The possibility “for freezing allowances and accounts” is specified in more detail in Articles 70, 71 and 73 of the Commission’s proposal for the Registry Regulation amendment and amounts to three differing legal measures with distinct premises, effects and entities authorised to use them, i.e.:

- suspension of all access by authorised representatives,

- suspension of access to allowances or Kyoto units,

- suspension of processes.

 

 

The communication revealed by the European Commission signalled that on 17 June 2011  the Climate Change Committee backed proposals to enhance the integrity and the security of the registries system underpinning the EU Emissions Trading System. Pursuant to the press release, if the regulation is endorsed by the Parliament and the Council, registry administrators and law enforcement authorities will be able to detect fraud more easily.

 

Some important aspects of the Commission’s legislative proposal as regards the Registry Regulation changes were analysed in The draft of the Commission Regulation establishing a Union Registry – the finality of transfers rules and other details for the new security measures revealed”.

 

It is however worth highlighting (after the said communication) that competent authorities will now be able to respond quickly in case of fraud, for instance by “freezing allowances and accounts in case of a suspicious transaction”.

 

The envisioned possibility for freezing allowances and accounts is worth of specific underlining. The current lack of legal basis for such an action was the one of the main reasons for the freezing the entire registry systems in the recent spate of cyberattacks. Even if only a contained number of allowances in only one national registry system was attacked, it was necessary to freeze entire registry system (see, nearby, Article 69 of the Commission Regulation No 2216/2004 of 21 December 2004 for a standardised and secured system of registries pursuant to Directive 2003/87/EC of the European Parliament and of the Council and Decision No 280/2004/EC of the European Parliament and of the Council).

Article 69

Suspension of access

The Central Administrator may suspend access to the Community independent transaction log and a registry administrator may suspend access to his registry if there is a breach of security of the Community independent transaction log or of a registry which threatens the integrity of the Community independent transaction log or of a registry or the integrity of the registries system and the back-up facilities under Article 68 are similarly affected.

 

This serious shortcoming will no longer be in place. The possibility mentioned in the Communication “for freezing allowances and accounts” is specified in more detail in Articles 70, 71 and 73 of the Commission’s proposal for the Registry Regulation amendment (hereinafter referred to as the “Proposal”) and amounts to three differing legal measures with distinct premises, effects and entities authorised to use them i.e.:

- suspension of all access by authorised representatives,

- suspension of access to allowances or Kyoto units,

- suspension of processes.

 

Suspension of all access by authorised representatives


Legal basis:


the legal basis for such a measure is Article 70 of the Proposal.

Premises:


the suspension of all access by authorised representatives might take place where there exists a reasonable suspicion that there is a breach of security of the Union Registry or the EUTL or that there exists a serious security risk to the Union Registry or the EUTL that threatens the integrity of the system, which includes the back-up facilities.

 

The entity entitled to take the measure and a procedure:


the entity authorised to apply the said instrument is the European Commission, the Commission may instruct the Central Administrator of The Union Registry to suspend access to the Union Registry or the EUTL or any part thereof. The notice of such a suspension must be clearly displayed on the public area of the EUTL's web site and should include the likely duration of the suspension.

 



Suspension of access to allowances or Kyoto units


Legal basis:


the legal basis for such a measure is Article 71 of the Proposal.


Premises:


The suspension of access to allowances or Kyoto units might take place where there exists a  suspicion that the allowances or Kyoto units have been the subject of a transaction constituting fraud, money laundering, terrorist financing or other serious crime.

 

The entity entitled to take the measure and a procedure:

 

1. An administrator or an administrator acting on request of the competent authority

may suspend access to allowances or Kyoto units in the part of the Union Registry it

administers.

 

2. The Commission may instruct the Central Administrator to suspend access to allowances or Kyoto units in the Union Registry or the EUTL.

 

In both above-mentioned cases the suspension might take place for a maximum period of two weeks. It is worth noting that the said measure may be applied in the entire Union Registry as well as in the part thereof.

 

Delegation to the Member States

 

A separate significant possibility is also provided for in Article 71(4) of the proposal which states that a national law enforcement authority of the Member State of the national administrator may also instruct the administrator to implement a suspension on the basis of and in accordance with national law. This provision establishes a legal basis for intervention of the national law with regard to the suspension of access to allowances or Kyoto units in the Union Registry. It might, however, be contentious whether the delegation at issue relates to the entire Union Registry or the part thereof administered by the national administrator. Another potential ambiguous issue is the application of the said provision to the EUTL.

Notwithstanding these uncertainties the introduction of the delegation laid down in Article 71(4) means that the responsibility for securing the safety of the Union Registry will be shared between the Commission (as an author of the Registry Regulation) and the Member States which are granted a discretion as regards addressing additional premises and procedures for suspension of access to allowances and Kyoto units.

 


 

Suspension of processes


Legal basis:


the legal basis for such a measure is Article 73 of the Proposal.


Premises and the entity entitled to take the measure and a procedure:


According to the Proposal the Commission may instruct the Central Administrator to temporarily suspend the acceptance by the EUTL of some or all processes originating from the Union Registry if it is not operated and maintained in accordance with the provisions of the Registry Regulation. It shall immediately notify national administrators concerned.

 

The Central Administrator may also temporarily suspend the initiation or acceptance of some or all processes in the Union Registry for the purposes of carrying out scheduled or emergency maintenance on the Union Registry.

 

A national administrator may request the Commission to reinstate processes suspended if it considers that the outstanding issues that caused the suspension have been resolved. If this is the case, the Commission shall instruct the Central Administrator to reinstate those processes. It shall otherwise reject the request within a reasonable period and inform the national administrator without delay, stating its reasons and setting out criteria to be fulfilled for a subsequent request to be accepted.

 

Short summary


The absence of all these provisions was the significant shortcoming in the registry system regulations. The new measures offer administrators and authorities much more flexibility in reacting to various possible threats to emissions registry system, thus the integrity of the EUETS will be better safeguarded.