The deadline for operators of installations covered by the European Union Emissions Trading Scheme (EU ETS) to submit verified reports on their carbon dioxide emissions has expired.
Some commentators are concerned that a number of operators may not have submitted their reports to national regulators. Legal and financial penalties could be imposed as a result.
Operators now have until 30 April 2006 to surrender an amount of emission allowances or their equivalents (EUAs) equal to the carbon dioxide emissions for 2005 from those of their installations covered by the EU ETS. This could be a further problem for those operators who have failed to submit verified reports, as they may not be able to calculate the correct amount of EUAs to be surrendered.
For phase I (2005-2007) of the EU ETS, failure by an operator to surrender sufficient EUAs will result in a €40 penalty per missing EUA. The operator’s future allocation of EUAs will also be reduced by the amount of the shortfall in EUAs submitted.
In a further development, the European Environment Agency (EEA) has published a report, ‘Application of the Emissions Trading Directive by EU Member States’. The EEA notes that EU member states have a number of concerns regarding the functioning of the EU ETS:
- There are inconsistencies between member states that could distort competition within the single market: allocation of emission allowances, verification procedures and fines imposed for severe infringements of the conditions (maximum fines range from €15 million in Ireland to €3,200 in Estonia).
- It is unclear to what extent ‘combustion installations’ are covered by the EU ETS.
- The overall allocation procedure is overly complex; simpler procedures are called for.
The European Commission can be expected to take these latest developments into account in its current review of the EU ETS, which it will submit to the European Parliament by 30 June 2006.
