Air Pollution Control Equipment Services, Emissions

Finland publishes national allocation plan

3 March 2004 – The Finnish Ministry of Trade and Industry its proposal for a national plan for allocating emission allowances, which complies with the EC Emissions Trading Directive.

The proposal has been preliminarily handled by the Government’s Ministerial Working Group on Climate and Energy Policy.

According to the proposal, a total of 137.6 carbon dioxide t of emission allowances will be granted for the period 2005 – 2007, which is four per cent less than the predicted need based on an industry-specific survey. The percentage also includes an emission quota, which is to be distributed to the plants on which there do not yet exist any construction decisions and which will be completed by the year 2007. The aggregate amount of emission allowances for the years 2005 – 2007 has been fixed so as to be consistent with Finland’s 2008 – 2012 emission target. The emission allowances will be allocated free of charge – there will be no auctioning.

The national allocation plan concerns around 150 companies and 500 energy production plants or industrial installations. The number also includes those district heating plants of under 20 MW that have been incorporated into the allocation plan on the basis of the Directive’s Article 24. These about 500 plants will constitute the emissions trading sector referred to in the Emissions Trading Directive.

For allocating plant-specific emission allowances, the plants and installations are divided into subgroups according to their production or nature of operations. Specific criteria for allocating emission allowances are defined for each subgroup. These allocation criteria are presented in Annex II to the plan.

The allocation of the emission allowances is based on the socalled grandfathering method in which the emission allowances of plants are calculated with certain calculation rules from their effected emissions mainly originating from the period 1998 – 2002. Plants completed in 1998 or thereafter have rules of their own.

The draft does not yet contain proposals for plantspecific emission allowances. They will be presented in the final Finnish proposal for an allocation plan after Parliament will have ratified the Government proposal for an Emissions Trading Act. The bill is to be put before Parliament at the beginning of April.

Some optional possibilities allowed by the Directive, such as taking into account the early actions carried out to reduce emissions, will not be used as such. They will be partly considered in the calculation formulas used. The allocation rules for the second emissions trading period 2008 – 2012 are not presented yet.

The proposal will be promptly circulated for comments. The aim is to notify the Commission of the allocation plan to be possibly amended based on the comments towards the end of March. The final decisions on the emission allowances will be made before the end of September. The draft of the Emissions Trading Act will also be sent for comments within the next few days.