Contrary to other sectors of economy, where allocations of CO2 allowances amount from 80% to 30 % (2020), allocations for sectors deemed to be exposed to significant risk of carbon leakage will be 100 %. But in many concepts of energy-climate package words have different – not popular - meaning.
Also in the said case 100% does not mean full coverage of needs of installations.
It’s obviously the matter of the risk of relocation of carbon-intensive sectors of economy – relocation to countries, where carbon related constraints are not so stringent like in Member States of the European Union.
The Commission is scheduled to determine the list of exposed sectors or sub-sectors by 31 December 2009. Legal basis for the said determination is Article 10a of the Directive 2003/87/EC (as amended by the Directive 2009/29/EC).
The problem with a cipher 100% lies of course in Community-wide ex-ante benchmarks, that are to be applied – as the Directive states:
"so as to ensure that allocation takes place in a manner that provides incentives for reductions in greenhouse gas emissions and energy efficient techniques, by taking account of the most efficient techniques, substitutes, alternative production processes, high efficiency cogeneration, efficient energy recovery of waste gases, use of biomass and capture and storage of CO2, where such facilities are available, and shall not provide incentives to increase emissions."
In addition, the Directive envisages, that for: “each sector and subsector, in principle, the benchmark shall be calculated for products rather than for inputs, in order to maximise greenhouse gas emissions reductions and energy efficiency savings throughout each production process of the sector or the subsector concerned.”
The most importantly is, that in defining the principles for setting ex-ante benchmarks in individual sectors or subsectors: “the starting point shall be the average performance of the 10 % most efficient installations in a sector or subsector in the Community in the years 2007-
So - as the Commission wrote in communication - only the most efficient installations have a chance of receiving all of their allowances for free. It does thus not mean that the exposed sectors are exempted from the ETS.
Currently, the draft of the decision under consideration here is available on the web pages of the Commission and will be presented to the European Parliament for a three months scrutiny.