Greenhouse Gases Emissions Trading Scheme (ETS) ETS Directive, Regulations and National Allocation Plan (NAP)

1. Greenhouse Gases Emissions Trading Scheme (ETS)ETS Directive, Regulations and National Allocation Plan (NAP) Graeme Cobb Department of Trade and Industry Licensing and Consents Unit - Environmental Policy Unit

2. The EU Emissions Trading Scheme • The EU Emissions Trading Scheme Directive – 2003/87/EC- came into force on 25 October 2003 • Implementation – both Regulations and physical – being carried out in parallel

3. The EU Emissions Trading Scheme • First consultation on draft NAP December/January • NAP then to be submitted to the Commission by 31 March 2004 • Second consultation on NAP Autumn (?) 2004 • Scheme starts with Phase 1 on 1 January 2005

4. The ETS Regulations and EU Directive • DEFRA Regulations to come into force 31 December 2003 set up permitting and appoint Competent Authorities (CAs) • LCU CA for offshore • Further Regulations to implement rest of Directive later

5. The National Allocation Plan (NAP) • NAP sets out caps for all UK installations in the Scheme • Offshore installation caps based on CO2 from GTs, diesels and fired heaters as in IPPC • Caps in draft NAP probably to be based on two-stage allocation • Caps based on either projections pro-rata-ed using CO2 historic data or historic • Caps likely to be third/third/third • Caps not statutory

6. The EU Emissions Trading Scheme • Flaring CO2 not in Phase 1. Will examine with UKOOA option of getting it into Phase 2 using Article 24 procedure

7. The EU Emissions Trading Scheme • Two forms of “New Entrants” in effect • New installations at +20MWth which will need permits and a cap • New tie-backs which will affect the caps of hosts • Hosts’ caps also affected by other things • Proposed offshore set-aside with free allocations to cover this

8. The EU Emissions Trading Scheme • The offshore set-aside likely to come from offshore bubble • Individual caps from it • But use 2% or 5% as set-aside

9. The EU Emissions Trading Scheme • Operators of all +20 MW(th) platforms / floaters will need permits by 31 March 2004 • Permits in effect only registration – not concerned with caps • Permits will lay down conditions – mainly about monitoring and reporting

10. The EU Emissions Trading Scheme • Monitoring and Reporting Guidelines adopted on 24 November • Annex 2 covers offshore which operators will need to compile reports • Annex 2 uses Tiers • Reports to be verified and submitted to LCU

11. The EU Emissions Trading Scheme • Likely closure rules mean installations will be allowed to keep caps until end of Phase but not into next Phase

12. DEFRA will establish the Registry LCU will maintain the Registry on a day-to-day basis The ETS Registry