article 24.

A m e n d m e n t 5 0 : Reflected and incorporated in part in Article 27.

A m e n d m e n t 5 5 : Reflected in Article 30(2).

A m e n d m e n t 5 6 :

Incorporated in Article 30(2)(b).

A m e n d m e n t 5 7 :

Incorporated in Article 30(2)(c).

A m e n d m e n t 5 8 :

Incorporated in Article 30(2)(i).

A m e n d m e n t 7 3 : Accepted in principle and in part and incorporated in Annex III, point
10.

A m e n d m e n t 7 4 : Accepted in part and incorporated in Annex IV.

27.5.2003

EN

Official Journal of the European Union

C 125 E/91

(b) The 50 amendments that have been rejected have been listed in the order they would apply to

the Commission's proposal, together with the reasons for their rejection.

Recitals

A m e n d m e n t 1 : The amendment refers to an opinion of the European Parliament that was
made in relation to another, separate proposal from the Commission and therefore the Council
deems it inappropriate.

A m e n d m e n t 2 : The Member States' margin of discretion in these matters is limited by what
follows from Community legislation and may thus not be able to act as freely as supposed by
the amendment.

A m e n d m e n t 3 : The need for an integrated Community approach (reflected in Recitals 7
and 27) does not exclude the need for the individual Member States to take action to reduce
greenhouse gases individually.

A m e n d m e n t 9 1 : The emission trading scheme should let operators decide on which
technologies they will use and not impose any technical standards possibly curtailing such
choices.

It should be for the Member States to decide on the quantities to be
A m e n d m e n t 6 :
allocated. Furthermore,
the suggested wording is operative and thus inappropriate for a
recital. It can be noted that Annex III, point 8, prescribes that the national allocation plan
shall contain information on the manner
including energy
efficient technologies, are taken into account.

in which clean technology,

A m e n d m e n t 8 : The amendment would basically make statements in the preamble of the
Directive about what the European Community will do in the context of the international
negotiations on climate change, which would be inappropriate.

In the view of the Council, the proposed recital would not adequately
A m e n d m e n t 9 :
reflect
the nature of the scheme in the common position. Setting targets and developing
instruments for sectors not covered by the Directive is excessive and inappropriate. The
relation and interaction with taxation is reflected in the existing recital 22, as well as in
Article 30 (e) on review.

is an operative provision inappropriate for recitals, and the taxation issue
A m e n d m e n t 1 1 :
is reflected in the existing recital 22, as well as in Article 30(e) on review. On the contents, it is
doubtful that a blanket-prohibition of the kind proposed would be a universally preferred
option, regardless of the specific circumstances that may be at hand.

A m e n d m e n t 1 2 : The common position clearly envisages the future inclusion of fluorinated
gases when these can be sufficiently monitored and reported; something which is reflected in
Article 24 (3-4). To include them earlier would, in the Council's view, be premature.

C 125 E/92

EN

Official Journal of the European Union

27.5.2003

A m e n d m e n t 1 4 : The Directive is addressed to the Member States and it is inappropriate to
make statements in the preamble of this Directive about what the European Community should
do in the context of the international negotiations on climate change.

Articles

A m e n d m e n t 9 7 : rejected for the same reasons as for amendment 6 above.

A m e n d m e n t 1 9 : would presuppose monitoring of volumes even before the permit would
have set out the monitoring requirements.

A m e n d m e n t 2 0 : The scheme, as set out in the common position, allows operators to
increase or decrease their actual emissions, subject only to the requirement that operators hold
corresponding quantities of allowances for the period concerned.

A m e n d m e n t 2 1 : The issuance of permits should not be subject to other legal requirements
than those either laid down in the Directive itself or applicable regardless of mentioning (for
instance, general principles of Community law).

A m e n d m e n t 2 2 : The provision that the amendment would change aims for consistency
with the permit provisions of the existing IPPC Directive, which should be maintained. Apart
from the essential information regarding the name and address of a new operator, it should be
up to the competent authority to decide on what elements of a permit that might need updating.

A m e n d m e n t 2 3 : would make the criteria listed in Annex III exhaustive and thus deprive
Member States of necessary flexibility to reflect different national circumstances in the setting of
targets for their entities.

A m e n d m e n t 2 4 : The proposed ‘cap’ is unnecessary because of the limitations from the
Member States' targets under the Kyoto Protocol, the criteria laid down in Annex III to the
common position and the Treaty provisions on state aid. The amendment would add additional
complications to these existing safeguards and is superfluous. The overall effect would also likely
constrain some Member States more than others, thereby risking a distortion of competition.

A m e n d m e n t 2 5 : Member States should have the opportunity to reward early action (see
Annex III, point 7) as they think appropriate.

A m e n d m e n t 2 6 : could create serious and adverse effects for the expedient handling of
individual national allocation plans, where, for instance, one Member State's failure to submit its
allocation plan would prevent the other Member States from commencing trade.

A m e n d m e n t 2 7 : Existing national trading schemes incompatible with the present proposal
cannot be linked without special measures being taken. The fact that Member States are free to
maintain existing national schemes whose scopes fall outside that of the proposed Directive is
reflected in recital 15.

A m e n d m e n t 2 9 : This amendment is linked to amendment 24 and is rejected for the same
reasons 24. Furthermore, the time limit proposed in the amendment is too short and would not
give Member States the necessary time to comply adequately.

27.5.2003

EN

Official Journal of the European Union

C 125 E/93

It should be up to the Member States to choose how allowances will be
A m e n d m e n t 7 6 :
allocated to new entrants, under the general proviso that access per se to allowances is safe-
guarded (see, in this respect, Article 11 (3)).

A m e n d m e n t 3 1 : This amendment is linked to amendment 24 and is rejected for the same
reasons.

A m e n d m e n t 3 2 : The accession of new Member States will bring additional sources — and,
consequently, more emissions — into the scheme. Therefore, there will be a need to increase the
number of allowances. Concerning the issue of potential gross over-allocation, it should be noted
that national allocation plans are subject to Commission scrutiny and potential rejection (see
Article 9(3) and the criteria in Annex III).

A m e n d m e n t 3 3 :
It should be noted that the common position does not lay down any
restrictions on transfers between operators within a Member State or between Member States
beyond those provided for by the Kyoto Protocol and decisions thereunder, and that initial
allocations are done to operators rather than installations.

A m e n d m e n t 3 4 : The cancellation proposed in the amendment may be detrimental to the
objective of reducing greenhouse gas emissions by taking away some of the incentives to close
down and cut back capacity on affected installations. Furthermore, the procedures cumbersome
and bureaucratic to implement.

A m e n d m e n t 3 6 : on banking is partly catered for by Article 13, although making banking
optional for Member States during the periods 2005-2007 and 2008-2012. Mandatory banking
between these periods would be more difficult for some Member States and given their different
circumstances, the Council considers that this should remain a matter of choice left to the
Member States.

is provided for in Article 13; not least
A m e n d m e n t 3 7 : Banking, but not borrowing,
because of the need to provide certainty about the quantities of allowances to be allocated
from the outset of each period.

A m e n d m e n t 3 8 : The application of such a provision would be unduly complicated and the
benefits doubtful.

A m e n d m e n t 8 0 : The competence over the subject-matter rests with the Member States,
and it is up to them to decide on how to use revenues for such penalties.

A m e n d m e n t 4 5 : Fiscal harmonisation is governed by specific Treaty provisions, and
cannot be brought about by the present Directive.

A m e n d m e n t s 4 7 - 4 8 : Judicial review is already provided for by Member States (compare,
for instance, Article 6 of the European Convention on Human Rights) and the proposed
amendments are therefore superfluous.

A m e n d m e n t s 5 2 - 5 3 : The Council will (in co-decision with the European Parliament)
consider the modalities for linking the trading scheme with the Kyoto flexible mechanisms
within the framework of the separate proposal on these, to be presented by the Commission
in 2003. The Council does not want to prejudge these deliberations in this Directive (see also
Article 30(3)).

A m e n d m e n t 5 4 : mainly duplicates the provisions of Article 30(2), foreseeing reviewing,
reporting and submission of appropriate proposals by the Commission by 30 June 2006.

A m e n d m e n t 5 9 : The features of the Community scheme should be confirmed in the
context of
to ensure the highest degree of certainty for the
market and the operators.

this co-decision procedure,

C 125 E/94

EN

Official Journal of the European Union

27.5.2003

Annexes

A m e n d m e n t 6 1 : see the comments on amendment 12 above.

A m e n d m e n t 6 2 - 6 3 : The future inclusion of other gases and sectors is foreseen by Article
26, but the Council considers that CO2 should be the starting point. In that light, there is no
sense in include aluminium installations at
the threshold-values
this stage. Furthermore,
proposed by the amendments would cause great administrative burdens.

A m e n d m e n t 6 4 : Annex II is not an appropriate place for these factors, which furthermore
are subject to periodic revisions by the UN Intergovernmental Panel on Climate Change.

A m e n d m e n t 6 5 - 6 6 : The Council rejects the idea of a ‘cap’ (see comments on amendment
24) and allocations should be consistent with the Community's legally binding commitments
under the Kyoto Protocol and the Member States' targets under the burden sharing agreement, to
ensure that these targets are reached.

A m e n d m e n t 7 8 :
amendments 24 and 65).

links to the concept of a cap, and is not acceptable (see comments on

A m e n d m e n t 7 9 :

links to amendment 78 and cannot be accepted for the same reasons.

A m e n d m e n t 6 8 : see comments on amendment 12.

A m e n d m e n t 7 0 : Member States are free to reward early action as they see fit, subject to
compatibility with the Treaty's rules on state aid and the criteria laid down in Annex III (see also
comments on amendment 76). It is not legally acceptable to try to set out what could amount to
undue discrimination in this Directive, and to state what already applies in this respect according
to the Treaty would be superfluous.

It should be left to the Member States to decide on the method for
A m e n d m e n t 1 0 4 :
ensuring new entrants adequate access to allowances (see also comments on amendment 76).

A m e n d m e n t 9 6 :
It should be for the Member States — in light of their different national
circumstances — to decide on the extent and manner they would like to reward early action (see
also comments on 76 and 70).

IV. CONCLUSION

The changes introduced by the Council to the Commission's amended Proposal respond to concerns in
certain Member States, with which the European Parliament agreed, that existing instruments should, in
certain circumstances, be allowed to continue until the end of 2007 as an alternative to the relevant
installations being brought within the emissions trading scheme. For the five-year period beginning in
2008, the provision for ‘pooling’ would enable there to be an easier transition between existing
instruments, such as long-term negotiated national agreements, and emissions trading.

The common position incorporates many of the amendments proposed by the European Parliament at
its first reading. In particular, reviews will take place by 31 December 2004 and 30 June 2006 to
examine if emissions of other greenhouse gases can be sufficiently accurately monitored and the scope
of the scheme can be extended. As from 2008 Member States will be able to unilaterally opt-in
emissions of other gases, following which a review will consider harmonising the scheme through
co-decision. The scope of the emissions trading scheme includes energy, heat and steam production of
installations above 20 MW, while Member States can extend the coverage of the scheme as from 2005
to lower thresholds. It should also be noted that the originally proposed use of comitology to revise
Annex III has been limited to the period 2008-2012 in the common position, which is necessary
purely for reasons of timing.

27.5.2003

EN

Official Journal of the European Union

C 125 E/95

The common position's requirement for Member States during the period 2008-2012 to allocate at
least 90 % of allowances free of charge gives businesses and Member States greater certainty of what to
expect in the future, and the issue of further harmonisation of the method of allocation will be included
in the review to take place by 30 June 2006.

Regarding the modalities for linking the EC emissions trading scheme with the Kyoto Protocol's
so-called project-based mechanisms,
it can be noted that the common position does not prejudge
this issue: On the basis of the Commission's forthcoming proposal on the project-based mechanisms,
the Council and the European Parliament will decide on these modalities through co-decision.
Furthermore, the common position accepts the European Parliament's position that the EC emissions
trading scheme should only be linked to schemes in third countries that have ratified the Kyoto
Protocol.

The EU ratified the Kyoto Protocol on 31 May 2002, and is committed to putting in place policies to
reduce its greenhouse gas emissions. Emissions trading will reduce emissions cost-effectively, and the
Community will greatly benefit from experience of greenhouse gas emissions trading from 2005 so
that it is prepared for the commencement of international emissions trading under the Kyoto Protocol
that will begin in 2008.

The EU is taking the lead in addressing climate change and proving that greenhouse gas emissions can
be reduced cost-effectively. The Commission is to adopt monitoring guidelines by 30 September 2003
and guidance on allocation criteria by 31 December 2003, while the Member States are to adopt
implementing legislation by 31 December 2003 and prepare their national allocation plans by 31 March
2004. Accession Countries are to do this at the latest by the date of their accession. Prompt finalisation
of the emissions trading Directive is necessary in order to ensure that this timetable is respected and
European leadership is maintained in the global fight against climate change.