WRITTEN QUESTION E-2795/03 by Eija-Riitta Korhola (PPE-DE) to the Commission. Emissions trading: problem of period-based allocation.
Date: 2003-09-19
Institutions: European Parliament, Provisional data
Subjects: Council of the European Union, EC Directive, EU environmental policy, degree of pollution, greenhouse gas, industrial pollution, reduction of gas emissions, tradeable emission permit

27.3.2004

EN

Official Journal of the European Union

C 78 E/431

(2004/C 78 E/0452)

WRITTEN QUESTION E-2794/03

by Eija-Riitta Korhola (PPE-DE) to the Commission

(19 September 2003)

Subject: Publication of the EU’s Kyoto target as a five-year moving average

The Kyoto Protocol stipulates that compliance with commitments is to be gauged according to the average
for the years from 2008 to 2012. This is reasonable because weather conditions, for example, can have a
great impact on annual emissions, linked among other things to the small quantities of hydroelectric
power generated in dry years. The developments as regards achievement of the Kyoto target by the EU and
its Member States have recently been the subject of conflicting assessments stemming in part from weather
conditions, as mentioned above. The press, to say nothing of the public at large, cannot understand such
fluctuations or ascertain whether the trend after smoothing is encouraging or gloomy.

Has the Commission thought of changing its reporting by publishing, in addition to the annual statistics,
an indication of the distance to target, calculated from a five-year moving average? Does it think that this
would put the public in a better position to understand the real direction in which developments were
moving, viewed over a time span longer than a year?

(2004/C 78 E/0453)

WRITTEN QUESTION E-2795/03

by Eija-Riitta Korhola (PPE-DE) to the Commission

Subject: Emissions trading: problem of period-based allocation

(19 September 2003)

Under the emissions trading directive a firm’s allocation is intended to cover three (first emissions trading
period) or five years (second period). It is thus in the firm’s interest to refrain from selling its unused
portion allowances at the end of an emissions trading period if in that way it can secure an unchanged
amount for the whole of the following five-year period. This likewise creates an incentive (unfortunate
from the environmental point of view) for the firm to postpone environmental investment until the start
of the first period, or beyond the beginning of 2008, to enable it to sell surplus emission allowances in as
many years as possible.

Does the Commission consider the allocation rule described above to be compatible with the single
accounting principle?

Does it believe that, when the directive is reviewed, the allocation rules should be assessed and,
if
necessary, amended in such a way as to ensure that the allocation for a firm selling emission allowances is
altered without delay, in proportion to the quantity offered for sale, in the year following the sale, even
though the emissions trading period might not yet have ended?

Joint answer
to Written Questions E-2789/03, E-2790/03,
E-2791/03, E-2792/03, E-2793/03, E-2794/03 and E-2795/03
given by Mrs Wallström on behalf of the Commission

(7 November 2003)

E-2789/03

The Kyoto Protocol’s first commitment period is from 2008-2012, and the Protocol provides that Parties
may bank assigned amount units from 2008-2012 into the next commitment period in the case that
Parties have reached their Kyoto target. The emissions trading Directive (1)
is in line with the Kyoto
Protocol by providing for banking of allowances by persons from the 2008-2012 period into the next
period.

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27.3.2004

The Kyoto Protocol’s quantified emission limitation and reduction requirements do not apply before 2008,
and the emissions trading Directive allows Member States to decide individually whether to provide for
banking of allowances by operators from the first period, 2005-2007, into the period 2008-2012. Under
the emissions trading Directive, operators are allocated allowances, and transfers of allowances from 2008
will be accompanied by corresponding transfers of assigned amount units.

The question is based on a false link between the Kyoto Protocol and the Union emissions trading scheme.
Member States do not have to keep trading scheme allowances, they issue them to plant operators when
and as appropriate without any formal link to the obligations or the flexibility mechanisms of the Kyoto
Protocol.

E-2790/03

The emissions trading Directive provides for transfers of allowances between Member States, in order to
achieve cost-effective reductions of greenhouse gas emissions. As transfers of allowances from 2008 will be
accompanied by corresponding transfers of assigned amount units, the Commission has explained to
Member States the potential effects of allowing banking of allowances from 2005-2007 to 2008-2012.
The Council and the Parliament have decided that Member States may allow the banking of allowances
from 2005-2007 to 2008-2012, and agreed a recital which indicates how Member States may decide to
allow the banking from 2005-2007 to 2008-2012. The Commission does not intend to re-open this issue.

E-2791/03

The Commission does not see a problem of double accounting nor one in respect of the equal treatment of
firms. The Assigned Amount of each Party to the Kyoto Protocol is fixed. The addition and subtraction of
Kyoto units will be taken into account in the compliance assessment by the Kyoto Protocol’s Compliance
Committee, but will not change the Assigned Amount of each Party to the Kyoto Protocol. Allocations to
operators after 2012 will take into account the commitments of Member States for periods after 2012.
Deducting allowances from an operator’s subsequent allocation would furthermore imply that banking is
de facto not possible.

E-2792/03

The Union emissions trading scheme is designed as a market based instrument to lower compliance cost
for participating actors and for society. The nature of a market instrument is to use the individual
decisions actors take in their efforts to optimize their profits from the system. As on all markets there may
be speculation also on this one. One important issue when designing the scheme was therefore to make
this market as broad and stable as possible. As there should be several thousands of actors already from
the start this market could be expected to be reasonably stable. Of course, signs of market domination
abuse must, as always, be monitored and addressed appropriately.

The rules of the EC Treaty on anti-competitive behaviour apply in any case, and the Commission does not
intend to intervene unless those rules are breached.

E-2793/03

Member States can buy and sell assigned amount units in accordance with the rules agreed under the
Kyoto Protocol and its implementing provisions. The Commission does not consider it appropriate to
propose an amendment to the Kyoto Protocol relating to a definition and a ban on the sale of ‘hot air’.

E-2794/03

The Commission has made its position on reporting clear in its proposal for a Decision on the monitoring
of greenhouse gas emissions and the implementation of the Kyoto Protocol (2). The Council and the
Parliament are in the process of reaching agreements at first reading on this proposal, and have not
proposed that this reporting should take place using the calculation of a five-year moving average.

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Official Journal of the European Union

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E-2795/03

The emissions trading Directive has not laid down any specific allocation rule, including the one outlined
in the written question.

A Member State has to develop periodically a national allocation plan adhering to the criteria laid down in
Annex III of the emission trading Directive.

In the review in mid-2006 the Commission will, on the basis of the experience gathered by then, consider
the further harmonisation of the allocation method and the criteria in Annex III.

The Commission disagrees with an allocation rule which would result in the reduction of an operator’s
allocation within an ongoing trading period after the operator has sold some allowances. Such a rule is not
in line with the provisions of the Directive and would not be desirable from an economic point of view
either.

(1) Directive 2003/87/EC of 13 October 2003, OJ L 275, 25.10.2003.
(2) COM(2003) 51 final.

(2004/C 78 E/0454)

WRITTEN QUESTION P-2799/03

by Domenico Mennitti (PPE-DE) to the Commission

(17 September 2003)

Subject: Development of Pan-European corridors

The process of European integration is now reaching its final stage with the accession of ten new countries
to the European Union.

There is therefore an urgent need to develop identified infrastructure to foster economic relations within
an area that has expanded enormously in size.

Of particular importance among the types of infrastructure envisaged are ‘Pan-European corridors’, which
are considered ideal tools for promoting economic exchange and especially trade.

In the light of the above, does the Commission not feel that the priority criteria should be broadened and
special attention awarded to Pan-European corridor No 8 as part of the plans to boost the countries
bordering the Mediterranean, which should be flanked with the development of adequate infrastructure?

Answer given by Mrs de Palacio on behalf of the Commission

(15 October 2003)

The enlargement of the Union will bring a major change into the corridor concept; two-thirds of the
existing Corridors will be within the territory of the Union and only one-third of the corridors will be
outside the Union territory. Corridors or axes could be seen both inside and outside of the enlarged Union
(cid:1) inside as a framework to channel the new priority transport routes which are emerging as a result of
accelerated economic integration and which are one of the subjects of the ongoing revision of the trans-
European transport network (TEN-T) guidelines, and (cid:1) outside to reflect international trade developments.

is needed.
However, a fundamental re-assessment of
The number of corridors should probably remain at a level which is manageable and affordable in terms of
financing. These redefined corridors or axes would need close and systematic supervision in order to be
realised in a reasonable amount of time. A number of useful management techniques have been developed
for the corridors. These structures (Memo of Understandings, Steering committees, etc.) are expected to
make progress with the identification of inventories, bottlenecks and priority projects.

future corridor development and management