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The fourth trading period of the European Union emission trading system 1 (EU ETS 1) starts on 01/01/2021 and lasts upto and including 2030. Operators of installations subject to emissions trading may, upon request, receive a free allocation of emission allowances for the periods between 2021-2025 (first allocation period) and 2026-2030 (second allocation period).
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In Germany, operators of large combustion plants (with a rated thermal input above 20 MW, mostly energy installations) and high energy usage industrial installations participate in European Emissions Trading. Annex 1 of the German Greenhouse Gas Emission Allowance Trading Act (TEHG) lists the activities subject to emissions trading for which operators must surrender emission allowances. The number of surrendered allowances must match the volume of emitted greenhouse gases. Emissions trading also establishes which greenhouse gases are subject to this proviso. The emissions are determined annually based on the methods presented in the specific installation monitoring plan and are compiled in an emissions report and submitted to the German Emissions Trading Authority (DEHSt) at the German Environment Agency by the 31/03/ each year.
07/06/2019
Operators in the third trading period will only receive a free allocation of emission allowances on a temporary basis. This is determined based on benchmarks in an EU-wide allocation procedure and allocated based on the 2020 Allocation Ordinance (ZuV 2020). Companies that emit more greenhouse gases than are covered by their allowances must purchase additional emission allowances. Those who emit less emissions can sell excess allowances.
Emission allowances issued as a result of CDM and JI climate protection projects can be included in EU emissions trading. The associated directive (Linking Directive) allows operators participating in EU emissions trading to fulfil part of their climate protection obligations through CDM and JI projects.
The German Environment Agency (UBA) has been appointed as the competent national authority.
16/05/2018
The EU created the basis for EU-wide harmonised allocation rules for the 2021-2030 trading period through the amended Emissions Trading Directive of 14/03/2018 (ETD). The auction will continue to be the fundamental principle for allocation in the future. Other rules, known from the third trading period, remain unchanged:
However, the amended directive also includes several changes, the main differences being:
3rd trading period | 4th trading period |
---|---|
8-year trading period | 10-year trading period |
Linear reduction factor: 1.74% per year | Linear reduction factor: 2.2% per year |
Allocation is determined at the beginning of the trading period | Allocation occurs over two allocation periods of five years each (2021-2025 and 2026-2030) and is determined at the beginning of each allocation period |
Uniform benchmarks apply for the entire trading period | Benchmarks are updated for each allocation period |
Free allocation drops from 80% of the calculated allocation in 2013 to 30% in 2020. Exception:
| Free allocation drops from 30% of the calculated allocation between 2021 to 2026 to 0% in 2030. Exception:
|
Allocation changes within the trading period:
| Allocation changes within the trading period:
(The details for the adjustment of the allocation are still to be determined by the EU.) |
The amount of emission allowances allocated free of charge to industrial installations (non-electricity generators) is limited to the historical emissions share of industrial installations (so-called industrial cap). A uniform cross-sectoral correction factor is applied to ensure compliance with the industrial cap. | The amount of auctioned emission allowances is set at 57% of the total amount, but 3% of the total amount can be used as a free allocation buffer to avoid the use of a cross-sectoral correction factor. |
The carbon leakage status is determined by carbon cost and/or trade intensity criteria. Changes to the status are possible within the trading period. | The carbon leakage status is determined by multiplying the trade intensity with the emissions intensity, divided by the gross added value. There are no intended status changes within the trading period. |
07/06/2019
Read our annual reports on greenhouse gas emissions from stationary installations and aviation in Germany (VET reports).
VET reports and installation lists