Is the heat distributor legally entitled to deliver data on the heat consumer’s carbon leakage status to the heat producer assuming that the agreement between the heat distributor and heat consumer does not regulate the matter?
The preparations for allocation for industrial installations are underway, the decision determining the rules governing the process has been adopted by the European Commission, even the set of guidelines has been elaborated by the consultants (guidelines on closures excepting). Seems everything OK and can we await the 1 January 2013 without anxiety? Not exactly.
General rules for allocation as regards heat networks
In the Guidance Document n°6 on the harmonized free allocation methodology for the EU-ETS post 2012, Cross-Boundary Heat Flows, Final version issued on 14 April 2011, can be found a small trap for heat producers as regards the situations described in points 3.2 and 3.5 relating to the distribution of the heat, in particular involving multiple heat exporters and importers.
The standard rules for cross-boundary heat flows under the European Commission’s Decision of 27 April 2011 and the Guidance Documents in general are as follows:
1) allocation is given to ETS heat consumers unless heat is imported from non-ETS heat producers,
2) allocation is given to ETS heat producers if consumers are not covered by the ETS.
In the specific case of the distribution of the heat through the heat network the distributor is commonly neither producing nor consuming the heat and there is no direct contractual relation between the heat producer and the heat consumers concerning the delivery of heat.
For the purpose of allocation, the heat distributor is regarded as a non-ETS entity. Consequently, free allowances are given to the heat producer for the heat exported to the heat distributor. Installations and entities receiving heat from the heat distributor do not receive free allocation. This (simplified) situation is described in section 3.2 of the Guidance Document n°6.
The section 3.5 considers the case in which multiple heat producers provide heat to a heat network that delivers heat to multiple consumers. Both producers and consumers consist of ETS installations and non-ETS entities. Given the rule for third party access (TPA) existing in some Member States also in relation to heat networks, the said situation may occur quite often.
Finally, it can be inferred from the Guidance Documents that if we have an ETS producer of the heat supplying the heat network managed by the heat distributor, allocation of the free allowances is given to the heat producer – regardless of the structure (ETS or non-ETS) of heat consuming entities connected to the heat network. But what about the carbon leakage exposure factor?