Communication from the Commission - “Further guidance on allocation plans for the 2008 to 2012 trading period of the EU Emission Trading Scheme”
Date: 2005-12-22
Institutions: European Commission
Subjects: EU environmental policy, air quality, greenhouse gas, pollution control measures, reduction of gas emissions, tradeable emission permit

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.12.2005 
COM(2005) 703 final 

COMMUNICATION FROM THE COMMISSION 

“Further guidance on allocation plans for the 2008 to 2012 trading period of 
the EU Emission Trading Scheme” 

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COMMUNICATION FROM THE COMMISSION 

“Further guidance on allocation plans for the 2008 to 2012 trading period of 
the EU Emission Trading Scheme” 

(Text with EEA relevance) 

1. 

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3. 

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INTRODUCTION 

This  communication  provides  guidance  to  Member  States  for  the  design  of  the 
national  allocation  plans  for  the  second  trading  period  (2008  to  2012).  This 
communication is not part of the ongoing review of the Emissions Trading Directive1 
(“the Directive”), under which the Commission will produce a report to the European 
Parliament  and  the  Council  in  June  2006,  including  proposals  for  improving  the 
functioning  of  the  EU  Emissions  Trading  Scheme  (“EU  ETS”),  as  appropriate.  In 
preparing  this  review,  the  Commission  acknowledges  input  from  stakeholders  on  a 
wide range of issues on the functioning and impact of the EU ETS. 

This  guidance  supplements  the  Commission’s  guidance  of  7  January  20042  for  the 
implementation  of  the  criteria  listed  in  Annex  III  of  the  Directive.  The  previous 
guidance  document  contains  in  particular  a  technical  analysis  of  the  interpretation 
and  interplay  of  the  different  criteria  in  Annex  III  and  explains  their  role  in  the 
Commission’s assessment of allocation plans. Key messages from the first guidance 
document are summarised in Annex 3. 

The  Commission  considers  it  necessary  to  provide  additional  guidance  to 
consistently incorporate the lessons learnt from the first allocation phase. It notes that 
the general nature of the criteria listed in Annex III of the Directive leaves scope for 
their implementation and shares the view of Member States and many stakeholders 
that  more  guidance  is  needed3  to  ensure  more  coherent  allocation  plans  for  the 
second trading period. 

In  general,  Member  States  and  stakeholders  also  stress  a  preference  for  increasing 
harmonisation of allocation rules. The Commission considers it necessary to achieve 
more coherence in the second trading period, to the extent that the divergent progress 
by  Member  States  towards  their  individual  Kyoto  targets  allows  for.  In  addition, 
further harmonisation is desirable beyond 2012. The Commission will consider these 
issues  in  the  context  of  the  strategic  review  of  the  EU  ETS.  On  the  basis  of  this 

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  of  25.10.2003  p.  32–46,  as  amended  by  Directive  2004/101/EC  of  the 
European  Parliament  and  of  the  Council  of  27  October  2004  amending  Directive  2003/87/EC 
establishing a scheme for greenhouse gas emission allowance trading within the Community, in respect 
of the Kyoto Protocol’s project mechanisms, OJ L 338/18 of 13.11.2004 p. 18-23. 
COM(2003) 830 final. 
On 1 December 2005, the Council invited the Commission to do its utmost to provide guidance early 
enough for the preparation of the second national allocation plans.  

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5. 

6. 

2. 

7. 

review,  the  Commission  will  come  forward  with  proposals,  as  appropriate,  to 
improve the functioning of the scheme whilst safeguarding regulatory stability. 

The Commission urges Member States to work towards simpler plans for the second 
trading  period.  Simple  allocation  plans  boost  the  understanding  of  the  instrument 
among stakeholders and also increase transparency and predictability. Member States 
should  strive  to  keep  the  second  national  allocation  plans  as  simple  as  possible,  in 
particular with respect to allocation methods and rules on new entrants and closures. 
Member States should critically assess the necessity and efficiency of rules contained 
in  the  first  round  national  allocation  plans  and  keep  only  those  deemed  absolutely 
essential. 

To  further  improve  transparency  of  plans  the  Commission  has  developed  and 
annexed  a  set  of  tables4  which  summarise  in  a  standardised  manner  some  basic 
information  contained  in  a  national  allocation  plan.  The  Commission  regards  these 
tables  as  an  integral  part  of  second  round  national  allocation  plans  and  expects 
Member  States  to  make  use  of  them.  Furthermore,  it  urges  Member  States  to 
continue using the Common Format5 elaborated for the first allocation plans and, as 
in the first phase, will ensure a fully consistent assessment of all plans. 

SUMMARY  OF  EXPERIENCE  GAINED  FROM  ALLOCATION  PLANS  FOR  THE  FIRST 
PHASE (2005-2007) AND GENERAL LESSONS FOR THE SECOND PHASE (2008-2012) 

The  first  phase  allocation  process  spanned  about  15  months,  from  the  deadline  for 
notification on 31 March 2004 until the last Commission decision on 20 June 2005. 
This  was  much  longer  than  envisaged  in  the  Directive.  The  approval  process 
extended well into the first trading period which started on 1 January 2005. The late 
notification,  approval  and  finalisation  at  national  level  of  some  plans  introduced 
uncertainties not only for the respective national authorities and business but also for 
actors  in  the  allowance  market  across  Europe.  This  underlines  the  importance  of 
timely  notification  of  complete  national  allocation  plans  for  the  second  allocation 
phase.  The  Commission  considers  that  the  three  month  period  foreseen  in  Article 
9(3)  can  only  commence  once  a  complete  national  allocation  plan  has  been 
submitted.  It  therefore  reminds  Member  States  of  their  obligations  to  respect  the 
deadline of 30 June 2006 in order to enable the completion of the second allocation 
process, including the subsequent final national allocation decision, well before the 
start  of  the  second  trading  period  on  1  January  2008.  The  Commission  will  not 
accept  amendments  to  national  allocation  plans  notified  after  the  deadline  of  31 
December 2006 specified in Article 11(2) of the Directive, other than those required 
by the respective Commission decision on a national allocation plan. 

8. 

Recognising  the  first  phase  as  a  learning  period,  the  Commission  assessed  the  first 
period  allocation  plans  in  a  pragmatic  manner.  Some  notable  characteristics, 
summarised  below,  emerged  from  the  first  allocation  process,  resulting  in  a 
convergence of choices and approaches across Member States (for more details see 
Annex 4): 

4 
5 

See Annex 10 
COM(2003) 830 final, p. 25-29. 

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–  More  use  of  emissions  trading  is  necessary  to  meet  the  Kyoto  targets  cost-

effectively. 

–  Allocations have in general been more restrictive for power generators than other 

sectors covered by the scheme.  

–  Member States experiencing considerable excess in actual emissions with respect 
to their Kyoto targets intend to purchase a substantial amount of Kyoto units.  

–  The non-acceptance of ex-post adjustments is essential for the allowance market 

development.  

–  Some  allocation  plans  are  more  complex  than  necessary  and  not  sufficiently 

transparent.  

3. 

FURTHER  GUIDANCE  ON  SELECTED  ISSUES  FOR  THE  SECOND  PERIOD  NATIONAL 
ALLOCATION PLANS 

3.1. 

Progress to Kyoto targets 

9. 

In  the  2005  progress  report6  the  Commission  has  assessed  the  progress  of  Member 
States  to  Kyoto  targets.  In  the  comparison  of  2003  actual  emissions  to  allowed 
emissions in the period 2008 to 2012, a considerable number of Member States have 
gaps  to  close,  some  of  significant  magnitude.  At  present,  it  would  appear  that  in 
particular  Austria,  Belgium,  Denmark,  Finland,  Germany, 
Italy, 
Luxembourg,  the  Netherlands,  Portugal,  Slovenia  and  Spain  are  not  sufficiently  on 
track towards meeting their Kyoto targets. In these Member States, more needs to be 
done during the second trading period to respect the Kyoto targets, which does not 
imply that further measures are not necessary in other Memer States as well. As it is 
unlikely that gaps can be closed solely by requiring emission reductions in the non-
trading sector or relying on purchase of Kyoto units, the EU ETS needs to be used 
more to fully realise the potential of emissions trading. 

Ireland, 

3.2. 

Setting national caps 

10. 

11. 

According to criterion 3 of Annex III (see Annex 2 attached to this document for the 
criteria of Annex III of the Directive), the quantity of allowances shall be consistent 
with the potential, including the technological potential, of activities covered by the 
scheme  to  reduce  emissions.  This  means  that  the  combination  of  the  respective 
economic and technological potential to cut emissions sets an upper limit for the cap 
at national level. 

Two  of  the  most  important  factors  driving  emissions  trends  are  economic  (GDP) 
growth  (with  higher  growth  leading  to  higher  emissions)  and  carbon  intensity 
(emissions per unit GDP, with reductions in carbon intensity lowering emissions). In 
principle,  the  faster  an  economy  grows,  the  faster  new  technologies  are  put  to  use 
and  the  faster  the  capital  stock  is  renewed,  thereby  improving  productivity  and 

6 

Report  from  the  Commission  on  the  Progress  towards  achieving  the  Community’s  Kyoto  Target 
of 15 December 2005, COM(2005) 655. 

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carbon intensity. The growing share of the tertiary sector and the parallel decline of 
the  secondary  sector  experienced  in  European  economies  further  contribute  to  this 
effect. Furthermore, the introduction of the EU ETS and the EU-wide carbon price in 
the trading sector will stimulate further reductions in carbon intensity.  

12. 

Historically (in the period 1990 to 2000) carbon intensity reductions have balanced 
or  even  outweighed  economic  growth,  which  means  that  greenhouse  gas  emissions 
remained stable or declined. The following table indicates that this trend is likely to 
remain  stable  in  the  course  of  the  ongoing  decade  (2000  to  2010).  It  needs  to  be 
emphasized  that  the  estimates  for  the  period  2000  to  2010  do  not  account  for  the 
incentives created by the first phase of the EU ETS and are therefore very likely to 
underestimate the actual reductions in carbon intensity during that period. 

Table A: Historic and estimated GDP growth rates and carbon intensity trends7: 

Annual GDP 
Change in % 

Annual Carbon 
Intensity* 
Improvement in 
% 

Combined Net 
Effect on Annual 
Emissions Trend in 
% 

Actual development 1990 to 2000 

EU25 

EU15 

New Member 
States 

EU25 

EU15 

New Member 
States 

2.0 

2.0 

1.7 

2.3 

1.9 

3.9 

Estimated development 2000 to 2010 

2.5 

2.4 

3.8 

2.2 

2.1 

3.6 

-0.3 

0.1 

-2.2 

0.3 

0.3 

0.2 

Note: * Carbon intensity expresses the relation between CO2 emissions to GDP. 

13. 

In  the  analysis  of  the  economic  and  technological  potential  to  cut  emissions,  the 
Commission considers the annual GDP growth and carbon intensity reduction rates. 
The  combined  effect  of  these  two  factors  gives  the  rate  for  the  annual  potential  to 
reduce emissions. Starting from actual emissions in an appropriate year (e.g. 2003), 
assuming  the  trading  sector  to  have  a  constant  share  in  emissions  and  a  similar 
potential  to  reduce  emissions  as  the  entire  economy,  the  indicative  cap  consistent 
with criterion 3 in Annex III can be derived. 

14. 

The cap for the first phase is therefore a starting point in determining and assessing 
the total quantity for the second phase both at EU and Member State level. Due to 

7 

Source:  European  Commission,  Directorate-General  for  Energy  and  Transport,  European  Energy  and 
Transport Trends to 2030, Appendix 2, January 2003, see website: 
http://europa.eu.int/comm/dgs/energy_transport/figures/trends_2030/index_en.htm 

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15. 

16. 

17. 

criterion  1  some  Member  States  have  to  lower  the  first  period  caps  to  respect  the 
Kyoto target. Other Member States need to maintain their first phase caps to align the 
plan with the potential to reduce emissions (criterion 3). Correspondingly, the annual 
average EU-wide ETS cap in the second phase should be lower than the first phase 
cap.  

A number of Member States have a gap to close between their 2003 actual emissions 
and allowed emissions according to the Kyoto target. The total gap for these Member 
States  is  296.5  million  tonnes  CO2  equivalent.  This  figure  therefore  represents  the 
excess  emissions  which  these  Member  States  still  need  to  reduce  by  using  the 
instruments at their disposal to secure compliance with the Kyoto targets.  

Member States with a gap to reach the Kyoto target should aim for a balanced mix of 
(i)  lowering  the  allocation  for  the  second  phase  and  (ii)  implementing  additional 
measures in the non-trading sector, potentially supplemented by the (iii) government 
purchase  of  Kyoto  unit  credits.  A  balanced  mix  makes  reductions  practically  more 
feasible and economically more efficient. 

The table in Annex 1 lists the share of the emission trading sector expressed as the 
first phase allocation in comparison to 2003 actual emissions. At EU level the share 
amounts  to  some  45%.  If  the  emissions  trading  sector  were  to  contribute  a 
proportionate share of the reduction in Member States with a gap to close, the second 
period  total  allocation  in  the  EU-25  would  be  some  6%  below  the  first  period 
allocation, resulting in an annual average allocation of 2.063 billion allowances. To 
meet the Kyoto targets a reduction of less than 6 % would imply stronger efforts by 
the non-trading sector. 

3.3. 

Substantiation of intended government purchase of Kyoto units 

18. 

19. 

In  view  of  the  state  of  market  development  and  constraints  in  the  supply  of  Kyoto 
units, Member States face a considerable challenge to realise the volume of intended 
purchases.  The  decision  by  a  Member  State  to  purchase  with  public  funds  Kyoto 
units  eases  (as  much  as  the  purchase  by  companies  under  the  terms  of  the  Linking 
Directive) the need for domestic emission reductions.  

For  the  above  reasons,  the  substantiation  of  the  intended  government  purchase  of 
Kyoto units is crucial for the consistency of a national allocation plan with criterion 1 
in Annex III. Therefore this was already an important element in the assessment of 
first  period  plans.  Several  Member  States  did  not  fully  substantiate  the  intended 
purchase in the first period national allocation plans and some caps were accordingly 
lowered.  Each  Member  State  relying  on  the  government  purchase  of  Kyoto  units, 
even  if  already  indicated  in  the  first  round  national  allocation  plan,  thus  needs  to 
substantiate  more  thoroughly  the  intentions  and  demonstrate  progress  in  realising 
these purchases. The Commission will base its assessment on the cumulative criteria 
outlined in Annex 5 and assess these aspects in a stringent manner. Where a Member 
State fails to satisfactorily fulfil the full set of criteria the Commission will require a 
proportional reduction in the cap proposed. 

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3.4. 

Substantiation of other policies and measures 

20. 

The  substantiation  of  the  effects  of  implemented  and  additional  policies  and 
measures  by  Member  States  is  crucial  for  a  national  allocation  plan’s  consistency 
with criterion 1 in Annex III of the Directive. In the first period national allocation 
plans  Member  States  listed  a  number  of  existing  and  additional  policies  and 
measures.  Each  Member  State  relying  on  implemented  and  additional  policies  and 
measures, even if already indicated in the first round national allocation plan, needs 
to  substantiate  the  effects  and  demonstrate  progress  in  implementing  or  adopting 
them.8 The Commission will base its assessment on the cumulative criteria outlined 
in  Annex  6  and  assess  these  aspects  in  a  stringent  manner.  Where  a  Member  State 
fails  to  satisfactorily  fulfil  the  full  set  of  criteria  the  Commission  will  require  a 
proportional reduction in the cap proposed.  

3.5. 

Guidance on criterion 12 – limit on JI and CDM compliance use by operators 

21. 

22. 

23. 

Criterion  12  of  Annex  III  of  the  Directive,  as  amended  by  the  Linking  Directive9, 
states: “The plan shall specify the maximum amount of CERs and ERUs which may 
be used by operators in the Community scheme as a percentage of the allocation of 
the  allowances  to  each  installation.  The  percentage  shall  be  consistent  with  the 
Member State’s supplementarity obligations under the Kyoto Protocol and decisions 
adopted pursuant to the UNFCCC or the Kyoto Protocol.” 

Criterion 12 is mandatory in the sense that the national allocation plan must specify 
the maximum amount of CERs and ERUs that may be used for compliance purposes 
by operators in the EU ETS. 

Criterion  12  states  that  the  established  percentage  must  be  consistent  with  the 
Member State’s supplementarity obligations under the Kyoto Protocol and decisions 
adopted  pursuant  to  the  UNFCCC  or  the  Kyoto  protocol.  The  Marrakesh  Accords 
state that “the use of the mechanisms shall be supplemental to domestic action”10. No 
quantitative  definition  of  the  supplementarity  obligations  is  available  in  the  Kyoto 
Protocol  or  the  UNFCCC  or  the  decisions  adopted  thereunder11.  It  should  also  be 
noted  that  the  meeting  of  the  conferences  of  the  parties  to  the  Kyoto  Protocol  in 
Montreal took a range of important decisions to stimulate the use of CDMs, to which 
EU emission trading can contribute.  

24. 

The  supplementarity  requirement  is  applicable  to  aggregate  greenhouse  gas 
emissions of a Member State and not separately for individual sectors. Therefore, the 
intended  government  purchase  of  Kyoto  units  also  needs  to  be  taken  into 
consideration when evaluating the fulfilment of this requirement. 

8 

9 

10 
11 

In  this  regard,  the  Commission  stresses  the  importance  of  allocation  plans  to  be  fully  consistent  with 
Member States’ obligations pursuant to Directive 2001/77/EC for the promotion of electricity produced 
from renewable energy sources in the internal electricity market, OJ L 283, 27.10.2001, p. 33. 
Directive 2004/101/EC of the European Parliament and of the Council of 27 October 2004 amending 
Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the 
Community, in respect of the Kyoto Protocol’s project mechanisms, OJ L 338 of 13.11.2004, p. 18. 
Decision 15/CP.7, Art 1. 
The  Commission’s  proposal  for  the  Linking  Directive  provided  for  such  a  quantitative  definition 
(COM(2003) 403). 

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25. 

The Commission considers that Member States are free to choose whether to apply 
the  limit  individually  in  respect  of  each  installation,  or  collectively  to  all 
installations.  For  greater  flexibility,  Member  States  are  recommended  to  apply  the 
limit for the entire trading period and collectively to all installations. 

3.6. 

Issues related to new entrants and closures 

26. 

The  Commission  considers  it  premature  to  draw  conclusions  and  identify  best 
practice  with  respect  to  new  entrants  and  closures.  Further  details  are  specified  in 
Annex 7. 

3.7. 

Further guidance on allocation at sector and installation level 

27. 

28. 

29. 

30. 

In fixing installation level allocations in the second phase, the Commission considers 
it  necessary  that  Member  States  do  not  rely  on  first  phase  emissions  or  other  first 
phase data. Otherwise installations which have actively reduced emissions in the first 
trading period are unduly disadvantaged by receiving in the second phase a smaller 
share of allowances than installations that have not reduced emissions during the first 
period. 

By  not  relying  on  first  phase  emissions  or  other  first  phase  data,  early  action  is 
adequately  recognised,  which  substitutes  therefore  for  the  set-up  of  an  early  action 
reserve or any other means of accommodating early action.  

In  order  to  reduce  the  complexity  and  administrative  effort  the  Commission 
considers  it  inappropriate  to  maintain  special  provisions  at  installation  level  on 
process emissions. 

As  already  stated  above,  the  importance  of  achieving  a  simpler  design  of  second 
phase  national  allocation  plans  compared  to  the  first  phase  cannot  be  over-
emphasized.  Simpler  allocation  rules  at  sector  and  installation  level  increase  the 
transparency of the allocation process and lower the costs in particular for small- and 
medium-sized enterprises covered by the scheme. 

3.8. 

Further guidance on other allocation aspects 

31. 

32. 

EU-wide benchmarking is not a sufficiently matured allocation method to be used for 
the  second  phase.  Member  states  may  however  find  appropriate  use  for 
benchmarking at national level for the installation level allocation in certain sectors 
and for new entrants, e.g. in the electricity sector. Experiences from such use will be 
examined  by  the  Commission  in  the  context  of  the  review.  The  Commission  is 
interested  in  whether  the  additional  data  requirements  for  benchmarking  can  be 
mastered  and  whether  Member  States  consider  the  additional  administrative  effort 
worthwhile. 

The Commission stresses that Member States can make use of auctioning within the 
10%-limit permitted under Article 10 of the Directive in the second trading period. 
Making more use of auctioning would allow Member States and the Commission to 
collect  more  experience  in  applying  this  allocation  method  and  to  inform  the 
strategic  review  with  practical  experience.  It  reminds  Member  States  that  proceeds 
from auctioning can, amongst others, be used to cover the administrative costs of the 

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scheme and the government purchase of Kyoto units. Where Member States choose 
to auction allowances the Commission encourages them to specify the details of the 
auction process well in advance, preferably in the national allocation plan, especially 
as regards timing and quantities involved. 

33. 

With  respect  to  public  consultation  provided  for  by  Articles  9(1)  and  11(2)  and 
criterion 9 of Annex III of the Directive, the Commission expects Member States to 
provide  appropriate  timelines  to  ensure  a  more  effective  public  consultation  with 
respect  to  the  establishment  of  the  second  phase  national  allocation  plan.  Member 
States should aim to conclude the public consultation pursuant to Article 11(2) and 
criterion 9 of Annex III in time in order to respect the deadline of 31 December 2006. 
As there should be less time pressure in the preparation of the second trading period 
than was the case for the first phase, the Commission is confident that Member States 
will duly comply with this requirement under their own responsibility and discretion.  

4. 

INTERPRETATION OF THE SCOPE OF ANNEX I OF THE DIRECTIVE 

4.1. 

Combustion installations 

34. 

35. 

36. 

With  respect  to  the  interpretation  of  combustion  installation  in  Annex  I  of  the 
Directive,  the  Commission  notes  that  some  Member  States  based  the  first  phase 
national  allocation  plans  on  an  interpretation  which  included  all  combustion 
processes  fulfilling  the  specified  capacity,  regardless  of  whether  the  combustion 
process produces energy independently or as an integrated part of another production 
process.  Other  Member  States  applied  variants  of  a  more  narrow  interpretation, 
excluding some or all combustion processes as integrated parts of another production 
process. 

The  Commission  regards  this  situation  as  highly  unsatisfactory.  From  an  Internal 
Market  perspective  it  needs  to  be  avoided  that  the  same  type  of  installation  is 
covered in some Member States but not in others while applying the same Directive. 
A consistent interpretation and coverage of combustion installations across Member 
States in the second trading period is vital in order to avoid significant distortions of 
competition throughout the Internal Market. 

The  Commission  considers  the  interpretation  of  combustion  installation  given  in 
Annex 8 as the appropriate one. It understands that some Member States would have 
to  include  a  number  of  additional  installations,  including  large  installations  with 
significant emissions as well as some of the smallest emitters. However, in the light 
of the following chapter, the Commission recognises that it is not useful to include 
typically  carried  out  by  small 
additional  combustion  processes  which  are 
installations.  In  order  to  remove  inconsistencies  in  the  second  trading  period,  all 
Member  States  should  therefore  in  any  case  include  also  combustion  processes 
involving  crackers,  carbon  black,  flaring12,  furnaces13  and  integrated  steelworks14, 
typically  carried  out  in  larger  installations  causing  considerable  emissions.  The 
Commission  reserves  the  right  to  take  all  necessary  measures  to  avoid  significant 

12 
13 
14 

Including off-shore. 
Including rock wool. 
Including rolling mills, re-heaters, annealing furnaces and pickling. 

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distortions. Details about the Commission’s interpretation of combustion installation 
are contained in Annex 8. 

4.2. 

The smallest installations 

37. 

38. 

39. 

40. 

Certain concerns have been raised by Member States and stakeholders with respect 
to  the  coverage  under  the  Directive  of  the  smallest  installations,  claiming  in 
particular  that  the  costs  of  participation  for  the  smallest  installations  outweigh  the 
benefits  of  being  covered  by  the  scheme.  The  Commission  recognises  that  the 
benefits  and  costs  of  participation  of  certain  small  installations  merit  further 
consideration in the review of the EU ETS pursuant to Article 30 of the Directive. 

The  Commission  underlines  that  some  participation  costs  incurred  by  the  smallest 
installations are “one-off” costs in the run-up to the first trading period, and will not 
occur in the future. In terms of recurring costs, which are largely related to the annual 
costs  of  monitoring,  reporting  and  verifying  emissions,  the  Commission  pays 
particular  attention  to  realising  the  potentials  for  cost  savings  for  the  smallest 
installations  in  the  ongoing  review  of  the  monitoring  and  reporting  guidelines.  The 
Commission  aims  for  entry  into  force  of the revised guidelines by  1 January 2008, 
thus coinciding with the start of the second trading period. 

Moreover, it reiterates the importance of using simpler allocation rules for the second 
trading  period  in  order  to  benefit  the  smallest  installations  and  look  also  at  other 
aspects,  besides  monitoring  and  allocation,  to  alleviate  the  participation  costs  for 
these  installations.  The  Commission  is  confident  that  this  will  further  improve  the 
relationship  between  benefits  and  costs  for  such  installations  of  participating  in  the 
EU ETS. 

The  Commission  invites  Member  States  to  explore  the  flexibilities  identified  in 
Annex  9  in  the  establishment  of  their  second  phase  national  allocation  plans.  It 
intends  to  consider  in  the  review  more  comprehensively  the  scope  of  the  Directive 
with respect to the coverage of the smallest installations, including the possibility to 
propose  an  amendment  to  the  Directive  to  enable  the  removal  of  some  small 
installations from the EU ETS in the course of the the second trading period. In that 
context,  the  Commission  is  considering  the  possibility  that  combustion  activities 
below  a  certain  size  threshold,  such  as  up  to  3  MW,  should  not  be  counted  for  the 
purposes  of  the  so-called  aggregation  rule.  The  Commission  is  also  examining  the 
possibility of removing the part of the aggregation rule that provides for the adding 
together of the capacities of activities that are operated by the same operator on the 
same site.  

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Annex 1: Background data 

Member State 

2003 national 
greenhouse 
gas emissions 

ANNEX 

Allowed 
emissions 
annual 
average 2008-
12 under 
Kyoto 
Protocol  

ETS share15 

First phase 
cap annual 
average  
2005-07 
according to 
Commission 
decisions16 

Austria 

Belgium 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Slovakia 

Slovenia 

Spain 

Sweden 

UK 

Total 

91.6 

147.7 

9.2 

145.4 

74.0 

21.4 

85.5 

557.2 

1017.5 

137.6 

83.2 

67.6 

569.8 

10.5 

17.2 

11.3 

2.9 

214.8 

384.0 

81.2 

51.7 

19.8 

402.3 

70.6 

651.1 

68.3 

135.8 

n.a. 

176.8 

55.0 

40.0 

70.4 

568.0 

986.1 

139.6 

114.3 

61.0 

477.2 

23.3 

46.9 

9.2 

n.a. 

200.3 

531.3 

75.4 

66.0 

18.8 

329.0 

75.2 

657.4 

36.0% 

42.6% 

62.0% 

67.1% 

45.3% 

88.6% 

53.2% 

28.1% 

49.0% 

54.1% 

37.6% 

33.0% 

40.8% 

43.4% 

71.2% 

29.8% 

n.a. 

44.4% 

62.3% 

47.0% 

59.0% 

44.3% 

43.4% 

32.5% 

37.7% 

33.0 

62.9 

5.7 

97.6 

33.5 

19.0 

45.5 

156.5 

499.0 

74.4 

31.3 

22.3 

232.5 

4.6 

12.3 

3.4 

2.9 

95.3 

239.1 

38.2 

30.5 

8.8 

174.4 

22.9 

245.3 

2190.8 

Note: All emission figures are in million tonnes CO2 equivalent. 

15 
16 

The ETS share is calculated as the first period cap divided by 2003 national greenhouse gas emissions. 
These  figures  do  not  account  for  changes  to  the  number  of  installations  subsequent  to  the  respective 
Commission decision (e.g. opt-ins or opt-outs of installations). 

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Annex 2: Criteria for national allocation plans referred to in Articles 9, 22 and 30 of 
Annex III of the Directive 

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. The total quantity of allowances to be allocated shall not be more than is 
likely  to  be  needed  for  the  strict  application  of  the  criteria  of  this  Annex.  Prior  to 
2008,  the  quantity  shall  be  consistent  with  a  path  towards  achieving  or  over-
achieving  each  Member  State's  target  under  Decision  2002/358/EC  and  the  Kyoto 
Protocol. 

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 undertakings 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.  Benchmarks  derived  from 
reference documents concerning the best available technologies may be employed by 
Member States in developing their National Allocation Plans, and these benchmarks 
can incorporate an element of accommodating early action. 

8.  The  plan  shall  contain  information  on  the  manner  in  which  clean  technology, 
including energy efficient technologies, 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. 

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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. 

12. The plan shall specify the maximum amount of CERs and ERUs which may be 
used by operators in the Community scheme as a percentage of the allocation of the 
allowances to each installation. The percentage shall be consistent with the Member 
State’s supplementarity obligations under the Kyoto Protocol and decisions adopted 
pursuant to the UNFCCC or the Kyoto Protocol. 

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Annex 3: Key messages from the first allocation guidance document 

In January 2004, the Commission provided guidance to assist Member States in the 
preparation  of  the  national  allocation  plans17.  The  guidance  contained  in  that 
document  on  the  implementation  of  the  then  eleven18  criteria  in  Annex  III  to  the 
Directive remainsrelevant for the second trading period 2008-2012. The Commission 
therefore wishes to reiterate the main elements. 

Criterion (1) – Kyoto commitments 

The Commission understands “likely to be needed” as forward-looking and linked to 
the projected emissions of covered installations as a whole, given that this criterion 
refers  to  the  total  quantity  of  allowances  to  be  allocated.  The  Commission 
understands  the  reference  to  the  “strict  application  of  the  criteria  in  this  annex”  to 
comprise the criteria with a mandatory character or containing mandatory elements - 
i.e. criteria 1, 2, 3, 4 and 5.  

In order to satisfy this requirement and fulfil all mandatory criteria and elements, a 
Member  State  should  not  allocate  more  than  is  needed,  or  warranted,  by  the  most 
constraining of these criteria.  

It follows that any application of the optional elements of Annex III may not lead to 
an increase in the total quantity of allowances. 

Criterion (2) – Assessments of emissions developments 

Pursuant  to  Decision  280/2004/EC  concerning  a  mechanism  for  monitoring 
Community greenhouse gas emissions and for implementing the Kyoto Protocol , the 
Commission  undertakes  an  annual  assessment  of  each  Member  State’s  actual 
emissions  and  projected  emissions  for  the  period  2008-2012,  in  total  and  by  sector 
and by gas. Criterion 2 requires the total quantity of allowances to be allocated to be 
consistent with these assessments.  

Consistency  will  be  deemed  as  ensured,  if  the  total  quantity  of  allowances  to  be 
allocated  to  covered  installations  is  not  more  than  would  be  necessary  taking  into 
account actual emissions and projected emissions contained in those assessments. 

Criterion (3) – Potential to reduce emissions 

A Member State should determine the total quantity of allowances resulting from the 
application  of  criterion  3  by  comparing  the  potential  of  activities  covered  by  the 
scheme to reduce emissions with the potential of activities not covered.  

The  criterion  will  be  deemed  as  fulfilled  if  the  allocation  reflects  the  relative 
differences in the potential between the total covered and non-covered activities. 

17 
18 

Commission Communication COM (2003) 830 final, 7.1.2004. 
Directive  2004/156/EC  (“the  Linking  Directive”)  added  a  criterion  12  to  Annex  III  to  Directive 
2003/87/EC. 

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Criterion (4) – Consistency with other legislation 

Criterion  4  concerns 
the  relationship  between  allocations  under  Directive 
2003/87/EC  and  other  Community  legislative  and  policy  instruments.  Consistency 
between allowance allocations and other legislation is introduced as a requirement in 
order  to  ensure  that  the  allocation  does  not  contravene  the  provisions  of  other 
legislation.  

In  principle,  no  allowances  should  be  allocated  in  cases  where  other  legislation 
implies  that  covered  emissions  had  or  will  have  to  be  reduced  even  without  the 
introduction  of  the  emissions  trading  scheme.  Similarly,  consistency  implies  that  if 
other  legislation  results  in  increased  emissions  or  limits  the  scope  for  decreasing 
emissions covered by the Directive account should be taken of this increase. 

Criterion (6) – New entrants 

Under  criterion  6,  the  national  allocation  plan  should  contain  information  on  the 
manner  in  which  new  entrants  will  be  able  to  begin  participating  in  the  emissions 
trading scheme in a Member State.  

The guidance proposes three ways in which new entrants can begin participating in 
the emissions trading scheme: by buying allowances in the market, by buying them 
in an auction, or by receiving them for free from a reserve set aside by the Member 
State.  

Having new entrants buy allowances in the market or in an auction is in accordance 
with the principle of equal treatment. 

Criterion (10) – List of installations 

This  criterion  will  be  deemed  as  fulfilled,  if  a  Member  State  has  respected  its 
obligation to list all the installations covered by the Directive. A Member State has to 
indicate the total quantity of allowances intended to be allocated to each installation. 

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1. 

2. 

3. 

4. 

5. 

Annex  4:  Summary  of  experience  gained  from  allocation  plans  for  the  first  phase 
(2005-2007) and general lessons for the second phase (2008-2012) 

More  use  of  emissions  trading  is  necessary  to  meet  the  Kyoto  targets  cost-
effectively.  Some  Member  States  rely  to  a  large  degree  on  reductions  in  the  non-
trading  sectors  or  on  government  purchase  of  Kyoto  unit  credits  in  the  pursuit  of 
their  Kyoto  targets.  The  intended  government  purchase  of  Kyoto  units  and  the 
foreseen  reduction  efforts  in  the  non-trading  sectors  have  served  in  the  first 
allocation  phase  as  buffers  resulting  in  moderate  use  of  emission  trading.  In  some 
Member States too much of the reduction effort may have been shifted to the non-
trading  sectors.  Maintaining  this  imbalance  would  make  Kyoto  compliance  more 
costly  than  necessary.  Given  that  emissions  trading  is  the  most  cost-effective 
instrument  at  hand,  it  should  be  used  more  in  the  second  allocation  round  and 
beyond. 

Allocations  have  in  general  been  more  restrictive  for  power  generators  than 
other sectors covered by the scheme. In most Member States, the allocation to the 
power generating sector, in relation to projected needs, has been more restrictive, i.e. 
more environmentally ambitious, than the allocations to the other sectors covered by 
the scheme.  

Member  States  experiencing  considerable  excess  in  actual  emissions  with 
respect to their Kyoto targets intend to purchase a substantial amount of Kyoto 
units.  Eight  Member  States  announced  in  the  first  phase  national  allocation  plans 
their intention to purchase with government funds in total some 500 to 600 million 
Kyoto  units.  Given  the  general  outlook  for  Joint  Implementation  (JI)  and  Clean 
Development Mechanism (CDM), the envisaged volume will be very challenging to 
realise.  Furthermore,  the  Linking  Directive  will  add  private-sector  demand  to 
government  demand  for  such  credits.  The  Commission  considers  it  as  a  matter  of 
priority to improve the functioning of these mechanisms. 

The non-acceptance of ex-post adjustments is essential for the allowance market 
development.  The  Commission  did  not  approve  the  so-called  ex-post  adjustments 
envisaged  by  a  number  of  Member  States  for  the  first  trading  period.  This  plays  a 
vital role in the development of an efficient and liquid allowance market. The good 
functioning  of  the  allowance  market  depends  crucially  on  a  stable  and  predictable 
allocation  for  the  entire  trading  period  in  order  to  create  stable  incentives  for 
installations  to  reduce  emissions.  For  compliance  purposes,  companies  can  use  the 
full flexibility of the scheme, be it via the allowance market or via company-internal 
transfers across borders.  

Some  allocation  plans  are  more  complex  than  necessary  and  not  sufficiently 
transparent.  In  the  first  national  allocation  plans,  some  Member  States  created  a 
complex  set  of  special  allocation  rules:  all  Member  States  provided  for  a  new 
entrants reserve and most also for some kind of administrative provision in the case 
of closure of an installation (i.e. no further allocation of allowances for the remainder 
of  the  ongoing  trading  period  once  an  installation  is  closed).  The  design  of  new 
entrants  and  closure  rules  differs  in  detail.  This  contributes  to  a  high  degree  of 
complexity and intransparency in the internal market and may result in unnecessary 
distortions  of  competition.  Member  States  should  consider  simplifying  all  rules 
which they have added themselves and which are not essential for the functioning of 
the scheme. Simpler rules will help make national allocations plans more transparent. 

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Annex  5:  Information  requested  to  assess  substantiation  of  intended  government 
purchase of Kyoto units 

Member  States  must  substantiate  the  intended  government  purchase  of  Kyoto  units 
and  are  requested  to  provide  the  following  information  in  the  national  allocation 
plan: 

(1) 

indicate  the  amount  of  Kyoto  units  planned  to  be  purchased  for  compliance 
with  the  Kyoto  target  and  any  changes  in  this  amount  compared  to  the  first 
national allocation plan; 

(2) 

indicate  the  type  of  Kyoto  units  planned  to  be  purchased,  along  with  their 
respective projected or contracted purchase price; 

(3)  demonstrate  the  existence  of  relevant  national  legislation  and  budget 

allocations; 

(4)  provide information on the progress to date in realising the planned purchases, 
in particular the quantity of Kyoto units for which emission reduction purchase 
contracts  have  been  signed  at  the  time  of  notification  of  the  second  national 
allocation plan; 

(5) 

indicate the envisaged time schedule of still to be effected purchases; 

(6)  outline  the  administrative  arrangements  put  in  place  for  realising  the  planned 
purchases,  such  as  national  programmes  or  purchase  tenders  for  purchasing 
Kyoto units; 

(7) 

indicate  details  about  the  contributions  of  multilateral  or  private  carbon 
purchase funds and the expected delivery of credits; 

(8)  demonstrate the existence of contingency measures applicable in the event that 
planned purchases and signed purchase agreements result in the  delivery  of a 
lower than expected amount of Kyoto units. 

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Annex  6:  Information  requested  to  assess  substantiation  of  other  policies  and 
measures 

Member States must substantiate the effects of implemented and additional policies 
and measures and are requested to provide the following information in the national 
allocation plan: 

(1) 

(2) 

(3) 

indicate  the  implemented  policies  and  measures  it  considers  as  significant  in 
sectors  not  covered  by  the  EU  ETS.  For  sectoral  framework  policies 
implemented  (e.g.  rural  development  plan,  waste  management  plan)  the  plan 
has to provide the individual measures included that are considered to lead to 
greenhouse gas emission reductions. For cross-sectoral policies and measures, 
the  plan  has  to  indicate  in  which  way  those  measures  affect  emissions  in  the 
trading  and  non-trading  sectors.  The  information  provided  has  to  include  the 
year in which the implementation showed full effect; 

indicate  additional  policies  and  measures  not  yet  implemented  at  the  time  of 
notification which the Member State considers as significant. The plan has to 
present  information  on  the  status  of  planning  or  adoption  of  relevant 
legislation,  agreements,  incentive  programmes,  etc.  and  has  to  address  the 
period for which full additional reduction effects are expected; 

indicate the approximate level of current greenhouse gas emissions represented 
by  the  activity  targeted  by  each  policy  or  measure  and  include  quantified 
annual  emissions  reductions  for  the  period  2008  to  2012  for  the  policies  and 
measures  indicated  under  the  two  preceding  bullets.  If  no  quantitative 
estimation of effects is available, the plan should explain why this information 
could  not  be  provided  and  should  include  additional  information  why  the 
policy  or  measure  is  considered  to  provide  significant  emission  reduction 
effects; 

(4)  provide  assumptions  and  methodologies  used  for  the  quantification  of  the 
effects of indicated policies and measures and provide references to sources for 
this information; 

(5)  present quantitative indicators to demonstrate the effectiveness of the policy or 

measure under the first requirement; 

(6) 

(7) 

(8) 

indicate how policies and measures presented under the first two requirements 
are reflected in the greenhouse gas emissions projections presented in the plan; 

indicate any developments and trends of the activities targeted by the policies 
and measures provided under the first two requirements that could potentially 
counteract  the  reduction  effects,  e.g.  increased  production  capacities  or 
growing trends in consumption patterns; 

indicate  any  overlapping  effects  among  important  measures  (e.g.  effects  of 
cross-sectoral  measures  and  sectoral  measures  on  the  same  activity)  and  how 
such  double-counting  effects  have  been  eliminated  in  the  estimation  of 
quantitative reduction effects. 

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1. 

2. 

3. 

4. 

Annex 7: Issues related to new entrants and closures 

The  Commission  notes  that  in  the  first  trading  period  all  Member  States  have  set 
aside  allowances  for  new  entrants  in  a  reserve  and  most  adopted  some  form  of 
closure provisions. The Commission did not raise objections to these administrative 
provisions  and  rules  to  the  extent  that  they  were  not  tantamount  to  ex-post 
adjustments. 

The  Commission  notes  further  a  multitude  of  detailed  provisions  governing  new 
entrants  reserves  and  closures,  including  transfer  rule  arrangements,  adopted  by 
Member  States  in  the  first  allocation  phase.  This  contributes  to  a  high  degree  of 
complexity and intransparency in the internal market and may result in distortions of 
competition.  At  this  stage,  there  is  however  insufficient  practical  experience  with 
regard to the practical application of these rules.  

For  this  reason,  the  Commission  considers  it  premature  to  draw  conclusions  and 
identify best practice. In the case of new entrants’ reserves and closure and transfer 
provisions  being  maintained  in  the  second  trading  period,  the  Commission 
recommends Member States ensure in particular that the new entrants reserve not be 
replenished upon exhaustion, that allowances not allocated to closed installations be 
cancelled  or  auctioned,  and  that  there  be  no  allocation  at  projected  needs  to  new 
installations. 

In the review report in June 200619, the Commission will consider alternative options 
(including  the  set-up  of  an  EU-level  new  entrant  reserve  accompanied  by  EU-wide 
administrative  rules  on  closure  and  cross-border  transfer)  to  achieve  further 
harmonisation with respect to new entrants and closure provisions. 

19 

As provided for by Article 30(2) of the Directive 

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1. 

2. 

3. 

4. 

5. 

6. 

20 

21 

22 

Annex 8: Definition of combustion installation 

The Commission considers the interpretation including all combustion processes, i.e 
oxidation of fuels, fulfilling the specified capacity to be the correct interpretation of 
Annex I of the Directive, for the following notable reasons:  

Firstly,  the  term  “combustion”  is  used  in  a  wide  range  of  Community  legislation 
including not only the Emissions Trading Directive and the IPPC-Directive, but also 
the  LCP-Directive20  and  the  Sulphur  in  Liquid  Fuels-Directive21.  The  meaning  of 
combustion  in the  context  of  the  Emissions Trading Directive  has to be interpreted 
within the framework of other Community legislation where definitions are included.  

The Sulphur in Liquid Fuels-Directive in its Article 2(5) and the LCP-Directive in its 
Article 2(7) define ‘combustion plant’ as “any technical apparatus in which fuels are 
oxidised in order to use the heat thus generated”. The LCP-Directive lists in the same 
Article a range of combustion plants which are specifically excluded from the scope 
of  the  LCP-Directive.  The  Emissions  Trading  Directive  does  not  provide  for  such 
exclusion.22  

Given that the Emissions Trading Directive makes no similar specific exclusions, the 
types of combustion installations excluded by Article 2(7) of the LCP-Directive are 
included within the scope of the Emissions Trading Directive where the threshold is 
met or exceeded. 

Further guidance in support of this conclusion comes from Annex I of the Emissions 
Trading  Directive  itself.  Annex  I  specifically  excludes  municipal  and  hazardous 
waste  incineration  facilities  from  the  scope  of  the  scheme.  The  combustion  of  e.g. 
hazardous  waste  is  clearly  an  integrated  part  of  the  normal  process  undertaken  by 
hazardous  waste  incinerators.  If,  in  the  absence  of  this  specific  exclusion,  the 
Directive  were  to  be  interpreted  as  not  applying  to  such  installations  where 
combustion takes place as an integrated part of the installation’s processes, municipal 
and hazardous waste installations would not need to have been specifically excluded 
as  they  would  in  any  case  have  fallen  outside  its  scope.  Their  specific  exclusion  is 
further  confirmation  that  it  is  the  presence  of  a  combustion  process  with  a  rated 
thermal  input  exceeding  20MW  that  determines  the  Directive’s  coverage  of 
stationary combustion installations. 

It is also commonly accepted that the term “combustion installation” for the purposes 
of  the  IPPC-Directive  covers  not  just  the  power  generation  industry  but  also  other 
industries  where  fuels  are  burned.  Thus  the  heading  “Energy  industries”  in  the 
context of the IPPC Directive does not imply a narrow restriction of coverage of the 

Directive  2001/80/EC  on  the  limitation  of  emissions  of  certain  pollutants  into  the  air  from  large 
combustion plants, OJ L 309, 27.11.2001, p. 1. 
Directive 1999/32/EC  relating  to  a reduction  in  the  sulphur  content of  certain  liquid  fuels, OJ  L 121, 
11.05.1999, p. 13. 
Certain  activities  that  are  specifically  excluded  by  the  LCP-Directive  are  also  excluded  from  the 
Emissions Trading Directive, such as “(h) any technical apparatus used in the propulsion of a vehicle, 
ship  or  aircraft”  because  the  Emissions  Trading  Directive  only  applies  to  stationary  technical  units 
(Article  3(e)).  The  Emissions  Trading  Directive  therefore  covers  neither  transportation  in  general  nor 
greenhouse gas emissions arising from traffic on the site of an installation. 

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7. 

8. 

term  “combustion  installations”  to  combustion  processes  that  produce  energy 
independently,  but  rather  also  includes  combustion  processes  taking  place  as  an 
integrated part of another production process. The heading “Energy activities” used 
in  the  Emissions  Trading  Directive,  if  anything,  would  be  broader,  so  at  least  the 
same  conclusion  would  apply.  This  therefore  provides  additional  support  for  the 
argument that “combustion installations” in the Emissions Trading Directive not only 
covers  combustion  installations  that  are  part  of  the  energy  industry,  but  also 
combustion  installations  in  other  industry  sectors,  including  sectors  that  are  not 
explicitly listed in its Annex I. 

It is well-established that industries can fall under more than one activity category of 
the  IPPC-Directive.  Integrated  steel  works  for  example  carry  out  several  Annex  I 
activities,  and  refineries  include  combustion  installations  of  more  than  50MW. 
Considering the similarities between the IPPC-Directive and the Emissions Trading 
Directive, there is no reason to take a different approach to the interpretation of the 
latter  in  this  respect.  In  particular,  a  different  approach  cannot  be  justified  by  the 
separate listing of the steel and cement industries, given that both produce substantial 
CO2  emissions  from  (chemical)  processes  in  addition  to  their  emissions  from 
combustion. 

In the light of the above points, any installation, which includes one or more piece of 
stationary  technical  apparatus  in  which  a  combustion  process  takes  place  and  that 
together  on  the  same  site  and  under  the  responsibility  of  the  same  operator  has  a 
rated thermal input exceeding 20MW, is therefore subject to the Emissions Trading 
Directive.  This  includes  apparatus  where  the  heat  is  used  in  another  piece  of 
apparatus,  through  a  medium  such  as  electricity  or  steam,  and  apparatus  where  the 
heat  resulting  from  combustion  is  used  directly  within  that  apparatus,  for  example, 
for  melting,  drying,  flares  or  units  providing  heat  input  to  chemical  reactors.  The 
purpose  to  which  the  product  of  an  activity  is  put  should  not  be  a  determining 
characteristic as to whether or not an installation is subject to the Directive, as this 
would introduce subjectivity into its scope. Energy produced by combustion may be 
in  the  form  of  electricity,  heat,  hot  water  or  steam,  and  the  distance  between  the 
production of energy and its eventual use is not relevant for competent authorities to 
decide whether or not an installation is subject to the Emissions Trading Directive. 

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1. 

2. 

Annex 9: Interpretation issues related to the smallest installations 

The  Commission  draws  Member  States’  attention  to  the  fact  that  the  so-called 
aggregation clause23 contained in the second paragraph of Annex I of the Directive 
should be interpreted carefully so as to not cover certain small installations, without 
prejudice  to  the  interpretation  of  such  or  similar  wording  in  other  Community 
legislation. In particular, the wording “under the same subheading” contained in this 
clause should be understood in the sense that a single activity falling simultaneously 
under  several  subheadings,  e.g.  both  under  “energy  activities”  and  under  a  specific 
sectoral activity covered by Annex I of the Directive, such as “mineral industry”, is 
considered  under  the  more  specific  sectoral  subheading.  Multiple  activities  of  the 
same  type  should  then  be  aggregated  on  the  basis  of  that  specific  sectoral 
subheading, and not on the basis of all of the different possible activity descriptions 
that could apply. There is no basis for aggregating activities that fall under a different 
subheading, even though they may be part of the same installation. 

Furthermore,  flexibility  at  the  discretion  of  Member  States  comes  also  from  the 
wording “and/or” in the provision governing the manufacture of ceramic products in 
Annex  I  of  the  Directive.  If  Member  States  want  to  use  this  flexibility  the 
Commission notes that this provision can be interpreted in a restrictive way so as to 
require  the  simultaneous  presence  of  all  mentioned  sub-elements  for  the  second 
trading  period,  again  without  prejudice  to  the  interpretation  of  such  or  similar 
wording in other Community legislation. In this context, the Commission draws the 
attention of Member States to the Declaration of the Council and the Commission of 
4  September  199624  supporting  an  interpretation  of  the  same  wording  contained  in 
Annex I of the IPPC-Directive, that it is up to Member States to decide as to whether 
one of the two criteria or both criteria need to be fulfilled at the same time. 

23 

24 

“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.” 
Council Declaration of 4 September 1996 on Directive 96/61/EC of the Council on Integrated Pollution 
Prevention and Control, 9388/96, Interinstitutional dossier No. 00/0526 (SYN) 

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Annex 10: Set of NAP common format summary tables 

I.

NAP summary table – target calculation
(Grey fields are filled out automatically)

Row  Data table 
no.

Emissions (Mt 
CO2eq)

A

B III

C

D III

E

Target under Kyoto Protocol or Burden 
Sharing Agreement (avg. annual GHG 
emissions 2008-12)
Total GHG emissions 2003 (excluding 
LULUCF emissions and removals)

Difference +/-                                
(row A - row B)                               
(negative means need to reduce)
Av. annual projected total GHG 
emissions 2008-2012 ('with measures' 
projection)
Difference +/- 
(row A - row D)                                  
(negative means need to reduce)

Reduction measures  (where relevant)

F V

G VI

H VII

I

EU emissions trading scheme

Additional policies and measures (other 
than emissions trading), including 
LULUCF
Government purchase of Kyoto 
mechanisms
Total reduction measures                   
(row F + row G + row H)

0

0

0

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IIa

NAP Summary table – Basic data

(Grey fields are filled out automatically)

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

A

B

C

A

B

C

Real GDP1  (in billion 
€2000)

Absolute

Emissions1 (Mt of 
CO2)

Carbon intensity1 
(million tonnes CO2 / 
billion €)

Trend index 
2003=100

Absolute

Trend index 
2003=100

Absolute

Trend index 
2003=100

Year

Real GDP1  (in billion 
€'2000)

Absolute

Emissions1 (Mt of 
CO2)

Carbon intensity1 
(million tonnes CO2 / 
billion €)

Trend index 
2003=100

Absolute

Trend index 
2003=100

Absolute

Trend index 
2003=100

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Annual average 
2008-2012

[1] Indicate source(s), separately per year where relevant.

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NAP Summary table – Basic data on electricity sector[1]
(Grey fields are filled out automatically)

2000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Average 
2008-2012

IIb.

Year

A

Total domestic electricity production (TWh)

Imports (TWh)

Exports (Twh)

Country 1

Country n

Other countries

Total Imports 

Country 1

Country n

Other countries

Total Exports

Electricity trade balance (TWh, total row B - total row 
C)

Share of gas in total domestic electricity production 
(%)

Share of oil in total domestic electricity production 
(%)

Share of coal in total domestic electricity 
production  (%)

Share of nuclear energy in total domestic electricity 
production (%) 

B

C

D

E

F

G

H

Share of renewable energy, including biomass, in 
total domestic electricity production (%)
Indicate source(s), separately per year where relevant.
This cell should also include (in parentheses) the target pursuant to Directive 2001/77/EC.

I
[1]
[2]

[2]

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III

NAP Summary table – Recent and projected greenhouse gas emissions per common reporting format sector (without taking into account additional policies and measures in Table VI)
(Grey fields are filled out automatically)

in CO2eq
CRF 
subsector

Row 
ref.

1.A.1

Energy generation

1.A.3

Transport

1.A.4.a + b + c

Commercial and institutional, 
Residential, and Agricultural energy 
use

Industrial processes

Agriculture

Land-Use Change and Forestry

Waste 

All other sectors

2

4

5

6

1.A.2 + 1.A.4 
+ 1.A.5 + 1.B 
+ 3 + 7

Total

Total in ETS

A

B

C

D

E

F

G

I

J

K

L

M

N

O

2003

2004

2005

2008

2009

2010

2011

2012 Average annual 

projected emissions 
2008-2012

GHG

CO2 in ETS

GHG

GHG

CO2 in ETS

GHG

CO2 in ETS

GHG

GHG

GHG

GHG

CO2 in ETS

GHG

ETSCO2

Rows B + E + 
G + M

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IV

NAP Summary table – Recent and projected CO2 emissions in sectors covered by the EU emissions trading scheme
(Grey fields are filled out automatically)

Emissions in Mt CO2eq
Year

i

2003

ii

iii

iv

v

vi

vii

viii

ix

x

xi

2004

2005

2006

2007

2008

2009

2010

2011

2012 Average annual projected 

emissions 2008 – 2012*

A

combustion installations total 
(excluding installations covered 
under rows B-J)

main activity 1

main activity 2

flaring

integrated steelworks

crackers

furnaces

B

C

D

E

F

G

H

I

J

K

main activity n

mineral oil refineries

coke ovens

metal ore roasting, sintering, pig 
iron and steel producing 
installations

cement producing installations

lime producing installations

glass and glass fibre producing 
installations
ceramics producing installations

pulp, paper and board producing 
installations
Total

Share of EU ETS CO2 in total 
GHG emissions (%)

Rows A to J

Row L / Row B in 
Table Iia

* Numbers to be used in last two columns of Table V.

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V

NAP Summary table – Proposed allocation in relation to first period allocation (without additional policies and measures) in the sectors covered by the EU emissions trading scheme

i

ii

iii

iv

v

2003 actual CO2 emissions (Mt 
CO2)[1]

2004 actual CO2 emissions (Mt 
CO2)

Average annual allocation 
2005 - 2007

Proposed average annual 
allocation in 2008-2012

Proposed ETS allocation as a 
percentage of first period ETS 

ll

ti

col iv / col iii 

(Grey fields are filled out automatically)

combustion installations total 
(excluding installations covered 
under rows B-J)

main activity 1

main activity 2

flaring

integrated steelworks

crackers

furnaces

main activity n

mineral oil refineries

coke ovens

metal ore roasting, sintering, pig iron 
and steel producing installations

cement producing installations

lime producing installations

glass and glass fibre producing 
installations

ceramics producing installations

pulp, paper and board producing 
installations

Total

A

B

C

D

F

G

H

I

J

L

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VI

NAP Summary table – Reductions expected by policies and measures other than the EU emissions trading scheme and which have not been taken into account for the "with measures" 
projection presented in Table III (Mt CO2eq)

Measures

Under implementation (1)

i

ii

iii

iv

v

Adopted (2)

vi

vii

viii

Planned (3)

ix

Expected average annual reduction (2008-
12)

Full effects 
expected as 
from year

Expected average annual reduction (2008-
12)

Full effects 
expected as 
from year

Expected average annual reduction (2008-
12)

Full effects 
expected as 
from year

In ETS sectors

In non-ETS sectors

In ETS sectors

In non-ETS sectors

In ETS sectors

In non-ETS sectors

A

B

C

D

E

F

G

H

I

…

X

Subtotal

Total

[1] 

[2] 

[3] 

equal to row G in Table I

p e e tat o s o go g, a d t e

easu e s ot ta e

to accou t o t e

t

easu es p oject o s p ese ted

ab e

s ega ds t e yea , e be States s ou d d cate t e yea

where the full or a substantial part of the effects can be expected, not the first year of implementation.

The measure has been adopted by the final instance at the relevant local, regional or national level, but it is not yet implemented

The measure is at least mentioned in a formal government document 

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VII
NAP Summary table – Government’s planned use of Kyoto units (Mt CO2eq) and status of implementation

(Grey fields are filled out automatically)

ERUs

CERs

AAUs and others

Total

Σ  (equal to row H on table I)

A

Planned purchase

Total 2008-2012

Annual average

Quantity of units already paid for

Quantity of units contracted, but yet unpaid (delivery pending start of UN ITL) (1)

Neither bought nor contracted by date of notification (A - C - D)

Full budget appropriated to first commitment 
period (2008-12)

Currently available for 2006

Committed for the future

Implied future price ((F+G)/A)

(1) Units partially paid for should be proportionally distributed between lines C and D

B

C

D

E

F

G

H

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Description of NAP provisions

VIII

NAP Summary table – Details on new entrants, closures and auctioning

Issues with respect to new entrants
Does the plan contain a new entrants’ reserve? 
What is its size in absolute terms and as a percentage of the total quantity of allowances for the
period?
What use is made of allowances left over in the reserve at the end of the trading period?
(cancellation, sold)

How will new entrants be treated in case the reserve runs out of allowances before the end of the
trading period? (reserve replenished, further new entrants buy in the market)
Does the allocation to the new entrant depend on the actual choice of fuel? 
Does the allocation to the new entrant depend on the actual choice of technology?
Does the allocation to the new entrant depend on the estimated or actual number of operating
hours or does the allocation use a standard number of operating hours?

Auctioning
Will any allowances be auctioned? 
What share of the total quantity of allowances will be auctioned?
Who can participate in the auction?
What auctioning method will be used?
When/at what intervals will the auction(s) be held?
What quantity of allowances will be auctioned each time?
What use will be made of the revenues?
Will the auctions be coordinated with any auctions in other Member States?

Closures
Do operators have to report to the competent authority when an installation closes, and on what
conditions is an installation considered to be closed?
Does the operator continue to be issued allowances for a closed installation in the remaining
years of the trading period? If the reply depends on whether the operator sets up a new entrant
installation replacing the closed installation, please briefly describe the provision.

What happens to any allowances that were intended for an installation, which will not receive
them after closure? (cancellation, fed into a new entrants’ reserve, auctioning)

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IX
NAP Summary table – Further details on selected new entrants

Power plant with a rated thermal input exceeding 
20 MW

Power plant with a rated thermal input exceeding 
20 MW

Maximum capacity of the actual installation

(At least 100 MW)

(At least 100 MW)

Fuel (s) used 

Coal

Gas

Forecast number of operating hours/year in 
the period 2008 to 2012

Annual allowance allocation in 2008 to 2012

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X
NAP Summary table - Important assumptions on annual averages

EU Allo-
wance price 
(in Euro)

Crude oil 
price (Brent) 
(1)

Natural gas 
price (1)

Coal price (1) Exchange rate 

Other

(2)

Year

2005

2006

2007

2008

2009

2010

2011

2012

(1) Use common market standard and specify, including the currency used; indicate in detail sources of data and methodologies 
(2) For those Member States outside the Euro-zone

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Explanatory comments on NAP Common Format summary tables 

Note: Grey fields are filled in automatically when using the Excel spreadsheets. 

Table I: NAP summary table – target calculation 

General description: 

The purpose of this table is to provide an overview of key data relevant for NAP assessment. 
The gap (row C) between the Kyoto target (row A) and actual greenhouse gas emissions in 
2003 (row B) is presented with necessary corresponding reduction measures (quantified in the 
fourth column of rows F-H, and totalled in row I). The gap is also expressed as the difference 
between  the  Kyoto  target  (row  A)  and  the  projected  annual  average  total  greenhouse  gas 
emissions from 2008-2012 (row D). This figure is indicated in row E. 

Specific remarks: 

The second column makes a cross-reference to other data tables. 

The fourth column refers to emissions or effects on emissions from measures recorded in the 
third column. 

All rows with the exception of rows B and C contain annual averages relating to the second 
trading period 2008 to 2012. 

Table IIa: NAP Summary table – Basic data 

General description: 

Table IIa gives an overview of historic and expected trends in various factors crucial to the 
calculation  of  a  Member  State’s  potential  to  reduce  emissions:  namely,  real  GDP  (row  A), 
greenhouse gas emissions (row B) and carbon intensity (row C).  

All three factors are expressed both in absolute numbers and in a trend index, with 2003 being 
the base year (2003=100). 

Specific remarks: 

In order to have a complete picture, the Commission invites Member States to provide annual 
data  from  1990  to  2012.  While  re-stating  some  date  in  the  public  domain,  Table  IIa  is  of 
added  value  as  an  integral  part  of  the  NAP  ensuring  transparency  and  easy  access  to  this 
information for stakeholders and other Member States. 

Member  States  are  required  to  indicate  the  sources  of  the  information  used,  separately  per 
year where relevant. 

For  the  period  2008  to  2012,  the  Commission  prefers  annual  data  to  better  understand  the 
development of these figures over time. In case a Member State can justify why such annual 
data  are  not  available,  the  Commission  would  also  accept  the  submission  of  only  annual 
averages for the period 2008 to 2012, to be indicated in the respective column. 

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Table IIb: NAP Summary table – Basic data on electricity sector 

General description: 

Table  IIb  indicates  the  basic  data  for  the  electricity  sector.  The  purpose  is  to  obtain  a 
comprehensive picture of total domestic electricity production (row A), imports (row B) and 
exports (row C), the electricity trade balance (row D, constituting the difference between rows 
B and C) as well as the shares of different fuels (gas, oil, coal, nuclear energy, and renewable 
energy) in total domestic electricity production (rows E-I).  

Specific remarks: 

Imports  and  exports  (rows  B  and  C)  need  to  be  disaggregated  into  the  most  important 
countries to/from which the export/import takes place, as well as a row with the remainder to 
other countries, and the total figure. These figures will allow the Commission to cross-check 
the  plausibility  of  indications  by  individual  Member  States  of  their  respective  exports  and 
imports, which would naturally need to be compatible with each other. 

Member  States  are  required  to  indicate  the  sources  of  the  information  used  (separately  per 
year  where  relevant)  and  are  encouraged  to  provide  annual  data  also  for  the  period  2008  to 
2012. 

If  a  Member  State  can  justify  why  such  annual  data  are  not  available,  the  Commission 
requires explanation and at least the submission of data for a recent year and annual averages 
for the period 2008 to 2012. Similarly, Member States should provide data on the fuel mix as 
accurately as possible.  

Naturally,  the  future  fuel  mix  will  depend  on  estimates,  amongst  others,  of  the  allowance 
price. Member States are requested to indicate their respective estimates in the explanations in 
the NAP and also in Table X. 

Member States should introduce also the target pursuant to Directive 2001/77/EC in Table 2b 
for the year 2010. 

Table  III:  NAP  Summary  table  –  Recent  and  projected  greenhouse  gas  emissions  per 
common  reporting  format  sector  (without  taking  into  account  additional  policies  and 
measures in Table VI) 

General description: 

Table III relates recent and projected greenhouse gas emissions per common reporting format 
sector,  as  further  specified  by  the  numbers  for  the  respective  sub-sectors  in  the  second 
column.  Where  indicated,  the  emissions  should  be  indicated  for  total  greenhouse  gases  and 
CO2 in the EU ETS. 

The  Commission  recognises  the  technical  difficulty  to  complete  this  table  but  stresses  the 
importance  of  bringing  together  the  categories  in  the  UNFCCC-based  common  reporting 
format with the categories under EU ETS reporting. 

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Specific remarks: 

The second column indicates the sub-sectoral reference under the Common Reporting Format 
(CRF). 

The Commission recognises that some Member States may not have all the data available to 
complete  Table  III.  If  a  Member  State  can  justify  why  such  annual  or  sectoral  data  is  not 
available, the Commission requires at least the submission of data for a recent year and annual 
averages  for  the  period  2008  to  2012  for  as  many  sectors  as  possible,  as  well  as  aggregate 
figures (total and total in ETS). 

CO2 emissions in the ETS sector depend on estimates, amongst others, on the allowance price. 
Member States are requested to indicate their respective estimates in the explanations in the 
NAP and also in Table X. 

Table IV: NAP Summary table – Recent and projected CO2 emissions in sectors covered 
by the EU emissions trading scheme 

General description: 

Table IV looks more specifically at the recent and projected CO2 emissions by installation or 
sector  covered  by  the  EU  ETS,  relating  them  to  the  activities  mentioned  in  Annex  I  of  the 
Directive. Certain activities have been aggregated where separate information is likely not to 
be available or necessary for the Commission’s assessment. 

Specific remarks: 

Emissions  from  combustion  installations  shall  be  calculated  without  emissions  from 
installations  also  covered  under  the  specific  sectors  of  Annex  I  of  the  Directive  being 
indicated in rows B-J. As a matter of example, where a combustion installation is also covered 
by the category “installations for the production of cement clinker …” under the subheading 
“mineral  industry”  of  Annex  I  of  the  Directive,  emissions  from  that  installation  should  fall 
under the entry “cement producing installations” in row E of Table IV, and should be omitted 
from  row  A  “combustion  installations”.  Moreover,  emissions  from  these  combustion 
installations shall be disaggregated into the most important activities to be identified by each 
Member State, including flaring, integrated steelworks, crackers and furnaces. 

For  the  period  2008  to  2012,  the  Commission  prefers  annual  data  to  better  understand  the 
development of all sectors. Where a Member State can justify the absence of such annual data 
for certain sectors, the Commission requires at least the submission of data for a recent year 
and annual averages for the period 2008 to 2012 in as many sectors as possible. If a Member 
State  can  show  this  to  be  appropriate,  certain  sectors  may  be  (dis-)aggregated;  in  particular 
coke  ovens  (row  C)  with  metal  ore  roasting,  sintering,  pig  iron  and  steel  producing 
installations (row D). Where such data are not available on an annual basis, the Commission 
requires a justification and at least the submission of data for a recent year as well as annual 
averages  for  the  period  2008  to  2012  for  as  many  sectors  as  possible,  as  well  as  aggregate 
figures (total and total in ETS).  

The  amount  entered  in  row  J,  column  XI  correlates  to  Table  III,  row  O,  last  column.  The 
amount entered in row K, column XI correlates to Table III, row N, last column. 

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Table V: NAP Summary table – Proposed allocation in relation to first period allocation 
(without  additional  policies  and  measures)  in  the  sectors  covered  by  the  EU  emissions 
trading scheme 

General description: 

For installations or sectors covered by the EU ETS, Table V indicates 2003 and 2004 actual 
emissions  (columns  i  and  ii)  as  well  as  the  proposed  second  period  allocation  in  relation  to 
first trading period allocation (columns iii and iv). Column v indicates the proposed second 
period allocation as a percentage of the first period allocation. The same sectoral specification 
is used as in Table IV. 

Specific remarks: 

Emissions  from  combustion  installations  shall  be  calculated  without  emissions  from 
installations  covered  also  under  the  specific  sectors  of  Annex  I  of  the  Directive  being 
indicated in rows B-J. As a matter of example, where a combustion installation is also covered 
by the category “installations for the production of cement clinker …” under the subheading 
“mineral  industry”  of  Annex  I  of  the  Directive,  emissions  from  that  installation  should  fall 
under the entry “cement producing installations” in row E of Table IV, and should be omitted 
from  row  A  “combustion  installations”.  Moreover,  emissions  from  these  combustion 
installations shall be disaggregated into the most important activities to be identified by each 
Member State, including flaring, integrated steelworks, crackers and furnaces. 

For  the  period  2008  to  2012,  the  Commission  prefers  annual  data  to  better  understand  the 
development  of  all  sectors.  Where  a  Member  State  can  justify  why  such  annual  data  is  not 
available for all sectors, the Commission requires at least the submission of data for a recent 
year and annual averages for the period 2008 to 2012 in as many sectors as possible, as well 
as aggregate figures (total and total in ETS). If a Member State can show it to be appropriate, 
certain  sectors  may  be  (dis-)aggregated;  in  particular  coke  ovens  (row  C)  with  metal  ore 
roasting, sintering, pig iron and steel producing installations (row D). 

Table  VI:  NAP  Summary  table  –  Reductions  expected  by  policies  and  measures  other 
than the EU emissions trading scheme and which have not been taken into account for 
the "with measures" projection presented in Table III (Mt CO2eq) 

General description: 

Table  VI  gives  account  of  greenhouse  gas  emissions  reductions  expected  by  policies  and 
measures  other  than  the  EU  ETS,  which  have  not  been  taken  into  account  for  the  “with 
measures” projection presented in Table III. 

It  classifies  such  measures  into  three  categories:  “under  implementation”  (columns  i-iii), 
“adopted” (columns iv-vi), and “planned” (columns vii-ix). 

“Under  implementation”  means  that  the  implementation  is  ongoing,  and  that  the  measure  is 
not taken into account for the "with measures" projections presented in Table III. 

“Adopted” means that the measure has been adopted by the final instance at the relevant local, 
regional or national level, but it is not yet implemented. 

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“Planned” means that the measure is at least mentioned in a formal government document, but 
not adopted. 

Each of these three categories is again subdivided into three columns: the expected average 
annual reduction (2008-12), on the one hand, in ETS sectors (columns i, iv and vii), and, on 
the other hand, in non-ETS sectors (columns ii, v and viii). The third sub-column (iii, vi and 
ix, respectively) indicates the year, in which the full or a substantial part of the effects of the 
respective measure can be expected (not necessarily the first year of implementation). 

The rows shall contain the measures to be specified in the second column.  

Specific remarks: 

The  Commission  recognises  that  for  some  measures  the  disaggregation  of  the  expected 
reductions into those occurring outside and inside the ETS presents a technical difficulty. It is 
however an important element for the Commission’s assessment.  

Table VII: NAP Summary table – Government’s planned use of Kyoto units (Mt CO2eq) 
and status of implementation 

General description: 

Table VII gives a detailed overview on the government’s planned use of Kyoto units and the 
status of their implementation. 

It  subdivides  the  Kyoto  units  into  ERUs  from  JI  projects,  CERs  from  CDM  projects,  and 
AAUs and other units from international emissions trading. The last column indicates the total 
of the three types combined. 

The status of implementation is presented in the rows, as follows.  

Rows  A  and  B  indicate  the  sum  across  the  various  degrees  of  implementation,  with  row  A 
giving  the  total  amount  in  the  period  2008  to  2012  and  row  B  the  annual  average  in  that 
period per type of Kyoto unit and as a total. The total annual average across all three forms of 
Kyoto units is equal to row H of Table I. 

Row  C  indicates  the  most  advanced  degree  of  implementation,  i.e.  the  quantity  of  units 
already paid for. 

Row D gives a lesser degree of implementation, which is the quantity of units contracted, but 
yet  unpaid  (delivery  pending  start  of  UN  ITL).  Units  partially  paid  for  should  be 
proportionally distributed between rows C and D. 

Row E relates to the quantity with the lowest degree of implementation, i.e. the units neither 
bought nor contracted by the date of notification (Row E = Row A – Row C – Row D). 

Rows  F  and  G  give  additional  information  on  the  full  budget  appropriated  to  the  first 
commitment period (2008-12), both the one currently available for 2006 (row F) and the one 
committed up to 2012 (row G). 

Row H indicates the implied future price of Kyoto units, which is the sum of rows F and G, 
divided by the total planned purchase in row A. 

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Specific remarks: 

The  Commission  prefers  Member  States  to  specify  the  breakdown  into  ERUs,  CERs,  and 
AAUs and others. In case a Member State can justify why such a breakdown is not feasible, 
the Commission requires at least the submission of separate figures for ERUs and CERs on 
the one hand and AAUs and others on the other hand. 

Table VIII: NAP Summary table – Details on new entrants, closures and auctioning 

Table  VIII  contains  various  questions  relating  to  important  information  on  new  entrants, 
auctioning and closures. The questions should be self-explanatory. 

Table IX: NAP Summary table – Further details on new entrants 

Table  IX  asks  for  further  details  on  a  selected  new  entrant,  e.g.  a  power  plant  with  a  rated 
thermal input of 100 MW.  

In one scenario (second column) the fuel used is coal, while in the other (third column) it is 
gas. 

Member States are then requested to fill in row 4 (forecast number of operating hours/year in 
the period 2008 to 2012), where such a forecast is relevant for the allocation under the new 
entrants rule of the Member State, and row 5 (annual allowance allocation in 2008 to 2012). 

This  information  will  allow  the  Commission  to  better  assess  the  standards  used  in  the 
allocation to new entrants and at the same time provide for more transparency.  

Table X: NAP Summary table – Important assumptions on annual averages  

In  Table  X,  Member  States  are  requested  to  quantify  for  the  years  2005-12  their  key 
assumptions on annual average figures underlying the establishment of the NAP, in particular 
for: 

•  the EU allowance price (in Euro); 

•  the price for crude oil (Brent); 

•  the price for natural gas; 

•  the coal price; and  

•  the exchange rate (for those Member States outside the Euro-zone). 

Member States should use and specify common market standards for fuel prices, including the 
currency  used.  They  should  indicate  in  detail  sources  of  data  and  methodologies.  This 
information is necessary in order to ensure comparability of data and transparency. 

Member States are invited to indicate further assumptions considered important and useful for 
the Commission’s assessment. 

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