Further information on the start of phase 4 of the EU ETS in 2021: emission allowances to be issued for aircraft operators and the Market Stability Reserve

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On 17 November 2020 the Commission informed the market of the adoption of the Commission Decision setting up the Union-wide amount of normal allowances to be issued in 2021 (the ‘cap’) and the start of auctioning for phase 4 of the EU ETS.

The Commission Notice enhances the above-mentioned Commission Decision, by way of offering information:

  • on the amount of allowances to be issued in recognize of aircraft operators in 2021 in the absence of an settlement with the UK, and
  • on the quantities to be deducted from the public sale volumes of the Member States to be positioned in the Market Stability Reserve (MSR) from January to August 2021.

The Notice additionally reiterates the facets taken into consideration in the calculation of the cap for 2021 for normal allowances, in order that the information on the overall normal and aviation allowances to be issued in 2021 is to be had in one file.

Regarding aviation, the Notice explains how the calculation of the EU ETS allowances to be issued in recognize of aircraft operators in 2021 begins from a bottom-up calculation of the unfastened allocation to aviation. The quantity of EU ETS aviation allowances to be issued in 2021 is anticipated to be roughly 24.five million (some 20.7 million aviation allowances to be issued for unfastened and some 3.eight million aviation allowances to be auctioned) in the absence of an settlement with the UK, as defined in the Notice.

In addition, the Notice clarifies the penalties for the MSR of the utility of the ETS Directive to and in the United Kingdom on the foundation the Protocol on Ireland/Northern Ireland from 1 January 2021. As defined in the Notice, the overall quantity of allowances that may be positioned in the Market Stability Reserve from 1 September 2020 to 31 August 2021 is 307,663,518 (as a substitute of 332,519,080).

The relief is due to the massive lower in volumes to be auctioned by way of the UK from 2021, as those are based totally on the new public sale proportion for the UK, which is restricted to the degree of emissions of greenhouse gases from electrical energy era in Northern Ireland. To recall, from 2021, the most effective UK installations to be lined by way of the EU ETS are those who generate electrical energy in territory of Northern Ireland, so the Union-wide quantity of allowances to be issued from 2021 (the ‘cap’) was once decreased in share to the emissions from the UK which might be now not accounted for. The calculation of the overall quantity of allowances in stream and the corresponding deduction of public sale volumes to be positioned in the MSR, will be completed as same old for the subsequent MSR-period, ranging from 1 September 2021.

The quantities to be positioned in the MSR will be taken into consideration in the public sale calendars for 2021, which can be anticipated to be revealed by way of the public sale platform nonetheless in December 2020, for the start of auctions in overdue January / early February 2021.

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