REPORT on the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments

13.1.2017 - (COM(2015)0337 – C8‑0190/2015 – 2015/0148(COD)) - ***I

Committee on the Environment, Public Health and Food Safety
Rapporteur: Ian Duncan
Rapporteur for the opinion (*):
Fredrick Federley, Committee on Industry Research and Energy
(*) Associated committee – Rule 54 of the Rules of Procedure

Procedure : 2015/0148(COD)

Document stages in plenary

Document selected :

A8-0003/2017

Texts tabled :

A8-0003/2017

Debates :

PV 13/02/2017 - 13
CRE 13/02/2017 - 13
PV 05/02/2018 - 22
CRE 05/02/2018 - 22

Votes :

PV 15/02/2017 - 7.7
CRE 15/02/2017 - 7.7
Explanations of votes
PV 06/02/2018 - 5.5
Explanations of votes

Texts adopted :

P8_TA(2017)0035
P8_TA(2018)0024

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
EXPLANATORY STATEMENT
MINORITY OPINION
OPINION of the Committee on Industry, Research and Energy(*)
OPINION of the Committee on Development
PROCEDURE – COMMITTEE RESPONSIBLE

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments

(COM(2015)0337 – C8‑0190/2015 – 2015/0148(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2015)0337),

– having regard to Article 294(2) and Article 192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8‑0190/2015),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the opinion of the European Economic and Social Committee of 14 December 2015[1],

– having regard to the opinion of the Committee of the Regions of 7 April 2016[2],

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the report of the Committee on the Environment, Public Health and Food Safety and the opinions of the Committee on Industry, Research and Energy and of the Committee on Development (A8-0003/2017),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Amendment 1

Proposal for a directive

Recital 1

Text proposed by the Commission

Amendment

(1) Directive 2003/87/EC of the European Parliament and of the Council¹⁵ established a system for greenhouse gas emission allowance trading within the Union in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.

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¹⁵ Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).

Justification

It should be clarified that the objective of the Directive is to achieve a certain level of emissions reductions in a way that does not lead to carbon and investment leakage. This is essential both from an environmental viewpoint (avoid relocation of emissions) and an economic one (relocation of activities and jobs). Therefore, it should be added to the first article so that it is fully acknowledged as a key objective.

Amendment 2

Proposal for a directive

Recital 2

Text proposed by the Commission

Amendment

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¹⁶http://www4.unfccc.int/submissions/indc/Submission%20Pages/submissions.aspx

Amendment 3

Proposal for a directive

Recital 2 a (new)

Text proposed by the Commission

Amendment

(2a) In order to honour the agreed commitment that all sectors of the economy contribute to the fulfilment of the target of reducing the overall greenhouse gas emissions of the Union by at least 40% below 1990 levels by 2030, it is important that the EU ETS, despite being the Union's primary tool to achieve its long-term climate and energy targets, is complemented by equivalent additional actions taken in other legal acts and instruments dealing with greenhouse gas emissions from sectors not covered by the EU ETS.

Justification

EU ETS interaction with additional legal measures, underscores the importance of ensuring ambition both in the ETS as well as in non-ETS sectors, not least in view of the upcoming revision of ESD and LULUCF.

Amendment 4

Proposal for a directive

Recital 2 b (new)

Text proposed by the Commission

Amendment

(2b) Under the Agreement adopted in Paris at the 21^st Conference of the Parties of the UNFCCC of 12 December 2015 (the ‘Paris Agreement’), countries are required to put policies in place to achieve more than 180 Intended Nationally Determined Contributions (INDCs) that cover some 98% of global greenhouse gas emissions. The Paris Agreement is aimed at limiting the increase in the global average temperature to well below 2° C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1,5° C above pre-industrial levels. Many of those policies are expected to involve carbon pricing or similar measures, and therefore a revision clause should be laid down in this Directive to allow the Commission, where appropriate, to propose stricter emissions reductions after the first stocktaking exercise under the Paris Agreement in 2023, an adjustment to the provisions for transitional carbon leakage to reflect the development of carbon pricing mechanisms outside the Union, and additional policy measures and tools to enhance the greenhouse gas reduction commitments of the Union and its Member States. The revision clause should also ensure that a communication is adopted within six months of the facilitative dialogue under the UNFCCC in 2018 assessing the consistency of the Union’s climate change legislation with the Paris Agreement goals.

Amendment 5

Proposal for a directive

Recital 2 c (new)

Text proposed by the Commission

Amendment

(2c) In accordance with the Paris Agreement and in line with the commitment of the co-legislators expressed in Directive 2009/29/EC of the European Parliament and of the Council^1a and Decision No 406/2009/EC of the European Parliament and of the Council^1b , all sectors of the economy are required to contribute to the reduction of carbon dioxide (CO2)emissions. To this end, efforts to limit international maritime emissions through the International Maritime Organisation (IMO) are under way and should be encouraged, with the aim of establishing a clear IMO action plan for climate policy measures to reduce CO2 emissions from shipping at a global level. The adoption of clear targets to reduce international maritime emissions through the IMO has become a matter of great urgency and a prerequisite for the Union to refrain from acting further on the inclusion of the maritime sector within the EU ETS. If, however, any such agreement is not reached by the end of 2021, the sector should be included under the EU ETS and a fund should be established for ship operators' contributions and collective compliance relating to CO2 emissions already covered by the Union system for monitoring, reporting and verification (MRV system) laid down in Regulation (EU) 2015/757 of the European Parliament and of the Council^1c (emissions released in Union ports and during voyages to and from such ports). A share of revenues from the auction of allowances to the maritime sector should be used to improve energy efficiency and support investments in innovative technologies for the reduction of CO2 emissions in the maritime sector, including short sea shipping and ports.

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^1a Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community (OJ L 140, 5.6.2009, p. 63).

^1b Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community's greenhouse gas emission reduction commitments up to 2020 (OJ L 140, 5.6.2009, p. 136).

^1c Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and amending Directive 2009/16/EC (OJ L 123, 19.5.2015, p. 55).

Amendment 6

Proposal for a directive

Recital 3

Text proposed by the Commission

Amendment

(3) The European Council confirmed that a well-functioning, reformed EU ETS with an instrument to stabilise the market will be the main European instrument to achieve this target, with an annual reduction factor of 2.2% from 2021 onwards, free allocation not expiring but existing measures continuing after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in other major economies, without reducing the share of allowances to be auctioned. The auction share should be expressed as a percentage figure in the legislation, to enhance planning certainty as regards investment decisions, to increase transparency and to render the overall system simpler and more easily understandable.

(3) A well-functioning, reformed EU ETS with an enhanced instrument to stabilise the market and the removal of a significant number of surplus allowances from the market will be the main European instruments to achieve this target, with an annual reduction factor of 2,4% from 2021 onwards, free allocation not expiring but measures continuing after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in other major economies. The auction share should be expressed as a percentage figure in the legislation, which should decline on application of a cross-sectoral correction factor to enhance planning certainty as regards investment decisions, to increase transparency, to render the overall system simpler and more easily understandable, and to protect those sectors most at risk of carbon leakage from a cross-sectoral correction factor. Those provisions should be kept under review in line with the Paris Agreement and adjusted accordingly if necessary to fulfil the Union’s climate obligations pursuant to that agreement.

Amendment 7

Proposal for a directive

Recital 3 a (new)

Text proposed by the Commission

Amendment

(3a) Least Developed Countries (LDCs) are particularly vulnerable to the effects of climate change and are responsible only for very low levels of greenhouse gas emissions. Therefore, particular priority should be given to addressing the needs of LDCs through the use of EU ETS allowances to finance climate action, in particular adaptation to the impacts of climate change through the UNFCCC Green Climate Fund.

Amendment 8

Proposal for a directive

Recital 4

Text proposed by the Commission

Amendment

(4) It is a key Union priority to establish a resilient Energy Union to provide secure, sustainable, competitive and affordable energy to its citizens and industries. Achieving this requires continuation of ambitious climate action with the EU ETS as the cornerstone of Union’s climate policy, and progress on the other aspects of Energy Union¹⁷. The interaction of the EU ETS with other Union and national climate and energy policies that have an impact on the demand for EU ETS allowances needs to be taken into account. Implementing the ambition decided in the 2030 framework and adequately addressing the progress on other aspects of the Energy Union contributes to delivering a meaningful carbon price and to continuing to stimulate cost-efficient greenhouse gas emission reductions.

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¹⁷ COM(2015)80, establishing a Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy

Amendment 9

Proposal for a directive

Recital 4 a (new)

Text proposed by the Commission

Amendment

(4a) Increased ambition in energy efficiency compared to the 27% target adopted by the Council should lead to more free allowances for industry at risk of carbon leakage.

Justification

President Juncker supported a target of energy efficiency of at least 30%. The majority of the EP would even like to go further. This will of course lead to more emission reductions in the effort sharing. Therefore, the cap for the effort sharing should be reduced and the space should be used for protection of industry at risk of carbon leakage.

Amendment 10

Proposal for a directive

Recital 5

Text proposed by the Commission

Amendment

(5) Article 191(2) of the Treaty on the Functioning of the European Union requires that Union policy is based on the principle that the polluter should pay and, on this basis, Directive 2003/87/EC provides for a transition to full auctioning over time. Avoiding carbon leakage is a justification to postpone full transition, and targeted free allocation of allowances to industry is justified in order to address genuine risks of increases in greenhouse gas emissions in third countries where industry is not subject to comparable carbon constraints as long as comparable climate policy measures are not undertaken by other major economies.

(5) Article 191(2) of the Treaty on the Functioning of the European Union requires that Union policy is based on the principle that the polluter should pay and, on this basis, Directive 2003/87/EC provides for a transition to full auctioning over time. Avoiding carbon leakage is a justification to temporarily postpone full auctioning, and targeted free allocation of allowances to industry is a justified exception to the principle that the polluter should pay, provided that no over-allocation occurs, in order to address genuine risks of increases in greenhouse gas emissions in third countries where industry is not subject to comparable carbon constraints as long as comparable climate policy measures are not undertaken by other major economies. To that end, allocation of free allowances should be more dynamic in accordance with thresholds provided for in this Directive.

Amendment 11

Proposal for a directive

Recital 6

Text proposed by the Commission

Amendment

(6) The auctioning of allowances remains the general rule, with free allocation as the exception. Consequently, and as confirmed by the European Council, the share of allowances to be auctioned, which was 57% over the period 2013-2020, should not be reduced. The Commission's Impact Assessment¹⁸ provides details on the auction share and specifies that this 57% share is made up of allowances auctioned on behalf of Member States, including allowances set aside for new entrants but not allocated, allowances for modernising electricity generation in some Member States and allowances which are to be auctioned at a later point in time because of their placement in the Market Stability Reserve established by Decision (EU) 2015/… of the European Parliament and of the Council¹⁹ .

(6) The auctioning of allowances remains the general rule, with free allocation as the exception. Consequently, the share of allowances to be auctioned, which should be 57% over the period 2021-2030, should be reduced by applying the cross-sectoral correction factor in order to protect those sectors most exposed to the risk of carbon leakage. The Commission's Impact Assessment provides details on the auction share and specifies that this 57% auction share is made up of allowances auctioned on behalf of Member States, including allowances set aside to establish a Modernisation Fund aimed at improving energy efficiency and modernising the energy systems of certain Member States, allowances set aside to compensate sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs incurred as a result of greenhouse gas emission costs being passed on in electricity prices, allowances set aside to establish a Just Transition Fund to support regions with a high share of workers in carbon-dependent sectors and a GDP per capita well below the Union average, and allowances which are to be auctioned at a later point in time because of their placement in the Market Stability Reserve (MSR) established by Decision (EU) 2015/1814 of the European Parliament and of the Council¹⁹. .

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¹⁸ SEC(2015)XX

¹⁹ Decision (EU) 2015/… of the European Parliament and of the Council of … concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L […], […], p. […]).

¹⁹ Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L 264, 9.10.2015, p. 1).

Amendment 12

Proposal for a directive

Recital 7

Text proposed by the Commission

Amendment

(7) To preserve the environmental benefit of emission reductions in the Union while actions by other countries do not provide comparable incentives to industry to reduce emissions, free allocation should continue to installations in sectors and sub-sectors at genuine risk of carbon leakage. Experience gathered during the operation of the EU ETS confirmed that sectors and sub-sectors are at risk of carbon leakage to varying degrees, and that free allocation has prevented carbon leakage. While some sectors and sub-sectors can be deemed at a higher risk of carbon leakage, others are able to pass on a considerable share of the costs of allowances to cover their emissions in product prices without losing market share and only bear the remaining part of the costs so that they are at a low risk of carbon leakage. The Commission should determine and differentiate the relevant sectors based on their trade intensity and their emissions intensity to better identify sectors at a genuine risk of carbon leakage. Where, based on these criteria, a threshold determined by taking into account the respective possibility for sectors and sub-sectors concerned to pass on costs in product prices is exceeded, the sector or sub-sector should be deemed at risk of carbon leakage. Others should be considered at a low risk or at no risk of carbon leakage. Taking into account the possibilities for sectors and sub-sectors outside of electricity generation to pass on costs in product prices should also reduce windfall profits.

(7) To preserve the environmental benefit of emission reductions in the Union while actions by other countries do not provide comparable incentives to industry to reduce emissions, free allocation should temporarily continue to installations in sectors and sub-sectors at genuine risk of carbon leakage. Experience gathered during the operation of the EU ETS confirmed that sectors and sub-sectors are at risk of carbon leakage to varying degrees, and that free allocation has prevented carbon leakage. While some sectors and sub-sectors can be deemed at a higher risk of carbon leakage, others are able to pass on a considerable share of the costs of allowances to cover their emissions in product prices without losing market share and only bear the remaining part of the costs so that they are at a low risk of carbon leakage. The Commission should determine and differentiate the relevant sectors based on their trade intensity and their emissions intensity to better identify sectors at a genuine risk of carbon leakage. Where, based on these criteria, a threshold determined by taking into account the respective possibility for sectors and sub-sectors concerned to pass on costs in product prices is exceeded, the sector or sub-sector should be deemed at risk of carbon leakage. Others should be considered at a low risk or at no risk of carbon leakage. Taking into account the possibilities for sectors and sub-sectors outside of electricity generation to pass on costs in product prices should also reduce windfall profits. The risk of carbon leakage in sectors and subsectors for which free allocation is calculated on the basis of the benchmark values for aromatics, hydrogen and syngas should also be assessed considering that these products are produced both in chemical plants and refineries. In order to reduce the pressure on the availability of free allowances, an import inclusion scheme, fully compliant with World Trade Organisation (WTO) rules should be established. The scheme should focus on sectors with a low trade intensity and high emissions intensity such as cement and clinker.

Amendment 13

Proposal for a directive

Recital 8

Text proposed by the Commission

Amendment

(8) In order to reflect technological progress in the sectors concerned and adjust them to the relevant period of allocation, provision should be made for the values of the benchmarks for free allocations to installations, determined on the basis of data from the years 2007-8, to be updated in line with observed average improvement. For reasons of predictability, this should be done through applying a factor that represents the best assessment of progress across sectors, which should then take into account robust, objective and verified data from installations so that sectors whose rate of improvement differs considerably from this factor have a benchmark value closer to their actual rate of improvement. Where the data shows a difference from factor reduction of more than 0,5% of the 2007-8 value higher or lower per year over the relevant period, the related benchmark value shall be adjusted by that percentage. To ensure a level playing field for the production of aromatics, hydrogen and syngas in refineries and chemical plants, the benchmark values for aromatics, hydrogen and syngas should continue to be aligned to the refineries benchmarks.

(8) In order to reflect technological progress in the sectors concerned and adjust them to the relevant period of allocation, provisions should be made for the values of the benchmarks for free allocations to installations, determined on the basis of data from the years 2007 and 2008, to be updated in line with observed average improvement. For reasons of predictability, this should be done through applying a factor that represents the actual assessment of progress by the 10% most efficient installations in sectors, which should then take into account robust, objective and verified data from installations so that sectors whose rate of improvement differs considerably from this factor have a benchmark value closer to their actual rate of improvement. Where the data shows a difference from factor reduction of more than 1,75% of the value corresponding to the years of 2007 and 2008 (either higher or lower) per year over the relevant period, the related benchmark value should be adjusted by that percentage. Where, however, the data shows an improvement rate of either 0,25 or less over the relevant period, the related benchmark value should be adjusted by that percentage. To ensure a level playing field for the production of aromatics, hydrogen and syngas in refineries and chemical plants, the benchmark values for aromatics, hydrogen and syngas should continue to be aligned to the refineries benchmarks.

Amendment 14

Proposal for a directive

Recital 9

Text proposed by the Commission

Amendment

(9) Member States should partially compensate, in accordance with state aid rules, certain installations in sectors or sub-sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices. The Protocol and accompanying decisions adopted by the Conference of the Parties in Paris need to provide for the dynamic mobilisation of climate finance, technology transfer and capacity building for eligible Parties, particularly those with least capabilities. Public sector climate finance will continue to play an important role in mobilising resources after 2020. Therefore, auction revenues should also be used for climate financing actions in vulnerable third countries, including adaptation to the impacts of climate. The amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed Intended Nationally Determined Contributions (INDCs), subsequent investment plans and national adaptation planning processes. Member States should also use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy.

(9) In pursuing the goal of a level playing field, Member States should partially compensate, through a centralised system at Union level, certain installations in sectors or sub-sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices. Public sector climate finance will continue to play an important role in mobilising resources after 2020. Therefore, auction revenues should also be used for climate financing actions in vulnerable third countries, including adaptation to the impacts of climate change. The amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed INDCs, subsequent investment plans and national adaptation planning processes. Member States should also address the social aspects of decarbonising their economies and use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy. It should be possible for Member States to add to the compensation received through the centralised system at Union level. Such financial measures should not exceed the levels referred to in the relevant state aid guidelines.

Amendment 15

Proposal for a directive

Recital 10

Text proposed by the Commission

Amendment

(10) The main long-term incentive from this Directive for the capture and storage of CO2 (CCS), new renewable energy technologies and breakthrough innovation in low-carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for CO2 emissions which are permanently stored or avoided. In addition, to supplement the resources already being used to accelerate demonstration of commercial CCS facilities and innovative renewable energy technologies, EU ETS allowances should be used to provide guaranteed rewards for deployment of CCS facilities, new renewable energy technologies and industrial innovation in low-carbon technologies and processes in the Union for CO2 stored or avoided on a sufficient scale, provided an agreement on knowledge sharing is in place. The majority of this support should be dependent on verified avoidance of greenhouse gas emissions, while some support may be given when pre-determined milestones are reached taking into account the technology deployed. The maximum percentage of project costs to be supported may vary by category of project.

(10) The main long-term incentive from this Directive for carbon capture and storage (CCS) and carbon capture and use (CCU), new renewable energy technologies and breakthrough innovation in low-carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for CO2 emissions which are permanently stored or avoided. In addition, to supplement the resources already being used to accelerate demonstration of commercial CCS and CCU facilities and innovative renewable energy technologies, EU ETS allowances should be used to provide guaranteed rewards for deployment of CCS and CCU facilities, new renewable energy technologies and industrial innovation in low-carbon technologies and processes in the Union for CO2 stored or avoided on a sufficient scale, provided an agreement on knowledge sharing is in place. The majority of this support should be dependent on verified avoidance of greenhouse gas emissions, while some support may be given when pre-determined milestones are reached taking into account the technology deployed. The maximum percentage of project costs to be supported may vary by category of project.

Amendment 16

Proposal for a directive

Recital 11

Text proposed by the Commission

Amendment

(11) A Modernisation Fund should be established from 2% of the total EU ETS allowances, and auctioned in accordance with the rules and modalities for auctions taking place on the Common Auction Platform set out in Regulation 1031/2010. Member States who in 2013 had a GDP per capita at market exchange rates of below 60% below the Union average should be eligible for funding from the Modernisation Fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector while avoiding distortions of the internal energy market. The rules for governing the Modernisation Fund should provide a coherent, comprehensive and transparent framework to ensure the most efficient implementation possible, taking into account the need for easy access by all participants. The function of the governance structure should be commensurate with the purpose of ensuring the appropriate use of the funds. That governance structure should be composed of an investment board and a management committee and due account should be taken of the expertise of the EIB in the decision-making process unless support is provided to small projects through loans from a national promotional banks or through grants via a national programme sharing the objectives of the Modernisation Fund. Investments financed from the fund should be proposed by the Member States. To ensure that the investment needs in low income Member States are adequately addressed, the distribution of funds will take into account in equal shares verified emissions and GDP criteria. The financial assistance from the Modernisation Fund could be provided through different forms.

(11) A Modernisation Fund should be established from 2% of the total EU ETS allowances, and auctioned in accordance with the rules and modalities for auctions taking place on the Common Auction Platform set out in Regulation (EU) No 1031/2010. Member States which in 2013 had a GDP per capita at market exchange rates below 60% of the Union average should be eligible for funding from the Modernisation Fund. Member States which in 2014 had a GDP per capita in EUR at market prices below 60% of the Union average should be able, up to 2030, to derogate from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising and diversifying their energy sector, in line with the Union 2030 and 2050 climate and energy goals, while avoiding distortions of the internal energy market. The rules for governing the Modernisation Fund should provide a coherent, comprehensive and transparent framework to ensure the most efficient implementation possible, taking into account the need for easy access by all participants. Such rules should be transparent, balanced and commensurate with the purpose of ensuring the appropriate use of the funds. That governance structure should be composed of an investment board, an advisory board and a management committee. Due account should be taken of the expertise of the EIB in the decision-making process unless support is provided to small projects through loans from national promotional banks or through grants via a national programme sharing the objectives of the Modernisation Fund. Investments financed from the fund should be proposed by the Member States and all financing from the fund should comply with specific eligibility criteria. To ensure that the investment needs in low income Member States are adequately addressed, the distribution of funds will take into account in equal shares verified emissions and GDP criteria. The financial assistance from the Modernisation Fund could be provided through different forms.

Amendment 17

Proposal for a directive

Recital 12

Text proposed by the Commission

Amendment

(12) The European Council confirmed that the modalities, including transparency, of the optional free allocation to modernise the energy sector in certain Member States should be improved. Investments with a value of €10 million or more should be selected by the Member State concerned through a competitive bidding process on the basis of clear and transparent rules to ensure that free allocation is used to promote real investments modernising the energy sector in line with the Energy Union objectives. Investments with a value of less than €10 million should also be eligible for funding from the free allocation. The Member State concerned should select such investments based on clear and transparent criteria. The results of this selection process should be subject to public consultation. The public should be duly kept informed at the stage of the selection of investment projects as well as of their implementation.

(12) The European Council confirmed that the modalities, including transparency, of the optional free allocation to modernise and diversify the energy sector in certain Member States should be improved. Investments with a value of EUR 10 million or more should be selected by the Member State concerned through a competitive bidding process on the basis of clear and transparent rules to ensure that free allocation is used to promote real investments modernising or diversifying the energy sector in line with the Energy Union objectives, including that of promoting the Third Energy Package. Investments with a value of less than EUR 10 million should also be eligible for funding from the free allocation. The Member State concerned should select such investments based on clear and transparent criteria. The selection process should be subject to public consultation and the results of such selection process, including rejected projects, should be made publically available. The public should be duly kept informed at the stage of the selection of investment projects as well as of their implementation. Member States should have the possibility of transferring part of or all the corresponding allowances to the Modernisation Fund if they are eligible to use both instruments. The derogation should be terminated by the end of the trading period in 2030.

Amendment 18

Proposal for a directive

Recital 13

Text proposed by the Commission

Amendment

(13) EU ETS funding should be coherent with other Union funding programmes, including European Structural and Investment Funds, so as to ensure the effectiveness of public spending.

(13) EU ETS funding should be coherent with other Union funding programmes, including Horizon 2020, the European Fund for Strategic Investments, European Structural and Investment Funds, and the European Investment Bank (EIB) Climate Investment Strategy, so as to ensure the effectiveness of public spending.

Justification

The innovation fund should operate in co-ordinated manner with Horizon 2020 and EFSI. With regard to the Modernisation Fund and transitional free allocation, the climate and energy investment criteria developed by the EIB must be taken into account.

Amendment 19

Proposal for a directive

Recital 14

Text proposed by the Commission

Amendment

(14) The existing provisions which are in place for small installations to be excluded from the EU ETS allow the installations which are excluded to remain so, and it should be made possible for Member States to update their list of excluded installations and for Member States currently not making use of this option to do so at the beginning of each trading period.

(14) The existing provisions which are in place for small installations to be excluded from the EU ETS should be extended to cover installations operated by small to medium enterprises (SMEs) emitting less than 50 000 tonnes of CO2 equivalent in each of the three years preceding the year of the application for exclusion. It should be made possible for Member States to update their list of excluded installations and for Member States currently not making use of this option to do so at the beginning of each trading period and halfway through the period. It should also be possible for installations emitting less than 5 000 tonnes of CO2 equivalent in each of the three years preceding the beginning of each trading period to be excluded from the EU ETS, subject to revision every five years. Member States should ensure that alternative equivalent measures for installations that have opted out do not result in higher compliance costs. Monitoring, reporting and verification requirements should be simplified for small emitters covered by the EU ETS.

Amendment 20

Proposal for a directive

Recital 16 a (new)

Text proposed by the Commission

Amendment

(16a) In order to considerably reduce the administrative burden faced by companies, it should be left open to the Commission to consider measures such as automating the submission and verification of emissions reports, fully exploiting the potential of information and communication technologies.

Amendment 21

Proposal for a directive

Recital 17 a (new)

Text proposed by the Commission

Amendment

(17a) The delegated acts referred to in Articles 14 and 15 should simplify the rules of monitoring, reporting and verification as far as possible in order to reduce red tape for operators. The delegated act referred to in Article 19(3) should facilitate access to and the use of the registry, especially for small operators.

Amendment 22

Proposal for a directive

Article 1 – point -1 (new)

Text proposed by the Commission

Amendment

(-1) Throughout the Directive, the term 'Community scheme' is replaced by 'EU ETS' and any necessary grammatical changes are made.

Justification

Technical adaptation.

Amendment 23

Proposal for a directive

Article 1 – point -1 a (new)

Text proposed by the Commission

Amendment

(-1a) Throughout the Directive, the term 'Community-wide' is replaced by 'Union-wide'.

Justification

Technical adaptation.

Amendment 24

Proposal for a directive

Article 1 – point -1 b (new)

Text proposed by the Commission

Amendment

(-1b) Throughout the Directive, except in the cases referred to in points (-1) and (-1a) and in Article 26(2), the term 'Community' is replaced by 'Union' and any necessary grammatical changes are made.

Justification

Technical adaptation.

Amendment 25

Proposal for a directive

Article 1 – point -1 c (new)

Text proposed by the Commission

Amendment

(-1c) Throughout the Directive, the words 'regulatory procedure referred to in Article 23(2)' are replaced by the words 'examination procedure referred to in Article 30c(2)'.

Justification

Technical adaptation.

Amendment 26

Proposal for a directive

Article 1 – point -1 d (new)

Text proposed by the Commission

Amendment

(-1d) In Article 3g, in point (d) of Article 5(1), in point (c) of Article 6(2), in the second subparagraph of Article 10a(2), in Article 14(2), (3) and (4), in Article 19(1) and (4) and in Article 29a(4) the word 'regulation' is replaced by the word 'act' and any necessary grammatical changes are made.

Justification

Technical adaptation.

Amendment 27

Proposal for a directive

Article 1 – point -1 e (new)

Directive 2003/87/EC

Article 2 – paragraph 1


Present text	Amendment
	(-1e) In Article 2, paragraph 1 is amended as follows:
‘1. This Directive shall apply to emissions from the activities listed in Annex I and greenhouse gases listed in Annex II.’	‘1. This Directive shall apply to emissions from activities listed in Annex I, to greenhouse gases listed in Annex II and to importers as set out in Article 10b.’

Amendment 28

Proposal for a directive

Article 1 – point -1 f (new)

Directive 2003/87/EC

Article 3 – point h


Present text	Amendment
	(-1f) In Article 3, point (h) is replaced by the following:
'(h) ‘new entrant' means:	'(h) ‘new entrant’ means:
- any installation carrying out one or more of the activities indicated in Annex I, which has obtained a greenhouse gas emissions permit for the first time after 30 June 2011,	- any installation carrying out one or more of the activities indicated in Annex I, which has obtained a greenhouse gas emissions permit for the first time after 30 June 2018,
- any installation carrying out an activity which is included in the Community scheme pursuant to Article 24(1) or (2) for the first time, or	- any installation carrying out an activity which is included in the Union scheme pursuant to Article 24(1) or (2) for the first time, or
- any installation carrying out one or more of the activities indicated in Annex I or an activity which is included in the Community scheme pursuant to Article 24(1) or (2), which has had a significant extension after 30 June 2011, only in so far as this extension is concerned;'	- any installation carrying out one or more of the activities indicated in Annex I or an activity which is included in the Union scheme pursuant to Article 24(1) or (2), which has had a significant extension after 30 June 2018, only in so far as this extension is concerned;'

Justification

The current definition of a New Entrant - an installation obtaining a GHG permit after 30 June 2011 – needs to be amended to reflect Phase IV. In the current Directive, an installation is considered to be a new entrant 3 months before the submission by Member States of the list of installations (September 2011). The proposal for Phase 4 foresees that the submission of the list of installations be made by 30 September 2018; so keeping with the same logic, installations with an activity starting after 30 June 2018, should be considered as new entrants.

Amendment 29

Proposal for a directive

Article 1 – point -1 g (new)

Directive 2003/87/EC

Article 3 – point u a (new)


Text proposed by the Commission	Amendment
	(-1g) In Article 3, the following point is added:
	'(ua) ‘small emitter’ means an installation with low emissions which is operated by a small or medium-sized enterprise and that meets at least one of the following criteria:
	– the average annual verified emissions of that installation reported to the relevant competent authority during the trading period immediately preceding the current trading period, with the exclusion of CO2 stemming from biomass and before any subtraction of transferred CO2, is less than 50 000 tonnes of carbon dioxide equivalent per year;
	– the average annual emissions data referred to in the first indent are not available in relation to that installation or are no longer applicable to that installation because of changes in the installation's boundaries or changes to the operating conditions of the installation, but the annual emissions of that installation for the following five years, with the exclusion of CO2 stemming from biomass and before subtraction of transferred CO2, are expected to be less than 50 000 tonnes of carbon dioxide equivalent per year.'
	__________________
	^1aAs defined in Annex of recommendation 2003/361/EC

Amendment 30

Proposal for a directive

Article 1 – point -1 h (new)

Directive 2003/87/EC

Article 3c – paragraph 2


Present text	Amendment
	(-1h) In Article 3c, paragraph 2 is replaced by the following:
'2. For the period referred to in Article 13(1) beginning on 1 January 2013, and, in the absence of any amendments following the review referred to in Article 30(4), for each subsequent period, the total quantity of allowances to be allocated to aircraft operators shall be equivalent to 95 % of the historical aviation emissions multiplied by the number of years in the period.	'2. For the period referred to in Article 13 beginning on 1 January 2013, and, in the absence of any amendments following the review referred to in Article 30(4), for each subsequent period, the total quantity of allowances to be allocated to aircraft operators shall be equivalent to 95 % of the historical aviation emissions multiplied by the number of years in the period.
	The total quantity of allowances to be allocated to aircraft operators in 2021 shall be 10% lower than the average allocation for the period from 1 January 2014 to 31 December 2016 , and then decrease annually at the same rate as that of the total cap for the EU ETS referred to in the second subparagraph of Article 10(1) so as to bring the cap for the aviation sector more in line with the other EU ETS sectors by 2030.
	For aviation activities to and from aerodromes located in countries outside the EEA, the quantity of allowances to be allocated from 2021 onwards may be adjusted taking into account the future global market-based mechanism agreed by the International Civil Aviation Organisation (ICAO) in its 39th assembly. By 2019, the Commission shall present a legislative proposal to the European Parliament and the Council concerning those activities following the 40th assembly of the ICAO.
This percentage may be reviewed as part of the general review of this Directive.'	This percentage may be reviewed as part of the general review of this Directive.'

Amendment 31

Proposal for a directive

Article 1 – point -1 i (new)

Directive 2003/87/EC

Article 3c – paragraph 4


Present text	Amendment
	(-1i) In Article 3c(4), the last sentence is replaced by the following:
That decision shall be considered within the Committee referred to in Article 23(1).	That decision shall be considered within the Committee referred to in Article 30c(1).

Justification

Technical adaptation.

Amendment 32

Proposal for a directive

Article 1 – point -1 j (new)

Directive 2003/87/EC

Article 3d – paragraph 2


Present text	Amendment
	(-1j) In Article 3d, paragraph 2 is replaced by the following:
'2. From 1 January 2013, 15 % of allowances shall be auctioned. This percentage may be increased as part of the general review of this Directive.'	'2. From 1 January 2021, 50 % of allowances shall be auctioned.'

Justification

Unused free allowances should be made available to help address the risk of carbon leakage in industries with high carbon and trade intensity.

Amendment 33

Proposal for a directive

Article 1 – point 1

Directive 2003/87/EC

Article 3d – paragraph 3


Text proposed by the Commission	Amendment
(1) In Article 3d(3), the second subparagraph is replaced by the following:	(1) In Article 3d, paragraph 3 is replaced by the following:
'The Commission shall be empowered to adopt a delegated act in accordance with Article 23.';	'3. The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down detailed arrangements for the auctioning by Member States of allowances not required to be issued free of charge in accordance with paragraphs 1 and 2 of this Article or Article 3f(8). The number of allowances to be auctioned in each period by each Member State shall be proportionate to its share of the total attributed aviation emissions for all Member States for the reference year reported pursuant to Article 14(3) and verified pursuant to Article 15. For the period referred to in Article 3c(1), the reference year shall be 2010 and for each subsequent period referred to in Article 3c the reference year shall be the calendar year ending 24 months before the start of the period to which the auction relates.'

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 34

Proposal for a directive

Article 1 – point 1 a (new)

Directive 2003/87/EC

Article 3d – paragraph 4 – subparagraph 1


Present text	Amendment
	(1a) In Article 3d(4), the first subparagraph is replaced by the following:
'4. It shall be for Member States to determine the use to be made of revenues generated from the auctioning of allowances. Those revenues should be used to tackle climate change in the Union and third countries, inter alia, to reduce greenhouse gas emissions, to adapt to the impacts of climate change in the Union and third countries, especially developing countries, to fund research and development for mitigation and adaptation, including in particular in the fields of aeronautics and air transport, to reduce emissions through low-emission transport and to cover the cost of administering the Community scheme. The proceeds of auctioning should also be used to fund contributions to the Global Energy Efficiency and Renewable Energy Fund, and measures to avoid deforestation. '	'4. All revenues shall be used to tackle climate change in the Union and third countries, inter alia, to reduce greenhouse gas emissions, to adapt to the impacts of climate change in the Union and third countries, especially developing countries, to fund research and development for mitigation and adaptation, including in particular in the fields of aeronautics and air transport, to reduce emissions through low-emission transport and to cover the cost of administering the Union scheme. The proceeds of auctioning may also be used to fund contributions to the Global Energy Efficiency and Renewable Energy Fund, and measures to avoid deforestation. '

Amendment 35

Proposal for a directive

Article 1 – point 1 b (new)

Directive 2003/87/EC

Article 3e – paragraph 1 a (new)


Present text	Amendment
	(1b) In Article 3e, the following paragraph is added:
	'1a. From 2021 onwards, no free allocation of allowances under this Directive shall be granted to the aviation sector unless it is confirmed by a subsequent decision adopted by the European Parliament and the Council, since ICAO Resolution A-39/3 envisages that a global market-based measure is to apply from 2021. In that respect, the co-legislators shall take into account the interaction between that market-based measure and the EU ETS.'

Amendment 36

Proposal for a directive

Article 1 – point 2 a (new)

Directive 2003/87/EC

Chapter II a (new)


Text proposed by the Commission	Amendment
	(2a) The following Chapter is inserted:
	'CHAPTER IIa
	Inclusion of shipping in the absence of progress at international level
	Article 3ga
	Introduction
	As from 2021, in the absence of a comparable system operating under the IMO, CO2 emissions emitted in Union ports and during voyages to and from Union ports of call, shall be accounted for through the system set out in this Chapter, to be operational from 2023.
	Article 3gb
	Scope
	By 1 January 2023, the provisions of this Chapter shall apply to the allocation and issue of allowances in respect of CO2 emissions from ships within, arriving at or departing from ports under the jurisdiction of a Member State in accordance with the provisions laid down in Regulation (EU) 2015/757, . Articles 12 and 16 shall apply to maritime activities in the same manner as to other activities.
	Article 3gc
	Extra allowances for maritime sector
	By 1 August 2021, the Commission shall adopt delegated acts in accordance with Article 30b in order to supplement this Directive by setting the total quantity of allowances for the maritime sector in line with other sectors, the method of allocation of allowances for that sector through auctioning and the special provisions with regard to the administering Member State. When the maritime sector is included in the EU ETS, the total amount of allowances shall be increased by that amount.
	20% of the revenues generated from the auctioning of allowances referred to in Article 3gd shall be used through the fund established under that Article ('Maritime Climate Fund') to improve energy efficiency and support investments in innovative technologies to reduce CO2 emissions in the maritime sector, including short sea shipping and ports.
	Article 3gd
	Maritime Climate Fund
	1. A fund aimed at compensating for maritime emissions, improving energy efficiency and facilitating investments in innovative technologies to reduce CO2 emissions of the maritime sector shall be established at Union level.
	2. Ship operators may pay, on a voluntary basis, an annual membership contribution to the fund in accordance with their total emissions reported for the preceding calendar year under Regulation (EU) 2015/757. By way of derogation from Article 12(3), the fund shall surrender allowances collectively on behalf of ship operators which are members of the fund. The contribution per tonne of emissions shall be set by the fund by 28 February each year, and shall not be less than the level of the market price for allowances in the preceding year.
	3. The fund shall acquire allowances equal to the collective total quantity of emissions of its members during the preceding calendar year and surrender them in the registry established under Article 19 by 30 April each year for subsequent cancellation. Contributions shall be made public.
	4. The fund shall also improve energy efficiency and facilitate investments in innovative technologies to reduce CO2 emissions in the maritime sector, including short sea shipping and ports, through the revenues referred to in Article 3gc. All investments supported by the fund shall be made public and be consistent with the aims of this Directive.
	5. The Commission is empowered to adopt a delegated act in accordance with Article 30b to supplement this Directive concerning the implementation of this Article.
	Article 3ge
	International cooperation
	In the event that an international agreement on global measures to reduce greenhouse gas emissions from maritime transport is reached, the Commission shall review this Directive and shall, if appropriate, propose amendments in order to ensure alignment with that international agreement.'

Amendment 37

Proposal for a directive

Article 1 – point 2 b (new)

Directive 2003/87/EC

Article 5 – subparagraph 1 – point d a (new)


Text proposed by the Commission	Amendment
	(2b) In Article 5, subparagraph 1, the following point is added:
	'(da) all CCU technologies that will be used in the installation in order to help reduce emissions',

Justification

Details of any emission reduction technologies that operators intend to use should also be included in applications for emissions permits.

Amendment 38

Proposal for a directive

Article 1 – point 2 c (new)

Directive 2003/87/EC

Article 6 – paragraph 2 – points e a and e b (new)


Text proposed by the Commission	Amendment
	(2c) In Article 6(2), the following points are added:
	'(ea) all legal requirements on social responsibility and reporting in order to ensure equal and effective implementation of environmental regulations and ensure that competent authorities and stakeholders, including workers' representatives, representatives of civil society and local communities, have access to all relevant information, as laid down in the Aarhus Convention and implemented in Union and national law, including Directive 2003/87/EC);
	(eb) an obligation to publish every year comprehensive information in respect of combating climate change and compliance with Union directives in the field of the environment, health and safety at work; that information shall be accessible to workers' representatives and to the representatives of civil society from local communities in the vicinity of the installation.'

Amendment 39

Proposal for a directive

Article 1 – point 2 d (new)

Directive 2003/87/EC

Article 7


Present text	Amendment
	(2d) Article 7 is replaced by the following:
'The operator shall inform the competent authority of any planned changes to the nature or functioning of the installation, or any extension or significant reduction of its capacity, which may require updating the greenhouse gas emissions permit. Where appropriate, the competent authority shall update the permit. Where there is a change in the identity of the installation's operator, the competent authority shall update the permit to include the name and address of the new operator.'	'Without undue delay, the operator shall inform the competent authority of any planned changes to the nature or functioning of the installation, or any extension or significant reduction of its capacity, which may require updating the greenhouse gas emissions permit. Where appropriate, the competent authority shall update the permit. Where there is a change in the identity of the installation's operator, the competent authority shall update the permit with the relevant identity and contact information of the new operator.'

Amendment 40

Proposal for a directive

Article 1 – point 3

Directive 2003/87/EC

Article 9 – paragraphs 2 and 3


Text proposed by the Commission	Amendment
Starting in 2021, the linear factor shall be 2.2%.	Starting in 2021, the linear factor shall be 2,4%.

Justification

Absolute minimum in order to reach the low end of the EU 2050 target of emission reductions of 80-95%.

Amendment 41

Proposal for a directive

Article 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 1


Text proposed by the Commission	Amendment
(a) three new subparagraphs are added to paragraph 1:	(a) paragraph 1 is replaced by the following:
	'1. From 2019 onwards, Member States shall either auction or cancel allowances that are not allocated free of charge in accordance with Articles 10a and 10c and are not placed in the MSR.'

Amendment 42

Proposal for a directive

Article 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 2


Text proposed by the Commission	Amendment
From 2021 onwards, the share of allowances to be auctioned by Member States shall be 57%.	From 2021 onwards, the share of allowances to be auctioned or cancelled shall be 57%, and that share shall decrease by no more than five percentage points over the entire ten year period beginning on 1 January 2021 pursuant to Article 10a(5). Such an adjustment shall take place solely in the form of a reduction in allowances auctioned pursuant to point (a) of the first subparagraph of paragraph 2. Where no adjustment occurs, or where less than five percentage points are required to make an adjustment, the remaining quantity of allowances shall be cancelled. Such cancellation shall not exceed 200 million allowances.

Amendment 43

Proposal for a directive

Article 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 3


Text proposed by the Commission	Amendment
2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain member states as set out in Article 10d of this Directive (“the Modernisation Fund”).	2% of the total quantity of allowances between 2021 and 2030 shall be auctioned in order to establish a fund to improve energy efficiency and modernise the energy systems of certain Member States as set out in Article 10d of this Directive (“the Modernisation Fund”). The quantity set out in this subparagraph shall form part of the 57% share of allowances to be auctioned as set out in the second subparagraph.

Amendment 44

Proposal for a directive

Article 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 3 a (new)


Text proposed by the Commission	Amendment
	In addition, 3% of the total quantity of allowances to be issued between 2021 and 2030 shall be auctioned in order to compensate sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs actually incurred as a result of greenhouse gas emission costs being passed on in electricity prices as set out in Article 10a(6) of this Directive. Two thirds of the quantity set out in this subparagraph shall form part of the 57% share of allowances to be auctioned as referred to in the second subparagraph.

Amendment 45

Proposal for a directive

Article 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 3 b (new)


Text proposed by the Commission	Amendment
	A Just Transition Fund shall be created as of 1 January 2021 as a complement to the European Regional Development Fund and the European Social Fund and shall be funded through the pooling of 2% of the auctioning revenues.
	The revenues of those auctions shall remain at Union level, and shall be used to support regions which combine a high share of workers in carbon-dependent sectors and a GDP per capita well below the Union average. Such measures shall respect the principle of subsidiarity.
	Those auctioning revenues aimed at just transition may be put to use in different ways, such as:
	- creating redeployments and/or mobility cells,
	- education/training initiatives to re-skill or upskill workers,
	- support in job-seeking ,
	- business creation, and
	- monitoring and pre-emptive measures to avoid or minimise the negative impact of the restructuring process on physical and mental health.
	Since the core activities to be financed by a Just Transition Fund are strongly related to the labour market, social partners shall be actively involved in the fund management in a manner based on the model of the European Social Fund committee and the participation of local social partners shall be a key requirement for projects to get funding.

Amendment 46

Proposal for a directive

Article 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 4


Text proposed by the Commission	Amendment
The total remaining quantity of allowances to be auctioned by Member States shall be distributed in accordance with paragraph 2	The total remaining quantity of allowances to be auctioned by Member States, after deducting the quantity of allowances referred to in the first subparagraph of Article 10a(8) shall be distributed in accordance with paragraph 2.

Amendment 47

Proposal for a directive

Article 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 4 a (new)


Text proposed by the Commission	Amendment
	On 1 January 2021, 800 million allowances placed in the MSR shall be cancelled.

Amendment 48

Proposal for a directive

Article 1 – point 4 – point b – point ii

Directive 2003/87/EC

Article 10 – paragraph 2 – point b


Text proposed by the Commission	Amendment
(b) 10% of the total quantity of allowances to be auctioned being distributed amongst certain Member States for the purpose of solidarity and growth within the Community, thereby increasing the amount of allowances that those Member States auction under point (a) by the percentages specified in Annex IIa.	(b) 10% of the total quantity of allowances to be auctioned being distributed amongst certain Member States for the purpose of solidarity and growth within the Community, thereby increasing the amount of allowances that those Member States auction under point (a) by the percentages specified in Annex IIa. For those Member States eligible to benefit from the Modernisation Fund as set out in Article 10d, their share of allowances specified in Annex IIa shall be transferred to their share in the Modernisation Fund.

Amendment 49

Proposal for a directive

Article 1 – point 4 – point b a (new)

Directive 2003/87/EC

Article 10 – paragraph 3 – introductory part


Present text	Amendment
	(ba) in paragraph 3, the introductory part is replaced by the following:
'3. Member States shall determine the use of revenues generated from the auctioning of allowances. At least 50 % of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c), or the equivalent in financial value of these revenues, should be used for one or more of the following:'	'3. Member States shall determine the use of revenues generated from the auctioning of allowances. 100% of the total revenues generated from the auctioning of allowances referred to in paragraph 2 or the equivalent in financial value of these revenues, shall be used for one or more of the following:'

Amendment 50

Proposal for a directive

Article 1 – point 4 – point b b (new)

Directive 2003/87/EC

Article 10 – paragraph 3 – point b


Present text	Amendment
	(bb) in paragraph 3, point (b) is replaced by the following:
'(b) to develop renewable energies to meet the commitment of the Community to using 20 % renewable energies by 2020, as well as to develop other technologies contributing to the transition to a safe and sustainable low-carbon economy and to help meet the commitment of the Community to increase energy efficiency by 20 % by 2020;'	'(b) to develop renewable energies to meet the commitment of the Union to renewable energies by 2030, as well as to develop other technologies contributing to the transition to a safe and sustainable low-carbon economy and to help meet the commitment of the Union to increase energy efficiency by 2030 at the levels agreed in appropriate legislative acts;'

Amendment 51

Proposal for a directive

Article 1 – point 4 – point b c (new)

Directive 2003/87/EC

Article 10 – paragraph 3 – point f


Present text	Amendment
	(bc) in paragraph 3, point (f) is replaced by the following:
'(f) to encourage a shift to low-emission and public forms of transport;'	'(f) to encourage a shift to low emission and public forms of transport and support - as long as CO2 costs are not similarly reflected for other surface transport modes - electrified transport modes such as railways or other electrified surface transport modes taking into account their indirect EU ETS costs; '

Amendment 52

Proposal for a directive

Article 1 – point 4 – point b d (new)

Directive 2003/87/EC

Article 10 – paragraph 3 – point h


Present text	Amendment
	(bd) in paragraph 3, point (h) is replaced by the following:
'(h) measures intended to increase energy efficiency and insulation or to provide financial support in order to address social aspects in lower and middle income households; '	'(h) measures intended to increase energy efficiency, district heating systems and insulation or to provide financial support in order to address social aspects in lower and middle income households;'

Amendment 53

Proposal for a directive

Article 1 – point 4 – point c

Directive 2003/87/EC

Article 10 – paragraph 3 – point j


Text proposed by the Commission	Amendment
(j) to fund financial measures in favour of sectors or subsectors that are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, provided that these measures meet the conditions set out in Article 10a(6);	(j) to fund financial measures in favour of sectors or subsectors that are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, provided that not more than 20% of revenues are used for this purpose, and that these measures meet the conditions set out in Article 10a(6);

Amendment 54

Proposal for a directive

Article 1 – point 4 – point c

Directive 2003/87/EC

Article 10 – paragraph 3 – point l


Text proposed by the Commission	Amendment
(l) to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy in close coordination with the social partners.	(l) to address the social impact of the decarbonisation of their economies and promote skill formation and reallocation of labour affected by the transition of jobs in close coordination with the social partners.

Amendment 55

Proposal for a directive

Article 1 – point 4 – point c a (new)

Directive 2003/87/EC

Article 10 – paragraph 3 – subparagraph 1 a (new)


Text proposed by the Commission	Amendment
	(ca) in paragraph 3, the following subparagraph is inserted:
	'This information shall be provided through a standardised template prepared by the Commission, including information on the use of auctioning revenues for the different categories and the additionality of the use of the funds. The Commission shall make this information public on its website.'

Amendment 56

Proposal for a directive

Article 1 – point 4 – point c b (new)

Directive 2003/87/EC

Article 10 – paragraph 3 – subparagraph 2


Present text	Amendment
	(cb) in paragraph 3, the second subparagraph is replaced by the following:
'Member States shall be deemed to have fulfilled the provisions of this paragraph if they have in place and implement fiscal or financial support policies, including in particular in developing countries, or domestic regulatory policies, which leverage financial support, established for the purposes set out in the first subparagraph and which have a value equivalent to at least 50 % of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c).'	'Member States shall be deemed to have fulfilled the provisions of this paragraph if they have in place and implement fiscal or financial support policies, including in particular in developing countries, or domestic regulatory policies, which leverage additional financial support, established for the purposes set out in the first subparagraph and which have a value equivalent to 100% of the revenues generated from the auctioning of allowances referred to in paragraph 2 and have reported those policies in a standardised template provided by the Commission.'

Amendment 57

Proposal for a directive

Article 1 – point 4 – point d

Directive 2003/87/EC

Article 10 – paragraph 4 – subparagraphs 1, 2 and 3


Text proposed by the Commission	Amendment
(d) the third subparagraph of paragraph 4 is replaced by the following:	(d) in paragraph 4, the first, second and third subparagraphs are replaced by the following:
'The Commission shall be empowered to adopt a delegated act in accordance with Article 23.';	'4. The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down detailed arrangements for timing, administration and other aspects of auctioning to ensure that it is conducted in an open, transparent, harmonised and non-discriminatory manner. To this end, the process shall be predictable, in particular as regards the timing and sequencing of auctions and the estimated volumes of allowances to be made available. Where an assessment concludes in relation to the individual industrial sectors that no significant impact on sectors or subsectors exposed to a significant risk of carbon leakage is to be expected, the Commission may, in exceptional circumstances, adapt the timetable for the period referred to in Article 13(1) beginning on 1 January 2013 so as to ensure the orderly functioning of the market. The Commission shall make no more than one such adaptation for a maximum number of 900 million allowances.
	Auctions shall be designed to ensure that:
	(a) operators, and in particular any SMEs covered by the EU ETS, have full, fair and equitable access;
	(b) all participants have access to the same information at the same time and that participants do not undermine the operation of the auction;
	(c) the organisation and participation in auctions is cost-efficient and undue administrative costs are avoided; and
	(d) small emitters have access to allowances.';

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 58

Proposal for a directive

Article 1 – point 4 – point d a (new)

Directive 2003/87/EC

Article 10 – paragraph 4 – subparagraph 4 a (new)


Text proposed by the Commission	Amendment
	(da) in paragraph 4, the following fifth subparagraph is added:
	'Every two years Member States shall report to the Commission the closure of electricity generation in their territory capacity due to national measures. The Commission shall calculate the equivalent number of allowances that those closures represent and inform the Member States. Member States may cancel a corresponding volume of allowances out of the total quantity distributed in accordance with paragraph 2.'

Amendment 59

Proposal for a directive

Article 1 – point 4 – point d b (new)

Directive 2003/87/EC

Article 10 – paragraph 5


Present text	Amendment
	(db) paragraph 5 is replaced by the following:
'5. The Commission shall monitor the functioning of the European carbon market. Each year, it shall submit a report to the European Parliament and to the Council on the functioning of the carbon market including the implementation of the auctions, liquidity and the volumes traded. If necessary, Member States shall ensure that any relevant information is submitted to the Commission at least two months before the Commission adopts the report.'	'5. The Commission shall monitor the functioning of the EU ETS. Each year, it shall submit a report to the European Parliament and to the Council on its functioning including the implementation of the auctions, liquidity and the volumes traded. The report shall also address the interaction of the EU ETS with other Union climate and energy policies, including how those policies impact upon the supply-demand balance of the EU ETS and their compliance with the Union's 2030 and 2050 climate and energy goals. The report shall also take into account the risk of carbon leakage and the impact on investment within the Union. Member States shall ensure that any relevant information is submitted to the Commission at least two months before the Commission adopts the report.'

Amendment 60

Proposal for a directive

Article 1 – point 5 – point a

Directive 2003/87/EC

Article 10a – paragraph 1 – subparagraphs 1 and 2


Text proposed by the Commission	Amendment
(a) the second paragraph of paragraph 1 is replaced by the following:	(a) in paragraph 1, the first and second subparagraphs are replaced by the following:
'The Commission shall be empowered to adopt a delegated act in accordance with Article 23. This act shall also provide for additional allocation from the new entrants reserve for significant production increases by applying the same thresholds and allocation adjustments as apply in respect of partial cessations of operation. '	'1. The Commission is empowered to adopt a delegated act in accordance with 30b to supplement this Directive by setting Union-wide and fully harmonised measures for the allocation of the allowances referred to in paragraphs 4, 5 and 7, including any necessary provisions for a harmonised application of paragraph 19. This act shall also provide for additional allocation from the new entrants reserve for significant production changes. It shall, in particular, provide that any decrease or increase of at least 10% in production expressed as a rolling average of verified production data for the two preceding years compared to the production activity reported in accordance with Article 11 is adjusted with a corresponding amount of allowances by placing allowances into, or releasing them from, the reserve referred to in paragraph 7.
	When preparing the delegated act referred to in the first subparagraph, the Commission shall take into account the need to limit administrative complexity and prevent gaming of the system. For that purpose it may, as appropriate, use flexibility in the application of the thresholds set out in this paragraph where justified to do so due to specific circumstances. '

Amendment 61

Proposal for a directive

Article 1 – point 5 – point a a (new)

Directive 2003/87/EC

Article 10a – paragraph 1 – subparagraph 3


Text proposed by the Commission	Amendment
	(aa) in paragraph 1, the third subparagraph is replaced by the following:
'The measures referred to in the first subparagraph shall, to the extent feasible, determine Community-wide ex-ante benchmarks 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. No free allocation shall be made in respect of any electricity production, except for cases falling within Article 10c and electricity produced from waste gases.'	'The measures referred to in the first subparagraph shall, to the extent feasible, determine Union-wide ex-ante benchmarks 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, CCS and CCU, where such facilities are available, and shall not provide incentives to increase emissions. No free allocation shall be made in respect of any electricity production, except for cases falling within Article 10c and electricity produced from waste gases.'

Amendment 62

Proposal for a directive

Article 1 – point 5 – point b

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3 – introductory part


Text proposed by the Commission	Amendment
The benchmark values for free allocation shall be adjusted in order to avoid windfall profits and reflect technological progress in the period between 2007-8 and each later period for which free allocations are determined in accordance with Article 11(1). This adjustment shall reduce the benchmark values set by the act adopted pursuant to Article 10a by 1% of the value that was set based on 2007-8 data in respect of each year between 2008 and the middle of the relevant period of free allocation, unless:	The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive for the purpose of determining the revised benchmark values for free allocation. Those acts shall be in accordance with the delegated acts adopted pursuant to paragraph 1 of this Article and shall comply with the following:

Amendment 63

Proposal for a directive

Article 1 – point 5 – point b

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3 – point -i (new)


Text proposed by the Commission	Amendment
	(-i) For the period from 2021 to 2025, the benchmark values shall be determined on the basis of information submitted pursuant to Article 11 for the years 2016-2017;

Amendment 64

Proposal for a directive

Article 1 – point 5 – point b

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3 – point -i a (new)


Text proposed by the Commission	Amendment
	(-ia) On the basis of a comparison of the benchmark values based on this information with the benchmark value contained in Commission Decision 2011/278, the Commission shall determine the annual reduction rate for each benchmark and apply it to the benchmark values applicable in the period 2013-2020 in respect of each year between 2008 and 2023 to determine the benchmark values for the years 2021-2025;

Amendment 65

Proposal for a directive

Article 1 – point 5 – point b

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3 – point i


Text proposed by the Commission	Amendment
(i) On the basis of information submitted pursuant to Article 11, the Commission shall identify whether the values for each benchmark calculated using the principles in Article 10a differ from the annual reduction referred to above by more than 0.5% of the 2007-8 value higher or lower annually. If so, that benchmark value shall be adjusted either 0.5% or 1.5% in respect of each year between 2008 and the middle of the period for which free allocation is to be made;	(i) Where, on the basis of information submitted pursuant to Article 11 the rate of improvement does not exceed 0.25%, the benchmark value shall therefore be reduced by that percentage in the period 2021-2025, in respect of each year between 2008 and 2023;

Amendment 66

Proposal for a directive

Article 1 – point 5 – point b

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3 – point ii


Text proposed by the Commission	Amendment
(ii) By way of derogation regarding the benchmark values for aromatics, hydrogen and syngas, these benchmark values shall be adjusted by the same percentage as the refineries benchmarks in order to preserve a level playing field for producers of these products.	(ii) Where, on the basis of information submitted pursuant to Article 11 the rate of improvement exceeds 1,75%, the benchmark value shall therefore be reduced by that percentage in the period 2021-2025, in respect of each year between 2008 and 2023.

Amendment 67

Proposal for a directive

Article 1 – point 5 – point b

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 4


Text proposed by the Commission	Amendment
The Commission shall adopt an implementing act for this purpose in accordance with Article 22a.	deleted

Amendment 68

Proposal for a directive

Article 1 – point 5 – point b a (new)

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3 a (new)


Text proposed by the Commission	Amendment
	(ba) in paragraph 2, the following subparagraph is added:
	‘For the period between 2026 and 2030, the benchmark values shall be determined in the same manner on the basis of information submitted pursuant to Article 11 for the years 2021-2022 and with the annual reduction rate applying in respect of each year between 2008 and 2028.’

Amendment 69

Proposal for a directive

Article 1 – point 5 – point b b (new)

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3 b (new)


Text proposed by the Commission	Amendment
	(bb) in paragraph 2, the following subparagraph is added:
(ii) By way of derogation regarding the benchmark values for aromatics, hydrogen and syngas, these benchmark values shall be adjusted by the same percentage as the refineries benchmarks in order to preserve a level playing field for producers of these products.	‘By way of derogation regarding the benchmark values for aromatics, hydrogen and syngas, these benchmark values shall be adjusted by the same percentage as the refineries benchmarks in order to preserve a level playing field for producers of these products.’

Justification

EP position is to move the text.

Amendment 70

Proposal for a directive

Article 1 – point 5 – point b c (new)

Directive 2003/87/EC

Article 10a – paragraph 4


Present text	Amendment
	(bc) paragraph 4 is replaced by the following:
'4. Free allocation shall be given to district heating as well as to high efficiency cogeneration, as defined by Directive 2004/8/EC, for economically justifiable demand, in respect of the production of heating or cooling. In each year subsequent to 2013, the total allocation to such installations in respect of the production of that heat shall be adjusted by the linear factor referred to in Article 9.'	'4. Free allocation shall be given to district heating as well as to high efficiency cogeneration, as defined by Directive 2004/8/EC, for economically justifiable demand, in respect of the production of heating or cooling.'

Amendment 71

Proposal for a directive

Article 1 – point 5 – point c

Directive 2003/87/EC

Article 10a – paragraph 5


Text proposed by the Commission	Amendment
In order to respect the auctioning share set out in Article 10, the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the Member State auctioning share, the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the Member State auctioning share in later years. Where, nonetheless, the maximum level is reached, free allocations shall be adjusted accordingly. Any such adjustment shall be done in a uniform manner.	Where the sum of free allocations in a given year does not reach the maximum level, respecting the Member States’ auctioning share set out in Article 10(1), the remaining allowances up to that level shall be used to prevent or limit the reduction of free allocations in subsequent years. Where, however, the maximum level is reached, an amount of allowances equivalent to a reduction of up to five percentage points of the share of allowances to be auctioned by Member States over the entire ten year period beginning on 1 January 2021, pursuant to Article 10(1), shall be distributed free of charge to sectors and sub-sectors pursuant to Article 10b. Where, nonetheless, this reduction is insufficient to meet the demand of sectors or sub-sectors pursuant to Article 10b, free allocations shall be adjusted accordingly by a uniform cross-sectoral correction factor to sectors with an intensity of trade with third countries below 15% or a carbon intensity below 7Kg CO2/Euro GVA.

Amendment 72

Proposal for a directive

Article 1 – point 5 – point d

Directive 2003/87/EC

Article 10a – paragraph 6 – subparagraph 1


Text proposed by the Commission	Amendment
6. Member States should adopt financial measures in favour of sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, taking into account any effects on the internal market. Such financial measures to compensate part of these costs shall be in accordance with state aid rules.	6. A centralised arrangement at Union level shall be adopted to compensate sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices.
	Compensation shall be proportionate to greenhouse gas emission costs actually passed through in electricity prices and shall be applied in accordance with the criteria laid down in the relevant state aid guidelines in order to avoid negative effects on the internal market as well as overcompensation of costs incurred.
	Where the amount of compensation available is not sufficient to compensate eligible indirect costs, the amount of compensation available for all eligible installations shall be reduced in a uniform manner.
	The Commission is empowered to adopt a delegated act in accordance with Article 30b to supplement this Directive for the purpose referred to in this paragraph by putting in place arrangements for the creation and operation of the fund.

Amendment 73

Proposal for a directive

Article 1 – point 5 – point d a (new)

Directive 2003/87/EC

Article 10a – paragraph 6 – subparagraph 1a (new)


Text proposed by the Commission	Amendment
	(da) in paragraph 6, a new subparagraph is inserted:
	'Member States may also adopt national financial measures in favour of sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, taking into account any effects on the internal market. Such financial measures to compensate part of those costs shall be in accordance with state aid rules and Article 10(3) of this Directive. Those national measures, when combined with the support referred to in the first subparagraph, shall not exceed the maximum level of compensation referred to in the relevant state aid guidelines and shall not create new market distortions. The existing ceilings on state aid compensation shall continue to decline throughout the trading period.'

Amendment 74

Proposal for a directive

Article 1 – point 5 – point e – point i

Directive 2003/87/EC

Article 10a – paragraph 7 – subparagraph 1


Text proposed by the Commission	Amendment
Allowances from the maximum amount referred to Article 10a(5) of this Directive which were not allocated for free up to 2020 shall be set aside for new entrants and significant production increases, together with 250 million allowances placed in the market stability reserve pursuant to Article 1(3) of Decision (EU) 2015/… of the European Parliament and of the Council(*).	400 million allowances shall be set aside for new entrants and significant production increases.

Amendment 75

Proposal for a directive

Article 1 – point 5 – point e – point i

Directive 2003/87/EC

Article 10a – paragraph 7 – subparagraph 2


Text proposed by the Commission	Amendment
From 2021, allowances not allocated to installations because of the application of paragraphs 19 and 20 shall be added to the reserve.	From 2021 onwards, any allowances not allocated to installations because of the application of paragraphs 19 and 20 shall be added to the reserve.

Amendment 76

Proposal for a directive

Article 1 – point 5 – point f – introductory part

Directive 2003/87/EC

Article 10a – paragraph 8


Text proposed by the Commission	Amendment
(f) in paragraph 8, the first, second and third subparagraphs of paragraph 8 are replaced by the following:	(f) paragraph 8 is replaced by the following:

Amendment 77

Proposal for a directive

Article 1 – point 5 – point f – subparagraph 1

Directive 2003/87/EC

Article 10a – paragraph 8 – subparagraph 1


Text proposed by the Commission	Amendment
8. 400 million allowances shall be available to support innovation in low-carbon technologies and processes in industrial sectors listed in Annex I, and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage (CCS) of CO2 as well as demonstration projects of innovative renewable energy technologies, in the territory of the Union.	8. 600 million allowances shall be available to leverage investments in innovation in low-carbon technologies and processes in industrial sectors listed in Annex I, including bio-based materials and products substituting carbon intensive materials, and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe CCS and CCU as well as demonstration projects of innovative renewable energy technologies and energy storage, in the territory of the Union.

Amendment 78

Proposal for a directive

Article 1 – point 5 – point f

Directive 2003/87/EC

Article 10a – paragraph 8 – subparagraph 2


Text proposed by the Commission	Amendment
The allowances shall be made available for innovation in low-carbon industrial technologies and processes and support for demonstration projects for the development of a wide range of CCS and innovative renewable energy technologies that are not yet commercially viable in geographically balanced locations. In order to promote innovative projects, up to 60% of the relevant costs of projects may be supported, out of which up to 40% may not be dependent on verified avoidance of greenhouse gas emissions provided that pre-determined milestones are attained taking into account the technology deployed.	The allowances shall be made available for innovation in low-carbon industrial technologies and processes and support for demonstration projects for the development of a wide range of innovative renewable energy technologies, CCS and CCU that are not yet commercially viable. Projects shall be selected on the basis of their impact on energy systems or industrial processes within a Member State, a group of Member States or the Union. In order to promote innovative projects, up to 75% of the relevant costs of projects may be supported, out of which up to 60% may not be dependent on verified avoidance of greenhouse gas emissions provided that pre-determined milestones are attained taking into account the technology deployed. Allowances shall be allocated to projects according to their needs to reach pre-determined milestones.

Amendment 79

Proposal for a directive

Article 1 – point 5 – point f

Directive 2003/87/EC

Article 10a – paragraph 8 – subparagraph 3


Text proposed by the Commission	Amendment
In addition, 50 million unallocated allowances from the market stability reserve established by Decision (EU) 2015/… shall supplement any existing resources remaining under this paragraph for projects referred to above, with projects in all Member States including small-scale projects, before 2021. Projects shall be selected on the basis of objective and transparent criteria.	In addition, 50 million unallocated allowances from the MSR shall supplement any existing resources remaining under this paragraph as a consequence of funds resulting from NER300 allowance auctions for the period between 2013 and 2020 not having been used, for projects referred to in the first and second subparagraphs, with projects in all Member States including small-scale projects, before 2021 and from 2018 onwards. Projects shall be selected on the basis of objective and transparent criteria, taking into account their relevance in relation to the decarbonisation of the sectors concerned.
	Projects supported under this subparagraph may also receive further support under the first and second subparagraphs.

Amendment 80

Proposal for a directive

Article 1 – point 5 – point f

Directive 2003/87/EC

Article 10a – paragraph 8 – subparagraph 4


Text proposed by the Commission	Amendment
The Commission shall be empowered to adopt a delegated act in accordance with Article 23.	The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by setting the criteria to be used for the selection of projects that are eligible to benefit from the allowances referred to in this paragraph, taking due account of the following principles:
	(i) Projects shall focus on the design and development of breakthrough solutions and implementation of demonstration programmes;
	(ii) The activities shall run close-to-market in production plants to demonstrate the viability of breakthrough technologies in overcoming technological as well as non-technological barriers;
	(iii) Projects shall address technological solutions that have the potential to be of widespread application, and may combine different technologies;
	(iv) Solutions and technologies shall ideally have the potential to be transferred within the sector and possibly to other sectors;
	(v) Projects where the anticipated emissions reductions are significantly below the relevant benchmark value shall be prioritised. Eligible projects shall either contribute to emissions reductions below the benchmark values referred to in paragraph 2 or shall have future prospects to significantly lower the cost of transitioning towards low-emissions energy production; and
	(vi) CCU projects shall deliver a net reduction in emissions and a permanent storage of CO2 across their lifetime.

Amendment 81

Proposal for a directive

Article 1 – point 5 – point f

Directive 2003/87/EC

Article 10a – paragraph 8 – subparagraph 5


Present text	Amendment
Allowances shall be set aside for the projects that meet the criteria referred to in the third subparagraph. Support for these projects shall be given via Member States and shall be complementary to substantial co-financing by the operator of the installation. They could also be co-financed by the Member State concerned, as well as by other instruments. No project shall receive support via the mechanism under this paragraph that exceeds 15 % of the total number of allowances available for this purpose. These allowances shall be taken into account under paragraph 7.	Allowances referred to in the second and third subparagraphs shall be set aside for the projects that meet the criteria referred to in the third subparagraph. Support for those projects shall be given via Member States and shall be complementary to substantial co-financing by the operator of the installation. They could also be co- financed by the Member State concerned, as well as by other instruments. No individual project shall receive support via the mechanism under this paragraph that exceeds 15% of the total number of allowances available for this purpose. Those allowances shall be taken into account under paragraph 7.

Justification

EP position is to keep the present text for this subparagraph.

Amendment 82

Proposal for a directive

Article 1 – point 5 – point i a (new)

Directive 2003/87/EC

Article 10a – paragraph 20


Present text	Amendment
	(ia) paragraph 20 is replaced by the following:
'The Commission shall, as part of the measures adopted under paragraph 1, include measures for defining installations that partially cease to operate or significantly reduce their capacity, and measures for adapting, as appropriate, the level of free allocations given to them accordingly.'	'The Commission shall, as part of the measures adopted under paragraph 1, include measures for defining installations that partially cease to operate or significantly reduce their capacity, and measures for adapting, as appropriate, the level of free allocations given to them accordingly.
	Those measures shall provide flexibility for industry sectors where capacity is regularly transferred between operating installations in the same company.'

Justification

In some industry sectors capacity can be transferred between operating facilities (of the same operator). This is a characteristic of seasonal business where the production of a certain site can be increased by increasing the length of operation. Flexibility is needed to enable regular transfers of allowances between different operating sites.

Amendment 83

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10b – title


Text proposed by the Commission	Amendment
Measures to support certain energy-intensive industries in the event of carbon leakage	Transitional measures to support certain energy intensive industries in the event of carbon leakage

Amendment 84

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10b – paragraph 1a (new)


Text proposed by the Commission	Amendment
	1a. An import inclusion scheme, fully compliant with WTO rules shall be established. It shall require importers in sectors that do not have a trade intensity above 10% in the years 2009 to 2013 and are covered by the EU ETS to acquire and surrender allowances for imported products.
	By 30 June 2019, the Commission shall adopt a delegated act in accordance with Article 30b to supplement this Directive by specifying the exact design of the detailed requirements for this scheme. Before presenting the delegated act, the Commission shall carry out an impact assessment, including a stakeholder consultation and feasibility study looking at the most effective way to introduce such a scheme. This assessment shall be published together with the communication assessing the consistency of the Union's climate change legislation with the Paris Agreement goals published within six months of the facilitative dialogue under the UNFCCC in 2018, as laid down in Article 30a.
	Once this mechanism is in place, no free allocation shall be given to sectors and subsectors that are deemed to be at risk of carbon leakage but covered by the import inclusion carbon mechanism.

Amendment 85

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10b – paragraph 1 b (new)


Text proposed by the Commission	Amendment
	1b. After the adoption of the revision of the Directive 2012/27/EU of the European Parliament and of the Council, the Commission shall reassess the share of emission reductions in the EU ETS and the Decision No 406/2009/EC of the European Parliament and of the Council*. Additional reductions by an increased energy efficiency target shall be used to protect industry at risk of carbon or investment leakage.
	____________
	* Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ L 315, 14.11.2012, p. 1).
	** Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020 (OJ L 140, 5.6.2009, p. 136).

Justification

Amendment 86

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10b – paragraph 2


Text proposed by the Commission	Amendment
2. Sectors and sub-sectors where the product from multiplying their intensity of trade with third countries by their emission intensity is above 0.18 may be included in the group referred to in paragraph 1, on the basis of a qualitative assessment using the following criteria:	2. Sectors and sub-sectors where the product from multiplying their intensity of trade with third countries by their emission intensity is above 0,12 may be included in the group referred to in paragraph 1, on the basis of a qualitative assessment using the following criteria:
(a) the extent to which it is possible for individual installations in the sector or sub-sectors concerned to reduce emission levels or electricity consumption;	(a) the extent to which it is possible for individual installations in the sector or sub-sectors concerned to reduce emission levels or electricity consumption taking into account associated increases in costs of production;
(b) current and projected market characteristics;	(b) current and projected market characteristics;
(c) profit margins as a potential indicator of long-run investment or relocation decisions.	(c) profit margins as a potential indicator of long-run investment or relocation decisions;
	(ca) commodities which are traded on worldwide markets for a common reference price.

Amendment 87

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10b – paragraph 3


Text proposed by the Commission	Amendment
3. Other sectors and sub-sectors are considered to be able to pass on more of the cost of allowances in product prices, and shall be allocated allowances free of charge for the period up to 2030 at 30% of the quantity determined in accordance with the measures adopted pursuant to Article 10a.	3. The district heating sector is considered to be able to pass on more of the cost of allowances in product prices, and shall be allocated allowances free of charge for the period up to 2030 at 30% of the quantity determined in accordance with the measures adopted pursuant to Article 10a. Other sectors and sub-sectors shall not be allocated any allowances free of charge.

Amendment 88

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10b – paragraph 4


Text proposed by the Commission	Amendment
4. By 31 December 2019, the Commission shall adopt a delegated act for the preceding paragraphs for activities at a 4-digit level (NACE-4 code) as concerns paragraph 1, in accordance with Article 23, based on data for the three most recent calendar years available.	4. By 31 December 2019, the Commission shall adopt delegated acts in accordance with Article 30b to supplement this Directive in relation to paragraph 1 concerning the activities at a 4-digit level (NACE-4 code) or, where justified on the basis of objective criteria developed by the Commission, at the relevant level of disaggregation based on public and sector-specific data to comprise those activities covered by the EU ETS. The assessment of trade intensity shall be based on data for the five most recent calendar years available.

Amendment 89

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 1


Text proposed by the Commission	Amendment
1. By derogation from Article 10a(1) to (5), Member States which had in 2013 a GDP per capita in € at market prices below 60% of the Union average may give a transitional free allocation to installations for electricity production for the modernisation of the energy sector.	1. By way of derogation from Article 10a(1) to (5), Member States which had in 2013 a GDP per capita in EUR at market prices below 60% of the Union average may give transitional free allocation to installations for electricity generation for the modernisation, diversification and sustainable transformation of the energy sector. This derogation shall end on 31 December 2030.

Amendment 90

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 1 a (new)


Text proposed by the Commission	Amendment
	1a. Member States not eligible pursuant to paragraph 1 but which had in 2014 a GDP per capita in EUR at market prices below 60% of the Union average may also make use of the derogation referred to in that paragraph up to the total quantity referred to in paragraph 4, provided that the corresponding number of allowances is transferred to the Modernisation Fund and the revenues are used to support investments in accordance with Article 10d.

Amendment 91

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 1 b (new)


Text proposed by the Commission	Amendment
	1b. Member States which are eligible under this Article to grant free allocation to installations for energy generation, may choose to transfer the corresponding number of allowances or part of them to the Modernisation Fund and allocate them pursuant to the provisions of Article 10d. In such a case, they shall inform the Commission before the transfer.

Amendment 92

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 2 – subparagraph 1 – point b


Text proposed by the Commission	Amendment
(b) ensure that only projects which contribute to the diversification of their energy mix and sources of supply, the necessary restructuring, environmental upgrading and retrofitting of the infrastructure, clean technologies and modernisation of the energy production, transmission and distribution sectors are eligible to bid;	(b) ensure that only projects which contribute to the diversification of their energy mix and sources of supply, the necessary restructuring, environmental upgrading and retrofitting of the infrastructure, clean technologies (such as renewable technologies) or modernisation of the energy production, district heating networks, energy efficiency, energy storage, transmission and distribution sectors are eligible to bid;

Amendment 93

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 2 – subparagraph 1 – point c


Text proposed by the Commission	Amendment
(c) define clear, objective, transparent and non-discriminatory selection criteria for the ranking of projects, so as to ensure that projects are selected which:	(c) define clear, objective, transparent and non-discriminatory selection criteria in line with the Union 2050 climate and energy policy objectives for the ranking of projects, so as to ensure that projects are selected which:

Amendment 94

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 2 – subparagraph 1 – point c – point i


Text proposed by the Commission	Amendment
(i) on the basis of a cost-benefit analysis, ensure a net positive gain in terms of emission reduction and realise a pre-determined significant level of CO2 reductions;	(i) on the basis of a cost-benefit analysis, ensure a net positive gain in terms of emission reduction and realise a pre-determined significant level of CO2 reductions proportionate to the size of the projects. Where projects relate to electricity production, total greenhouse gas emissions per kilowatt hour of electricity produced in the installation shall not exceed 450g of CO2 equivalent after completion of the project. By 1 January 2021, the Commission shall adopt a delegated act in accordance with Article 30b in order to amend this Directive by defining for projects relating to heat production maximum total greenhouse gas emissions per kilowatt hour of heat produced in the installation that shall not be exceeded.

Amendment 95

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 2 – subparagraph 1– point c – point ii


Text proposed by the Commission	Amendment
(ii) are additional, clearly respond to replacement and modernisation needs and do not supply a market-driven increase in energy demand;	(ii) are additional, although they may be used to meet the relevant targets set under the 2030 Climate and Energy Framework, clearly respond to replacement and modernisation needs and do not supply a market-driven increase in energy demand;

Amendment 96

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 2 – subparagraph 1– point c – point iii a (new)


Text proposed by the Commission	Amendment
	(iiia) do not contribute to new coal-fired energy generation nor increase coal-dependency.

Amendment 97

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 2 – subparagraph 2


Text proposed by the Commission	Amendment
By 30 June 2019, any Member State intending to make use of optional free allocation shall publish a detailed national framework setting out the competitive bidding process and selection criteria for public comment.	By 30 June 2019, any Member State intending to make use of optional transitional free allocation for the modernisation of the energy sector shall publish a detailed national framework setting out the competitive bidding process and selection criteria for public comment.

Amendment 98

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 2 – subparagraph 3


Text proposed by the Commission	Amendment
Where investments with a value of less than €10 million are supported with free allocation, the Member State shall select projects based on objective and transparent criteria. The results of this selection process shall be published for public comment. On this basis, the Member State concerned shall establish and submit a list of investments to the Commission by 30 June 2019.	Where investments with a value of less than EUR 10 million are supported with free allocation, the Member State shall select projects based on objective and transparent criteria consistent with reaching the Union’s long-term climate and energy objectives. Those criteria shall be subject to public consultation, ensuring full transparency and accessibility of relevant documents, and fully reflect comments raised by stakeholders. The results of this selection process shall be published for public consultation. On this basis, the Member State concerned shall establish and submit a list of investments to the Commission by 30 June 2019.

Amendment 99

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 3


Text proposed by the Commission	Amendment
3. The value of the intended investments shall at least equal the market value of the free allocation, while taking into account the need to limit directly linked price increases. The market value shall be the average of the price of allowances on the common auction platform in the preceding calendar year.	3. The value of the intended investments shall at least equal the market value of the free allocation, while taking into account the need to limit directly linked price increases. The market value shall be the average of the price of allowances on the common auction platform in the preceding calendar year. Up to 75% of the relevant costs of an investment may be supported.

Amendment 100

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 6


Text proposed by the Commission	Amendment
6. Member States shall require benefiting electricity generators and network operators to report by 28 February of each year on the implementation of their selected investments. Member States shall report on this to the Commission, and the Commission shall make such reports public.	6. Member States shall require benefiting energy generators and network operators to report annually by 31 March of each year on the implementation of their selected investments, including the balance of free allocation and investment expenditure incurred, the types of investments supported and the way in which they achieved the goals set out in point (b) of the first subparagraph of paragraph 2. Member States shall report on this to the Commission, and the Commission shall make such reports available to the public. Member States and the Commission shall monitor and analyse potential arbitrage with regard to the threshold of EUR 10 million for small projects and shall prevent unjustified dividing up of an investment over smaller projects by excluding more than one investment in the same beneficiary installation.

Amendment 101

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 6 a (new)


Text proposed by the Commission	Amendment
	6a. In case of a reasonable suspicion of irregularities or a failure by a Member State to report in accordance with paragraphs 2 to 6, the Commission may undertake an independent investigation, where necessary assisted by a contracted third party. The Commission shall also investigate other possible infringements, such as failure to implement the Third Energy Package. The Member State concerned shall provide all investment information and access necessary for the investigation, including access to installations and building sites. The Commission shall publish a report on that investigation.

Amendment 102

Proposal for a directive

Article 1 – point 6

Directive 2003/87/EC

Article 10c – paragraph 6 b (new)


Text proposed by the Commission	Amendment
	6b. In the case of infringement of Union climate and energy law, including the Third Energy Package, or the criteria set out in this Article, the Commission may require the Member State to withhold free allocation.

Amendment 103

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 1 – subparagraph 1


Text proposed by the Commission	Amendment
1. A fund to support investments in modernising energy systems and improving energy efficiency in Member States with a GDP per capita below 60% of the Union average in 2013 shall be established for the period 2021-30 and financed as set out in Article 10.	1. A fund to support and leverage investments in modernising energy systems, including district heating, and improving energy efficiency in Member States with a GDP per capita below 60% of the Union average in 2013 shall be established for the period 2021-2030 and financed as set out in Article 10.

Amendment 104

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 1 – subparagraph 2


Text proposed by the Commission	Amendment
The investments supported shall be consistent with the aims of this Directive and the European Fund for Strategic Investments.	The investments supported shall comply with the principles of transparency, non-discrimination, equal treatment, sound financial management and shall offer the best value for money. They shall be consistent with the aims of this Directive, the Union’s long term climate and energy goals and the European Fund for Strategic Investments, and shall:
	(i) Contribute to energy savings, renewable energy systems, energy storage and electricity interconnection, transmission and distribution sectors; where projects relate to electricity production, total greenhouse gas emissions per kilowatt hour of electricity produced in the installation shall not exceed 450g of CO2 equivalent after completion of the project. The Commission shall adopt a delegated act in accordance with Article 30b by 1 January 2021 in order to amend this Directive by defining, for projects relating to heat production, maximum total greenhouse gas emissions per kilowatt hour of heat produced in the installation that shall not be exceeded;
	(ii) On the basis of a cost-benefit analysis, ensure a net-positive gain in terms of emissions reductions and realise a pre-determined significant level of CO2 reductions;
	(iii) Be additional although they may be used to meet the relevant targets set under the 2030 Climate and Energy Framework, clearly respond to replacement and modernisation needs and shall not supply a market-driven increase in energy demand;
	(iv) Not contribute to new coal-fired energy generation nor increase coal dependency.

Amendment 105

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 1 – subparagraph 2 a (new)


Text proposed by the Commission	Amendment
	The Commission shall keep under review the requirements set out in this paragraph taking into account the Climate Strategy of the EIB. If, on the basis of technological progress, one or more of the requirements set out in this paragraph become irrelevant, the Commission shall adopt a delegated act in accordance with Article 30b by 2024 in order to amend this Directive by outlining new or updated requirements.

Amendment 106

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 2


Text proposed by the Commission	Amendment
2. The fund shall also finance small-scale investment projects in the modernisation of energy systems and energy efficiency. To this end, the investment board shall develop guidelines and investment selection criteria specific to such projects.	2. The fund shall also finance small-scale investment projects in the modernisation of energy systems and energy efficiency. To this end, its investment board shall develop investment guidelines and selection criteria specific to such projects in line with the objectives of this Directive and with the criteria set out in paragraph 1. Those guidelines and selection criteria shall be made available to the public.
	For the purpose of this paragraph a small-scale investment project means a project funded through loans provided by a national promotional bank or through grants contributing to the implementation of a national programme serving specific objectives that are in line with those of the Modernisation Fund, provided that not more than 10% of the Member States' share set out in Annex IIb is used.

Amendment 107

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 3 a (new)


Text proposed by the Commission	Amendment
	3a. Any beneficiary Member State which has decided to grant transitional free allocation pursuant to Article 10c may transfer those allowances to its share of the Modernisation Fund set out in Annex IIb and allocate them pursuant to the provisions of Article 10d.

Amendment 108

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 4 – subparagraph 1


Text proposed by the Commission	Amendment
4. The fund shall be governed by an investment board and a management committee, which shall be composed of representatives from the beneficiary Member States, the Commission, the EIB and three representatives elected by the other Member States for a period of 5 years. The investment board shall be responsible to determine an Union-level investment policy, appropriate financing instruments and investment selection criteria.	4. The beneficiary Member States shall be responsible for the governance of the fund, and shall jointly establish an investment board composed of one representative per beneficiary Member State, the Commission, the EIB, and three observers from interested parties such as industrial federations, trade unions, or NGOs. The investment board shall be responsible for determining a Union-level investment policy, which shall be in line with the requirements set out in this Article and be consistent with Union policies.
	An advisory board, independent from the investment board, shall be established. The advisory board shall be composed of three representatives from the beneficiary Member States, three representatives from non-beneficiary Member States, a representative of the Commission, a representative of the EIB, and a representative from the European Bank for Reconstruction and Development (EBRD), selected for a five year period. The representatives of the advisory board shall have a high level of relevant market experience in project structuring and project financing. The advisory board shall provide advice and recommendations to the investment board on project eligibility for selection, investment and financing decisions, and any further project development assistance as required.
The management committee shall be responsible for the day-to-day management of the fund.	A management committee shall be established. The management committee shall be responsible for the day-to-day management of the fund.

Amendment 109

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 4 – subparagraph 2


Text proposed by the Commission	Amendment
The investment board shall elect a representative from the Commission as chairman. The investment board shall strive to take decisions by consensus. If the investment board is not able to decide by consensus within a deadline set by the chairman, the investment board shall take a decision by simple majority.	The chairman of the investment board shall be elected from among its members for a one-year term. The investment board shall strive to take decisions by consensus. The advisory board shall adopt its opinion by simple majority.

Amendment 110

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 4 – subparagraph 3


Text proposed by the Commission	Amendment
The management committee shall be composed of representatives appointed by the investment board. Decisions of the management committee shall be taken by simple majority.	The investment board, advisory board and management committee shall operate in an open and transparent manner. The minutes of both board meetings shall be published. The composition of the investment board and advisory board shall be published and CVs and declarations of interests of the members shall be made available to the public and regularly updated. The investment board and the advisory board shall, on an ongoing basis, check for the absence of any conflict of interest. The advisory board shall submit every six months to the European Parliament, the Council and the Commission a list of advice provided to projects.

Amendment 111

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 4 – subparagraph 4


Text proposed by the Commission	Amendment
If the EIB recommends not financing an investment and provides reasons for this recommendation, a decision shall only be adopted if a majority of two-thirds of all members vote in favour. The Member State in which the investment will take place and the EIB shall not be entitled to cast a vote in this case. For small projects funded through loans provided by a national promotional bank or through grants contributing to the implementation of a national programme serving specific objectives in line with the objectives of the Modernisation Fund, provided that not more than 10% of the Member States' share set out in Annex IIb is used under the programme, the two preceding sentences shall not apply.	If the EIB recommends to the advisory board not to finance an investment and provides reasons why it is not in line with the investment policy adopted by the investment board and the selection criteria set out in paragraph 1, a positive opinion shall only be adopted if a majority of two-thirds of all members vote in favour. The Member State in which the investment will take place and the EIB shall not be entitled to cast a vote in this case.

Amendment 112

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 5 – introductory part


Text proposed by the Commission	Amendment
5. The beneficiary Member States shall report annually to the management committee on investments financed by the fund. The report shall be made public and include:	5. The beneficiary Member States shall report annually to the investment board and advisory board on investments financed by the fund. The report shall be made available to the public and include:

Amendment 113

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 6


Text proposed by the Commission	Amendment
6. Each year, the management committee shall report to the Commission on experience with the evaluation and selection of investments. The Commission shall review the basis on which projects are selected by 31 December 2024 and, where appropriate, make proposals to the management committee.	6. Each year, the advisory board shall report to the Commission on experience with the evaluation and selection of investments. The Commission shall review the basis on which projects are selected by 31 December 2024 and, where appropriate, make proposals to the investment board and the advisory board.

Amendment 114

Proposal for a directive

Article 1 – point 7

Directive 2003/87/EC

Article 10d – paragraph 7


Text proposed by the Commission	Amendment
7. The Commission shall be empowered to adopt a delegated act in accordance with Article 23 to implement this Article.	7. The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down detailed arrangements for the effective functioning of the Modernisation Fund.

Amendment 115

Proposal for a directive

Article 1 – paragraph 1 – point 8 a (new)

Directive 2003/87/EC

Article 11 – paragraph 1 – subparagraph 2 a (new)


Text proposed by the Commission	Amendment
	(8a) In Article 11(1) the following third subparagraph is added:
	'From 2021 onwards, Member States shall also ensure that during each calendar year every operator reports production activity for adjustments to allocation in accordance with Article 10a paragraph 7.'

Amendment 116

Proposal for a directive

Article 1 – point 8 b (new)

Directive 2003/87/EC

Article 11 – paragraph 3 a (new)


Text proposed by the Commission	Amendment
	(8b) In Article 11, the following paragraph is added:
	'3a. In case of a reasonable suspicion of irregularities or a failure by a Member State to provide the list and the information set out in paragraphs 1 to 3, the Commission may start an independent investigation, where necessary assisted by a contracted third party. The Member State concerned shall provide all information and access necessary for the investigation, including access to installations and production data. The Commission shall respect the same confidentiality on commercially sensitive information as the Member State concerned and shall publish a report on that investigation.'

Justification

Under current provisions the European Commission fully depends on the information provided by the Member State. However, in case reporting is incorrect or other irregularities occur, a violation of the provisions in Article 10a(1) to 10c may significantly distort level playing field for industries and energy producers in the Union. In this context it is justified to give the Commission the possibility to collect information independently.

Amendment 117

Proposal for a directive

Article 1 – point 10 a (new)

Directive 2003/87/EC

Article 12 – paragraph 3a


Present text	Amendment
	(10a) In Article 12, paragraph 3a is replaced by the following:
'3a. An obligation to surrender allowances shall not arise in respect of emissions verified as captured and transported for permanent storage to a facility for which a permit is in force in accordance with Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide¹.'	'3a. An obligation to surrender allowances shall not arise in respect of emissions verified as captured and transported for permanent storage to a facility for which a permit is in force in accordance with Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide¹, nor in respect of emissions verified as captured and/or re-used in an application ensuring a permanent bound of the CO2, for the purpose of carbon capture and re-use.'

Amendment 118

Proposal for a directive

Article 1 – point 12

Directive 2003/87/EC

Article 14 – paragraph 1


Text proposed by the Commission	Amendment
(12) In Article 14(1), the second subparagraph is replaced by the following:	(12) In Article 14, paragraph 1 is replaced by the following:
'The Commission shall be empowered to adopt a delegated act in accordance with Article 23.';	'1. The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down detailed arrangements for the monitoring and reporting of emissions and, where relevant, activity data, from the activities listed in Annex I, the monitoring and reporting of tonne-kilometre data for the purpose of an application under Articles 3e or 3f, which shall be based on the principles for monitoring and reporting set out in Annex IV and the specification of the global warming potential of each greenhouse gas in the requirements for monitoring and reporting emissions for that gas.';
	'By 31 December 2018, the Commission shall adjust existing rules on monitoring and reporting of emissions as defined in Commission Regulation (EU) 601/2012^* in order to remove regulatory barriers to investment in more recent low carbon technologies such as carbon capture and usage (CCU). Those new rules shall be effective for all CCU technologies as of 1 January 2019.
	That regulation shall also determine simplified monitoring, reporting and verification procedures for small emitters.
	____________________
	^* Commission Regulation (EU) No 601/2012 of 21 June 2012 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council. (OJ L 181, 12.7.2012, p. 30).’

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 119

Proposal for a directive

Article 1 – point 13

Directive 2003/87/EC

Article 15 – paragraphs 4 and 5


Text proposed by the Commission	Amendment
(13) In Article 15, the fifth subparagraph is replaced by the following:	(13) In Article 15, the fourth and fifth paragraphs are replaced by the following:
'The Commission shall be empowered to adopt a delegated act in accordance with Article 23.';	'The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this directive by laying down detailed arrangements for the verification of emission reports based on the principles set out in Annex V and for the accreditation and supervision of verifiers. It shall specify conditions for the accreditation and withdrawal of accreditation, for mutual recognition and peer evaluation of accreditation bodies, as appropriate.';

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 120

Proposal for a directive

Article 1 – point 13 a (new)

Directive 2003/87/EC

Article 16 – paragraph 7


Present text	Amendment
	(13a) In Article 16, paragraph 7 is replaced by the following:
7. When requests such as those referred to in paragraph 5 are addressed to the Commission, the Commission shall inform the other Member States through their representatives on the Committee referred to in Article 23(1) in accordance with the Committee’s Rules of Procedure.	7. When requests such as those referred to in paragraph 5 are addressed to the Commission, the Commission shall inform the other Member States through their representatives on the Committee referred to in Article 30c(1) in accordance with the Committee’s Rules of Procedure.

Justification

Technical adaptation.

Amendment 121

Proposal for a directive

Article 1 – point 14

Directive 2003/87/EC

Article 16 – paragraph 12


Text proposed by the Commission	Amendment
12. Where appropriate, detailed rules shall be established in respect of the procedures referred to in this Article. Those implementing acts shall be adopted in accordance with the procedure referred to in Article 22a.	12. Where appropriate, detailed rules shall be established in respect of the procedures referred to in this Article. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 30c(2).

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act.

Amendment 122

Proposal for a directive

Article 1 – point 15

Directive 2003/87/EC

Article 19 – paragraph 3


Text proposed by the Commission	Amendment
(15) In Article 19(3), the third sentence is replaced by the following:	(15) In Article 19, paragraph 3 is replaced by the following:
'It shall also include provisions to put into effect rules on the mutual recognition of allowances in agreements to link emission trading systems. The Commission shall be empowered to adopt a delegated act in accordance with Article 23.';	'3 The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down detailed arrangements for the establishment of a standardised and secure system of registries in the form of standardised electronic databases containing common data elements to track the issue, holding, transfer and cancellation of allowances, to provide for public access and confidentiality, as appropriate, and to ensure that there are no transfers which are incompatible with the obligations resulting from the Kyoto Protocol. Those delegated acts shall also include provisions concerning the use and identification of CERs and ERUs in the EU ETS and the monitoring of the level of such use. Those acts shall also include provisions to put into effect rules on the mutual recognition of allowances in agreements to link emission trading systems.';

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 123

Proposal for a directive

Article 1 – point 15 a (new)

Directive 2003/87/EC

Article 21 – paragraph 1


Present text	Amendment
	(15a) In Article 21, paragraph 1 is replaced by the following:
'1. Each year the Member States shall submit to the Commission a report on the application of this Directive. That report shall pay particular attention to the arrangements for the allocation of allowances, the operation of registries, the application of the implementing measures on monitoring and reporting, verification and accreditation and issues relating to compliance with this Directive and on the fiscal treatment of allowances, if any. The first report shall be sent to the Commission by 30 June 2005. The report shall be drawn up on the basis of a questionnaire or outline drafted by the Commission in accordance with the procedure laid down in Article 6 of Directive 91/692/EEC. The questionnaire or outline shall be sent to Member States at least six months before the deadline for the submission of the first report.	'1. Each year the Member States shall submit to the Commission a report on the application of this Directive. That report shall pay particular attention to the arrangements for the allocation of allowances, financial measures pursuant to Article 10a(6), the operation of registries, the application of the implementing measures on monitoring and reporting, verification and accreditation and issues relating to compliance with this Directive and on the fiscal treatment of allowances, if any. The first report shall be sent to the Commission by 30 June 2005. The report shall be drawn up on the basis of a questionnaire or outline drafted by the Commission in accordance with the procedure laid down in Article 6 of Directive 91/692/EEC. The questionnaire or outline shall be sent to Member States at least six months before the deadline for the submission of the first report.'

Justification

Strengthens reporting and the transparency in the compliance, or lack thereof, in all sectors.

Amendment 124

Proposal for a directive

Article 1 – point 15 b (new)

Directive 2003/87/EC

Article 21 – paragraph 2 a (new)


Text proposed by the Commission	Amendment
	(15b) In Article 21, the following paragraph is inserted:
	'2a. The report shall, using data provided through the cooperation referred to in Article 18b, include a list of operators subject to the requirements of this Directive who have not opened a registry account.'

Justification

While compliance by aviation operators is generally high, there are a number of cases of non-compliance which have yet to be resolved. Publishing a list of non-compliant operators would expedite enforcement.

Amendment 125

Proposal for a directive

Article 1 – point 15 c (new)

Directive 2003/87/EC

Article 21 – paragraph 3 a (new)


Text proposed by the Commission	Amendment
	(15c) In Article 21 the following paragraph is added:
	'3a. In case of a reasonable suspicion of irregularities or a failure by a Member State to report in accordance with paragraph 1, the Commission may undertake an independent investigation, where necessary assisted by a contracted third party. The Member State shall provide all information and access necessary for the investigation, including access to installations. The Commission shall publish a report on the investigation.'

Justification

In order to ensure an equal level of compliance across the Union, and to ensure a level playing field for industries participating in the EU ETS, the Commission should have the right to conduct an independent investigation where it is suspected that compliance is not ensured by national authorities.

Amendment 126

Proposal for a directive

Article 1 – point 16

Directive 2003/87/EC

Article 22 – paragraph 2


Text proposed by the Commission	Amendment
The Commission shall be empowered to adopt a delegated act in accordance with Article 23.	The Commission is empowered to adopt delegated acts in accordance with Article 30b to amend this Directive by laying down non-essential elements of the Annexes to this Directive, with the exception of Annexes I, IIa and IIb.

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act.

Amendment 127

Proposal for a directive

Article 1 – point 17

Directive 2003/87/EC

Article 22a – title


Text proposed by the Commission	Amendment
(17) The following Article 22a is inserted:	(17) The following Article is inserted:
'Article 22a	'Article 30c
Committee procedure'	Committee procedure'

Justification

Renumbering for cross-referencing purposes.

Amendment 128

Proposal for a directive

Article 1 – point 18

Directive 2003/87/EC

Article 23 – title


Text proposed by the Commission	Amendment
‘Article 23	‘Article 30b
Exercise of the delegation’	Exercise of the delegation’

Justification

Renumbering for cross-referencing purposes.

Amendment 129

Proposal for a directive

Article 1 – point 19 – point a

Directive 2003/87/EC

Article 24 – paragraph 1 – subparagraph 1


Text proposed by the Commission	Amendment
From 2008, Member States may apply emission allowance trading in accordance with this Directive to activities and to greenhouse gases which are not listed in Annex I, taking into account all relevant criteria, in particular the effects on the internal market, potential distortions of competition, the environmental integrity of the Community scheme and the reliability of the planned monitoring and reporting system, provided that inclusion of such activities and greenhouse gases is approved by the Commission.	From 2008, Member States may apply emission allowance trading in accordance with this Directive to activities and to greenhouse gases which are not listed in Annex I, taking into account all relevant criteria, in particular the effects on the internal market, potential distortions of competition, the environmental integrity of the EU ETS and the reliability of the planned monitoring and reporting system, provided that inclusion of such activities and such greenhouse gases is approved by the Commission. Any such unilateral inclusion shall be proposed and approved no later than 18 months before the start of a new trading period in the EU ETS.

Justification

Member States have the possibility to extend the scope of the EU ETS to add new gases and sectors. Any unilateral inclusion in the scope of the EU ETS needs to be clarified well in advance of the start of Phase IV

Amendment 130

Proposal for a directive

Article 1 – point 19 – point a

Directive 2003/87/EC

Article 24 – paragraph 1 – subparagraph 2


Text proposed by the Commission	Amendment
In accordance with delegated acts which the Commission shall be empowered to adopt in accordance with Article 23, if the inclusion refers to activities and greenhouse gases which are not listed in Annex I	The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down detailed arrangements for approval of the inclusion of the activities and greenhouse gases referred to in the first subparagraph in the emission allowance trading scheme if that inclusion refers to activities and greenhouse gases which are not listed in Annex I.

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 131

Proposal for a directive

Article 1 – point 19 – point b

Directive 2003/87/EC

Article 24 – paragraph 3


Text proposed by the Commission	Amendment
(b) the second subparagraph of paragraph 3 is replaced by the following:	(b) paragraph 3 is replaced by the following:
'The Commission shall be empowered to adopt delegated acts for such a regulation for the monitoring and reporting of emissions and activity data in accordance with Article 23.';	'3. The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down detailed arrangements for the monitoring of, and reporting on, related to activities, installations and greenhouse gases which are not listed as a combination in Annex I, if that monitoring and reporting can be carried out with sufficient accuracy.';

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 132

Proposal for a directive

Article 1 – point 20 – point a

Directive 2003/87/EC

Article 24a – paragraph 1 – subparagraphs 1 and 2


Text proposed by the Commission	Amendment
(a) the second subparagraph of paragraph 1 is replaced by the following:	(a) in paragraph 1, the first and second subparagraphs are replaced by the following:
'Such measures shall be consistent with acts adopted pursuant to Article 11b(7). The Commission shall be empowered to adopt a delegated act in accordance with Article 23.';	'1. The Commission is empowered to adopt delegated acts in accordance with Article 30b to supplement this Directive by laying down, in addition to the inclusions provided for in Article 24, detailed arrangements for issuing of allowances or credits in respect of projects administered by Member States that reduce greenhouse gas emissions not covered by the EU ETS.';

Justification

TFEU alignment. The content of this provision corresponds to the current wording of the basic act with few technical adjustments.

Amendment 133

Proposal for a directive

Article 1 – point 22

Directive 2003/87/EC

Article 25a – paragraph 1


Text proposed by the Commission	Amendment
1. Where a third country adopts measures for reducing the climate change impact of flights departing from that country which land in the Community, the Commission, after consulting with that third country, and with Member States within the Committee referred to in Article 23(1), shall consider options available in order to provide for optimal interaction between the Community scheme and that country’s measures.	1. Where a third country adopts measures for reducing the climate change impact of flights departing from that country which land in the Union, the Commission, after consulting with that third country, and with Member States within the Committee referred to in Article 30c(1), shall consider options available in order to provide for optimal interaction between the EU ETS and that third country’s measures.
Where necessary, the Commission may adopt amendments to provide for flights arriving from the third country concerned to be excluded from the aviation activities listed in Annex I or to provide for any other amendments to the aviation activities listed in Annex I which are required by an agreement pursuant to the fourth subparagraph. The Commission shall be empowered to adopt such amendments in accordance with Article 23.	Where necessary, the Commission may submit a legislative proposal to the European Parliament and Council to provide for flights arriving from the third country concerned to be excluded from the aviation activities listed in Annex I or to provide for any other amendments to the aviation activities listed in Annex I which are required by such agreement.

Amendment 134

Proposal for a directive

Article 1 – point 22 a (new)

Directive 2003/87/EC

Article 27 – paragraph 1


Present text	Amendment
	(22a) In Article 27, paragraph 1 is replaced by the following:
'1. Following consultation with the operator, Member States may exclude from the Community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and, where they carry out combustion activities, have a rated thermal input below 35 MW excluding emissions from biomass, in each of the three years preceding the notification under point (a), and which are subject to measures that will achieve an equivalent contribution to emission reductions, if the Member State concerned complies with the following conditions:	'1. Following consultation with the operator and upon the operator’s agreement, Member States may exclude from the EU ETS installations operated by an SME which have reported to the competent authority emissions of less than 50 000 tonnes of carbon dioxide equivalent, excluding emissions from biomass, in each of the three years preceding the notification under point (a), and which are subject to measures that will achieve an equivalent contribution to emission reductions, if the Member State concerned complies with the following conditions:
(a) it notifies the Commission of each such installation, specifying the equivalent measures applying to that installation that will achieve an equivalent contribution to emission reductions that are in place, before the list of installations pursuant to Article 11(1) has to be submitted and at the latest when this list is submitted to the Commission;	(a) it notifies the Commission of each such installation, specifying the equivalent measures applying to that installation that will achieve an equivalent contribution to emission reductions that are in place and specifying how those measures would not result in higher compliance costs for such installations, before the list of installations pursuant to Article 11(1) has to be submitted and at the latest when this list is submitted to the Commission;
(b) it confirms that monitoring arrangements are in place to assess whether any installation emits 25 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year. Member States may allow simplified monitoring, reporting and verification measures for installations with average annual verified emissions between 2008 and 2010 which are below 5 000 tonnes a year, in accordance with Article 14;	(b) it confirms that monitoring arrangements are in place to assess whether any installation emits 50 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year. Member States, following an operator’s request, shall allow simplified monitoring, reporting and verification measures for installations with average annual verified emissions between 2008 and 2010 which are below 5 000 tonnes a year, in accordance with Article 14;
(c) it confirms that if any installation emits 25 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year or the measures applying to that installation that will achieve an equivalent contribution to emission reductions are no longer in place, the installation will be reintroduced into the Community scheme;	(c) it confirms that if any installation emits 50 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year or the measures applying to that installation that will achieve an equivalent contribution to emission reductions are no longer in place, the installation will be reintroduced into the EU ETS;
(d) it publishes the information referred to in points (a), (b) and (c) for public comment.	(d) it makes the information referred to in points (a), (b) and (c) available to the public.
Hospitals may also be excluded if they undertake equivalent measures. '	Hospitals may also be excluded if they undertake equivalent measures.'

Amendment 135

Proposal for a directive

Article 1 – point 22 b (new)

Directive 2003/87/EC

Article 27 a (new)


Text proposed by the Commission	Amendment
	(22b) The following Article is inserted:
	'Article 27a
	Exclusion of small installations not subject to equivalent measures
	1. Following consultation with the operator, Member States may exclude from the EU ETS installations which have reported to the competent authority emissions of less than 5 000 tonnes of carbon dioxide equivalent, excluding emissions from biomass, in each of the three years preceding the notification under point (a), if the Member State concerned complies with the following conditions:
	(a) it notifies the Commission of each such installation before the list of installations pursuant to Article 11(1) is to be submitted or at the latest when that list is submitted to the Commission;
	(b) it confirms that monitoring arrangements are in place to assess whether any installation emits 5 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year;
	(c) it confirms that if any installation emits 5 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year the installation will be reintroduced into the EU ETS, unless Article 27 is applicable;
	(d) it makes the information referred to in points (a), (b) and (c) available to the public.
	2. When an installation is reintroduced into the EU ETS pursuant to paragraph 1(c), any allowances issued pursuant to Article 10a shall be granted starting with the year of the reintroduction. Allowances issued to such installations shall be deducted from the quantity to be auctioned pursuant to Article 10(2) by the Member State in which the installation is situated.'

Amendment 136

Proposal for a directive

Article 1 – point 22 c (new)

Directive 2003/87/EC

Article 29


Present text	Amendment
	(22c) Article 29 is amended as follows:
‘Report to ensure the better functioning of the carbon market	‘Report to ensure the better functioning of the carbon market
If, on the basis of regular reports referred to in Article 10(5), the Commission has evidence that the carbon market is not functioning properly, it shall submit a report to the European Parliament and to the Council. The report may be accompanied, if appropriate, by proposals aiming at increasing transparency of the carbon market and addressing measures to improve its functioning.’	If, on the basis of regular reports referred to in Article 10(5), the Commission has evidence that the carbon market is not functioning properly, it shall submit a report to the European Parliament and to the Council. The report shall include a section dedicated to the interaction between the EU ETS and other Union and national climate and energy policies, as regards the volumes of emissions reductions, the cost effectiveness of such policies, and their impact on demand for EU ETS allowances. The report may be accompanied, if appropriate, by legislative proposals aiming at increasing transparency of the EU ETS and addressing the capacity to contribute to the Union's 2030 and 2050 climate and energy goals and addressing measures to improve its functioning, including measures to account for the impact of complementary Union-wide energy and climate policies on the supply-demand balance of the EU ETS.'

Amendment 137

Proposal for a directive

Article 1 – point 22 d (new)

Directive 2003/87/EC

Article 30 a (new)


Text proposed by the Commission	Amendment
	(22d) The following Article is inserted:
	'Article 30a
	Adjustments upon global stocktake under the UNFCCC and the Paris Agreement
	Within six months of the facilitative dialogue under the UNFCCC in 2018 the Commission shall publish a communication assessing the consistency of the Union’s climate change legislation with the Paris Agreement goals. In particular, the communication shall examine the role and adequacy of the EU ETS in meeting the Paris Agreement goals.
	Within six months of the global stocktake in 2023 and subsequent global stocktakes thereafter, the Commission shall submit a report assessing the need to adjust the Union’s climate action accordingly.
	The report shall consider adjustments to the EU ETS within the context of global mitigation efforts and efforts undertaken by other major economies. In particular, the report shall assess the need for stricter emissions reductions, the need to adjust the carbon leakage provisions, and whether or not additional policy measures and tools are needed to meet the greenhouse gas commitments of the Union and Member States.
	The report shall take into account the risk of carbon leakage, the competitiveness of European industries, investments within the Union and the Union’s industrialisation policy.
	The report shall be accompanied by a legislative proposal, if appropriate, and in such a case the Commission shall in parallel publish a full impact assessment.'

Amendment 138

Proposal for a directive

Article 1 – point 22 e (new)

Directive 2003/87/EC

Annex I – paragraph 3


Present text	Amendment
	(22e) Annex I(3) is replaced by the following:
'3. When the total rated thermal input of an installation is calculated in order to decide upon its inclusion in the Community scheme, the rated thermal inputs of all technical units which are part of it, in which fuels are combusted within the installation, are added together. These units could include all types of boilers, burners, turbines, heaters, furnaces, incinerators, calciners, kilns, ovens, dryers, engines, fuel cells, chemical looping combustion units, flares, and thermal or catalytic post-combustion units. Units with a rated thermal input under 3 MW and units which use exclusively biomass shall not be taken into account for the purposes of this calculation. “Units using exclusively biomass” includes units which use fossil fuels only during start-up or shut-down of the unit.	'3. When the total rated thermal input of an installation is calculated in order to decide upon its inclusion in the EU ETS, the rated thermal inputs of all technical units which are part of it, in which fuels are combusted within the installation, are added together. Those units could include all types of boilers, burners, turbines, heaters, furnaces, incinerators, calciners, kilns, ovens, dryers, engines, fuel cells, chemical looping combustion units, flares, and thermal or catalytic post-combustion units. Units with a rated thermal input under 3 MW, back-up and emergency units used solely to generate electricity for on-site consumption in the event of a power cut and units which use exclusively biomass shall not be taken into account for the purposes of this calculation. “Units using exclusively biomass” includes units which use fossil fuels only during start-up or shut-down of the unit.

Amendment 139

Proposal for a directive

Article 1 a (new)

Decision (EU) 2015/1814

Article 1 – paragraph 5 – subparagraphs 1 a and 1 b (new)


Text proposed by the Commission	Amendment
	Article 1a
	Decision (EU) 2015/1814 is amended as follows:
	In Article 1(5), the following subparagraphs are added to the first subparagraph:
	‘By way of derogation, up until the review period referred to in Article 3, the percentages referred to in this subparagraph shall be doubled. The review shall consider doubling the intake rate until market balance is restored.
	In addition, the review shall introduce a cap on the MSR and, if appropriate, the review shall be accompanied by a legislative proposal.’.

Justification

The intake rate for the MSR should be doubled for the first four years of operation.

[1] OJ C 71, 24.2.2016, p. 57.
[2] OJ C 240, 1.7.2016, p. 62.

EXPLANATORY STATEMENT

Introduction

On the 15^th of July 2015 the European Commission published its proposal for Phase IV of the ETS. The proposal aims to meet the EU’s 2030 greenhouse gas emissions target of ‘at least’ 40% while protecting European industry from the risk of carbon leakage and promoting innovation and modernisation in Europe’s industrial and power sectors over the decade from 2020.[1] The proposal stems from the European Council conclusions of the 23^rd and 24^th of October 2014, which lay down guidelines on how these aims should be achieved.[2]

The Rapporteur supports the proposal of the European Commission as part of the EU’s ongoing 2030 climate and energy package. The Rapporteur believes that a market-based mechanism such as the ETS is the most cost-effective way of meeting our climate change obligations and notes with positivity the spread of carbon pricing around the world.

In creating this report, the Rapporteur has worked closely with his Shadow Rapporteurs, their offices and advisers and would like to put on record his thanks to them for their valuable input in the process so far. Similarly, the Rapporteur would like to put on record his thanks to the European Commission for their sustained and proactive engagement, too.

Ambition

The Rapporteur welcomes the new linear reduction factor (LRF) of 2.2% and believes it is the minimum by which the overall number of allowances should decline annually throughout Phase IV.

On the 12^th of December the nations of the world arrived at the Paris Agreement, and in doing so committed to arresting the global temperature rise to ‘well below’ two degrees, while acknowledging that 1.5 degrees would better combat the worst effects of climate change.[3] The Rapporteur believes it is crucial that the ETS is able to reflect the Paris Agreement going forward and has proposed the following:

a) A new review clause instructing the European Commission to keep the LRF under review, and if necessary to put a proposal to the European Parliament and Council following the first global stocktake in 2023.

Recognising that overlapping EU climate and energy policy as well as unilateral national measures to reduce electricity generating capacity can undermine the effectiveness of the ETS and contribute to market imbalances, the Rapporteur has also proposed the following:

a) As part of its annual review of the functioning of the ETS, the Commission should consider the impact of overlapping EU polices and if necessary make a proposal to the European Parliament and the Council.

b) Every 2 years, Member States may surrender a number of allowances to the MSR equal to the number of allowances connected to electricity capacity that has come offline in that period.

Carbon Leakage

As our climate change ambition continues to ratchet, free allowances will become more scarce. The Rapporteur believes it is essential to afford adequate protection to industries at risk of carbon leakage but recognises the need to further focus this protection while ensuring benchmarks are realistic and the iniquitous cross-sectoral correction factor (CSCF) is avoided. The Rapporteur has therefore proposed the following:

a) A more focussed distribution of free allowances based on the result of multiplying a sector or sub-sectors trade intensity with third countries with its emissions intensity.

b) Qualitative assessment for all sectors within 10% of a higher category of free allocation.

c) A new benchmark reduction rate of 0.3% to account for industries that cannot achieve an annual reduction of 0.5%.

d) Up to 2% points of the auction share will be transferred to the free allowance pot to ameliorate a CSCF if it is triggered.

e) The Commission may assess sectors or sub-sectors at a further aggregated or disaggregated level other than at NACE-4.

Indirect Costs

The Rapporteur recognises that there is a market distortion when some Member States compensate for indirect costs and others do not. Furthermore, the Rapporteur believes this distortion should be addressed. However, in seeking to do so a legal issue has emerged. In light of the fact that it is against the Treaties to compel Member States to use state aid, the Rapporteur has reverted to the current status that Member State ‘may’ compensate, pending further discussion with his Shadows and legal experts.

More Dynamic Allocation

Under current rules it is only possible for allocation to change when there is a 50% change in production levels. This has contributed to under-allocation in some sectors while others have made windfall profits. In order to rectify this, the rapporteur has proposed that:

a) Allocation will change with a corresponding 10% increase or decrease in production of an installation.

Simplification

The cost and administrative burden of the ETS falls heaviest on those who can least afford it. Recognising that there is a strong drive for reducing administrative burden on industry the Rapporteur has proposed the following:

a) The small-emitters threshold will be raised from 25,000 tCO2e to 50,000 tonnes CO2e.

b) Ultra-small emitters of less than 5,000 tCO2e should be able to opt out of the ETS with no equivalent measures.

Innovation Fund

Ultimately, industries must be able to innovate their way to a low carbon future. As ambition within the ETS increases and as our greenhouse gas emission limits decrease, it is paramount that new technologies emerge to keep Europe’s industries competitive and to safeguard jobs. The Rapporteur has therefore proposed a number of changes to the Innovation Fund:

a) Half the Innovation Fund will come from the auction share.

b) The Innovation Fund will be boosted with 150 million unallocated allowances.

c) Up to 75% of the cost of projects shall be supported.

d) 60% of funding need not be dependent on verified emissions reductions.

e) Projects will be financed according to pre-determined milestones.

Modernisation Fund

The Rapporteur believes that, pursuant to the October 2014 Council conclusions, the Modernisation Fund should be primarily governed by the beneficiary Member States with involvement of the EIB and the European Commission. Furthermore, the Rapporteur believes that the investment criteria and rules of the fund should be as transparent as possible. The Rapporteur has proposed the following:

a) The threshold for small projects will be 20 million Euros.

b) Member States shall create national rules and selection criteria for small projects and those rules and criteria will be subject to public consultation.

c) The Investment Board shall be made up of beneficiary Member States, the EIB and the Commission

d) The Selection Criteria of the Investment Board shall be subject to public consultation.

Article 10c

The Rapporteur welcomes the move towards a competitive bidding process for projects undertaken through Article 10c and recognises that competition will determine best value for money. While broadly accepting the Commission proposal the Rapporteur has proposed the following:

a) The threshold for competitive bidding will be 20 million Euros.

b) The co-generation of heat and power shall be eligible for support.

[1] http://ec.europa.eu/clima/policies/ets/revision/index_en.htm
[2] http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/145356.pdf
[3] https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf

MINORITY OPINION

pursuant to Rule 56(3) of the Rules of Procedure

Mireille D'Ornano

Our group cannot support this reform, which we consider far too risky, despite the good intentions it invokes from an environmental point of view. Reducing greenhouse gas emissions is certainly to be applauded, but this must not be done at the expense of our jobs in industry. The sectors concerned, such as the steel industry, already face cutthroat international competition from countries such as China. Even though they play a significant role in the sector, such countries still show few scruples when it comes to environmental matters. Moreover, the increasingly insidious strengthening of the Commission’s powers to the detriment of sovereign Member States is also a factor here. Neither can we accept the barely concealed encroachment on the powers of the International Maritime Organisation and the International Civil Aviation Organisation that will result from the wish to include the maritime and aviation sector in the ETS system. If these decisions are to be legitimate and effective, they must be taken by all the States concerned, at international level. The European Union should on no account interfere in these organisations or seek to replace them. For all these reasons, we will be voting against this report.

OPINION of the Committee on Industry, Research and Energy(*) (10.11.2016)

for the Committee on the Environment, Public Health and Food Safety

on the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments
(COM(2015)0337 – C8‑0190/2015 – 2015/0148(COD))

Rapporteur (*)Fredrick Federley

(*) Associated committee – Rule 54 of the Rules of Procedure

SHORT JUSTIFICATION

The world is moving towards a low carbon economy, the Paris climate agreement adopted last year marks this development irreversible. The agreement sets out ambitious goals, and for the EU it is important to deliver on its promises. It is equally important that we seize the vast opportunities connected to the transformation of our economy into a low-carbon economy.

Europe has over ten years of experience with the EU emissions trading system (EU ETS). The EU ETS is the world's largest cap-and-trade scheme, covering over 11,000 power plants and industrial installations. It has been successful in bringing climate change on the agenda of boardrooms, by introducing a price on carbon – which has helped to stimulate investments in low-carbon technologies. Governments and the private sector are making the case for carbon markets all across the world, as a tool that can secure competitiveness, encourage innovation, and deliver meaningful emissions reductions. A growing group of countries, including notably China, uses or will use carbon markets to achieve its climate objectives.

In July 2015, the European Commission presented a proposal to revise the EU ETS Directive in order to reach the EU's objective of at least 40% domestic greenhouse gas emission cuts in 2030. The rapporteur welcomes the proposed reforms. However, some elements must be strengthened in order to ensure the integrity of the system, the predictability for industry and a level playing field across companies, sectors and Member States. It is vital, also in view of the recently adopted Paris agreement, that the EU ETS continues to drive adequate emission cuts. At the same time, it must prevent undue carbon costs for the best performing industries which are genuinely exposed to the risk of carbon leakage.

Delivering cost-efficient emission reductions

According to the current Directive, carbon leakage provisions end in 2020. However, for some industrial sectors it will remain necessary to continue the free allocation temporarily, as an exemption to the general rule of auctioning as main allocation method, to prevent the risk of carbon leakage. Allocation rules and benchmarks must be both realistic and provide an incentive for continuous process improvements. More frequent adjustments according to actual production data is needed in order to avoid over-allocation and to not discourage efficient industries from growing. The free allocation must be better targeted on those sectors most exposed to carbon leakage risk, ensuring full support for sectors in greatest need. This approach will minimise the need to apply a cross-sectoral correction factor that may otherwise unjustly and bluntly disadvantage the competitiveness of some industrial sectors.

Driving industrial innovation

The EU ETS can and should be a powerful tool to help scaling up innovative low-carbon technologies. The rapporteur welcomes the Commission's proposal to increase the size of the innovation fund, and the extended scope to low-carbon innovation in industrial sectors. However, the EU ETS currently fails to promote low-carbon investments and innovation on the scale needed to achieve medium and long term climate objectives. It needs a stronger innovation fund with an additional 150 million allowances to leverage private investments in breakthrough industrial technologies. As the EU ETS cap tightens and the carbon leakage provisions are reformed, the ultimate aim being 100% auctioning, policies to support investment in the transition to a low carbon economy become increasingly more important.

Consistent with an increasingly integrated energy market

The reform of the EU ETS, along with its impact on energy production and energy trade, should be consistent with the objectives of the Energy Union. An innovative and modern European energy system is vital, and more resources should be directed towards this aim. Post-2020 EU ETS rules aimed at the power sector or at the compensation of indirect carbon costs for electricity consumers need to be more harmonised, and should aim to establish a level playing field and not to distort competition in the electricity market between Member States. The transitional free allocation to the energy sector in lower income member states must be conducted in a transparent manner, ensuring economically viable projects in line with EU's long term energy and climate goals. A general review of the interaction between the EU ETS and other climate, air quality and energy policies at European and national level should be conducted regularly, in order to avoid overlapping policies and negative interaction between different instruments.

Building on the Paris agreement

What effects the Paris climate agreement will have for the EU ETS is not yet explored in detail, and is thus not possible to fully take into account for the start of phase 4.

While the Kyoto Protocol only covered 12 % of global emissions, countries accounting for over 95 % of global emissions are now required to implement national climate plans and increase ambition each fifth year. The EU ETS Directive must therefore be aligned with the Paris agreement, including the establishment of an EU ETS ratchet up mechanism that makes it possible to regularly revise the carbon leakage provisions and level of ambition.

AMENDMENTS

The Committee on Industry, Research and Energy calls on the Committee on the Environment, Public Health and Food Safety, as the committee responsible, to take into account the following amendments:

Amendment 1

Proposal for a directive

Recital 1

Text proposed by the Commission

Amendment

__________________

Amendment 2

Proposal for a directive

Recital 2

Text proposed by the Commission

Amendment

(2) The European Council of October 2014 made a commitment to reduce the overall greenhouse gas emissions of the Union by at least 40% below 1990 levels by 2030. All sectors of the economy should contribute to achieving these emission reductions and the target will be delivered in the most cost-effective manner through the Union emission trading system (EU ETS) delivering a reduction of 43% below 2005 levels by 2030. This was confirmed in the intended nationally determined reduction commitment of the Union and its Member States submitted to the Secretariat of the UN Framework Convention on Climate Change on 6 March 2015[1]. The Paris Agreement on Climate Change (“the Agreement”), approved at the 21st session of the Conference of the Parties to the United Nations Framework Convention on Climate Change, marks a new level of global commitment, aiming to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5°C. In accordance with the Agreement, all sectors of the economy have to contribute to the reduction of CO2 emissions. Targets and measures agreed at the international level, such as in the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO), are welcomed if they achieve adequate emissions reductions.

__________________

¹⁶ http://www4.unfccc.int/submissions/indc/Submission%20Pages/submissions.aspx

Amendment 3

Proposal for a directive

Recital 3

Text proposed by the Commission

Amendment

(3) The European Council confirmed that a well-functioning, reformed and more effective EU ETS with an instrument to stabilise the market will be the main European instrument to achieve this target, with an annual reduction factor of 2.2% from 2021 onwards, free allocation not expiring but existing measures continuing after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in other major economies, third countries or subnational regions, without reducing the share of allowances to be auctioned. The auction share should be expressed as a percentage figure in the legislation, to enhance planning certainty as regards investment decisions, to increase transparency and to render the overall system simpler and more easily understandable. While the Union is clear on its intention to maintain the EU ETS as the centrepiece of Union climate policy, other countries and regions in the world are following the Union climate policies. In 2016, some 40 countries and more than 20 cities, states and provinces use carbon-pricing mechanisms, to different extents, with more planning to implement them in the future. The Union encourages other countries to follow and persevere in their efforts.

Amendment 4

Proposal for a directive

Recital 4

Text proposed by the Commission

Amendment

(4) It is a key Union priority to establish a resilient Energy Union to provide secure, sustainable, competitive and affordable energy to its citizens. Achieving this requires continuation of ambitious climate action with the EU ETS as the cornerstone of Europe's climate policy, and progress on the other aspects of Energy Union¹⁷, while ensuring these aspects, such as those related to energy efficiency and renewable energy sources, enhance the goals of the EU ETS and do not undermine its market effectiveness. Implementing the ambition decided in the 2030 framework contributes to delivering a meaningful carbon price and continuing to stimulate cost-efficient greenhouse gas emission reductions, in order to meet the Union's long-term goal of reducing greenhouse gas emissions by 80-95% in 2050. It is regretted that the carbon price signal during Phase 3 has not been high enough to incentivise investments in low carbon technology and processes. A carbon price that is sufficient to incentivise investments in decarbonisation of the production is key for a well-functioning EU ETS. The re-industrialisation 20% target of industry's share in the Union's GDP by 2020 in this context is to be emphasised, as well as the importance of innovation, investments in R&D, employment and skills renewal.

__________________

¹⁷ COM(2015)80, establishing a Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy

Amendment 5

Proposal for a directive

Recital 5

Text proposed by the Commission

Amendment

(5) Article 191(2) of the Treaty on the Functioning of the European Union requires that Union policy is based on the principle that the polluter should pay and, on this basis, Directive 2003/87/EC provides for a transition to full auctioning over time. Avoiding the risk of carbon and investment leakage is a justification to postpone full transition, and targeted free allocation of allowances to industry is justified in order to address genuine risks of increases in global greenhouse gas emissions and diversion of investments to third countries where industry is not subject to comparable carbon constraints as long as comparable climate policy measures are not undertaken by other major economies. A study commissioned by the Commission in 2013 concluded that during the years 2005 to2012 no carbon leakage had occurred.

Amendment 6

Proposal for a directive

Recital 6

Text proposed by the Commission

Amendment

(6) The auctioning of allowances remains the general rule, with free allocation as an exception for a transitional period in order to maintain European global competitiveness. Consequently, and as confirmed by the European Council, the share of allowances to be auctioned, which was 57% over the period 2013-2020, should not be reduced. From 2021 onwards, the share of allowances to be auctioned should be 57% with the possibility of it being decreased by up to five percentage points to ensure a sufficient amount of free allowances. The Commission's Impact Assessment¹⁸ provides details on the auction share and specifies that this 57% share is made up of allowances auctioned on behalf of Member States, including allowances set aside for new entrants but not allocated, allowances for modernising electricity generation in some Member States and allowances which are to be auctioned at a later point in time because of their placement in the Market Stability Reserve established by Decision (EU) 2015/... of the European Parliament and of the Council¹⁹

__________________

¹⁸ SEC(2015)XX

Amendment 7

Proposal for a directive

Recital 7

Text proposed by the Commission

Amendment

(7) To preserve the environmental benefit of emission reductions in the Union while actions by other countries do not provide comparable incentives to industry to reduce emissions, free allocation should continue to installations in sectors and sub-sectors at genuine risk of carbon leakage. Free allocation is not supposed to be a subsidy, but should aim to prevent the risk of carbon and investment leakage and incentivise and finance investments in low carbon technologies and processes. Experience gathered during the operation of the EU ETS confirmed that sectors and sub-sectors are at risk of carbon leakage to varying degrees, and that free allocation has prevented carbon leakage. While some sectors and sub-sectors can be deemed at a higher risk of carbon leakage, others are able to pass on a considerable share of the costs of allowances to cover their emissions in product prices without losing market share and only bear the remaining part of the costs so that they are at a low risk of carbon leakage. The Commission should determine and differentiate the relevant sectors based on their trade intensity and their emissions intensity to better identify sectors at a genuine risk of carbon leakage. Where, based on these criteria, a threshold determined by taking into account the respective possibility for sectors and sub-sectors concerned to pass on costs in product prices is exceeded, the sector or sub-sector should be deemed at risk of carbon leakage. Others should be considered at a low risk or at no risk of carbon leakage. Sectors and sub-sectors that are not exposed to the risk of carbon leakage should not receive allowances free of charge. Taking into account the possibilities for sectors and sub-sectors outside of electricity generation to pass on costs in product prices should also reduce windfall profits.

Amendment 8

Proposal for a directive

Recital 8

Text proposed by the Commission

Amendment

(8) In order to reflect technological progress in the sectors concerned and adjust them to the relevant period of allocation, provision should be made for the values of the benchmarks for free allocations to installations, determined on the basis of data from the years 2007-8, to be updated in line with observed average improvement. For reasons of predictability, this should be done through applying a factor that represents the best assessment of progress across sectors, which should then take into account robust, objective and verified data from installations so that sectors whose rate of improvement differs considerably from this factor have a benchmark value closer to their actual rate of improvement. Where the data shows a difference from factor reduction of more than 0.5% of the 2007-8 value higher or lower per year over the relevant period, the related benchmark value shall be adjusted by that percentage. To ensure a level playing field for the production of aromatics, hydrogen and syngas in refineries and chemical plants, the benchmark values for aromatics, hydrogen and syngas should continue to be aligned to the refineries benchmarks.

(8) In order to reflect technological progress in the sectors concerned benchmarks should be fully updated with 2017 and 2018 data reflecting real technological improvements. For reasons of predictability and providing a continuous incentive for process improvement, the benchmarks should be further updated through applying a factor that represents the best assessment of progress across sectors, which should then take into account robust, objective and verified data from installations so that sectors whose rate of improvement differs considerably from this factor have a benchmark value closer to their actual rate of improvement. Where the data shows a difference from factor reduction of more than 0.5% of the value higher or lower per year over the relevant period, the related benchmark value shall be adjusted by that percentage. Where sectors have a lower rate of improvement than 0,3%, that percentage should be applied. To ensure a level playing field for the production of aromatics, hydrogen and syngas in refineries and chemical plants, the benchmark values for aromatics, hydrogen and syngas should continue to be aligned to the refineries benchmarks.

Amendment 9

Proposal for a directive

Recital 9

Text proposed by the Commission

Amendment

(9) A harmonised EU mechanism should be established to compensate, taking state aid rules into account, certain installations in sectors or sub-sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices. The Protocol and accompanying decisions adopted by the Conference of the Parties in Paris need to provide for the dynamic mobilisation of climate finance, technology transfer and capacity building for eligible Parties, particularly those with least capabilities. Public sector climate finance will continue to play an important role in mobilising resources after 2020. Therefore, at least 80% of the auction revenues should be spent on climate actions listed in this Directive, including for climate financing actions in vulnerable third countries, including adaptation to the impacts of climate. The amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed Intended Nationally Determined Contributions (INDCs), subsequent investment plans and national adaptation planning processes. The EU should also establish a Just Transition Fund to pool auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy.

Amendment 10

Proposal for a directive

Recital 10

Text proposed by the Commission

Amendment

(10) The main long-term incentive from this Directive for the capture and storage (CCS) and carbon capture and use (CCU) of CO2, new renewable energy technologies and breakthrough innovation in sustainable low-carbon technologies and processes is the carbon price signal it creates and that allowances will not need to be surrendered for CO2 emissions which are permanently stored or avoided. In addition, to supplement the resources already being used to accelerate demonstration of commercial CCS and CCU facilities and innovative renewable energy technologies, EU ETS allowances should be used to provide guaranteed rewards for deployment of CCS and CCU facilities, new renewable energy technologies and industrial innovation in sustainable low-carbon technologies and processes in the Union for CO2 stored or avoided on a sufficient scale, provided an agreement on knowledge sharing is in place. The majority of this support should be dependent on verified avoidance of greenhouse gas emissions, while some support may be given when pre-determined milestones are reached taking into account the technology deployed. The maximum percentage of project costs to be supported may vary by category of project.

Amendment 11

Proposal for a directive

Recital 11

Text proposed by the Commission

Amendment

(11) A Modernisation Fund should be established from 2% of the total EU ETS allowances, and auctioned in accordance with the rules and modalities for auctions taking place on the Common Auction Platform set out in Regulation (EU) No 1031/2010. Member States who in 2013 had a GDP per capita at market exchange rates of below 60% below the Union average should be eligible for funding from the Modernisation Fund and derogate up to 2030 from the principle of full auctioning for electricity generation by using the option of free allocation in order to transparently promote real investments modernising their energy sector in line with the Union's 2030 and 2050 climate and energy goals while avoiding distortions of the internal energy market. The rules for governing the Modernisation Fund should provide a coherent, comprehensive and transparent framework to ensure the most efficient implementation possible, taking into account the need for easy access by all participants. The function of the governance structure should be commensurate with the purpose of ensuring the appropriate use of the funds. The governance structure should be composed of an investment board and an advisory board. Investments financed from the fund should be proposed by the Member States. To ensure that the investment needs in low income Member States are adequately addressed, the distribution of funds will take into account in equal shares verified emissions and GDP criteria. The financial assistance from the Modernisation Fund could be provided through different forms.

Amendment 12

Proposal for a directive

Recital 12

Text proposed by the Commission

Amendment

(12) The European Council confirmed that the modalities, including transparency, of the optional free allocation to modernise the energy sector in certain Member States should be improved. Investments with a value of €10 million or more should be selected by the Member State concerned through a competitive bidding process on the basis of clear and transparent rules to ensure that free allocation is used to promote real investments modernising the energy sector in line with the Energy Union objectives. The list of both selected and rejected projects should be made publicly available. Investments with a value of less than €10 million should also be eligible for funding from the free allocation. The Member State concerned should select such investments based on clear and transparent criteria set in this Directive. The results of this selection process should be subject to public consultation. The public should be duly kept informed at the stage of the selection of investment projects as well as of their implementation.

Amendment 13

Proposal for a directive

Recital 13

Text proposed by the Commission

Amendment

(13) EU ETS funding should be coherent with other Union funding programmes, including European Structural and Investment Funds, so as to ensure the effectiveness of public spending.

(13) EU ETS funding should be coherent with other Union funding programmes, including Horizon 2020, The European Fund for Strategic Investments, and European Structural and Investment Funds, taking into account the European Investment Bank Climate Investment Strategy to ensure the effectiveness of public spending.

Amendment 14

Proposal for a directive

Recital 14

Text proposed by the Commission

Amendment

(14) The existing provisions which are in place for small installations to be excluded from the EU ETS allow the installations which are excluded to be extended in order to reduce unnecessary administrative costs, and it should be made possible for Member States to update their list of excluded installations and for Member States currently not making use of this option to do so at the beginning of each trading period.

Amendment 15

Proposal for a directive

Recital 16 b (new)

Text proposed by the Commission

Amendment

(16b) In order to considerably reduce the administrative burden faced by companies, the Commission could consider measures such as automating the submission and verification of emissions reports, fully exploiting the potential of information and communication technologies;

Amendment 16

Proposal for a directive

Article 1 – paragraph 1 – point -1 (new)

Directive 2003/87/EC

Article 3 – paragraph 1 – point ua (new)


Text proposed by the Commission	Amendment
	In Article 3, paragraph 1, the following point is added:
	“(ua) small emitter' means an installation which has reported to the competent authority emissions of less than 50 000 tonnes of carbon dioxide equivalent and, where they carry out combustion activities, have a rated thermal input below 35 MW, excluding emissions from biomass, in each of the three years preceding the notification under point (a) of Article 27(1).”

Amendment 17

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1


Text proposed by the Commission	Amendment
(a) three new subparagraphs are added to paragraph 1:	(a) four new subparagraphs are added to paragraph 1:
From 2021 onwards, the share of allowances to be auctioned by Member States shall be 57%.	“From 2021 onwards, the share of allowances to be auctioned by Member States shall be 57%, and that share shall decrease by up to five percentage points over the entire fourth trading period pursuant to Article 10a(5). Such an adjustment shall take place solely in the form of a reduction of allowances auctioned pursuant to point (a) of the first subparagraph of Article 10(2).
2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain Member States as set out in Article 10d of this Directive (“the Modernisation Fund”).	2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain Member States as set out in Article 10d of this Directive (“the Modernisation Fund”).
The total remaining quantity of allowances to be auctioned by Member States shall be distributed in accordance with paragraph 2.	The total remaining quantity of allowances to be auctioned by Member States shall be distributed in accordance with paragraph 2.
	300 million allowances placed in the market stability reserve shall be cancelled in the year 2021.”

Amendment 18

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point b – point i

Directive 2003/87/EC

Article 10 – paragraph 2


Text proposed by the Commission	Amendment
(i) in point (a), “88%” is replaced by “90%”;	(i) the first subparagraph is replaced by the following:
2 The total quantity of allowances to be auctioned by each Member State shall be composed as follows:	“2 The total quantity of allowances to be auctioned by each Member State shall be composed as follows:
(a) 90 % of the total quantity of allowances to be auctioned being distributed amongst Member States in shares that are identical to the share of verified emissions under the Community scheme for 2005 or the average of the period from 2005 to 2007, whichever one is the highest, of the Member State concerned;	(a) 90 % of the total quantity of allowances to be auctioned being distributed amongst Member States in shares that are identical to the share of verified emissions under the Community scheme for 2005 or the average of the period from 2005 to 2007, whichever one is the highest, of the Member State concerned;
(b) 10% of the total quantity of allowances to be auctioned being distributed amongst certain Member States for the purpose of solidarity and growth within the Community, thereby increasing the amount of allowances that those Member States auction under point (a) by the percentages specified in Annex IIa."; and	(b) 10 % of the total quantity of allowances to be auctioned being distributed amongst certain Member States for the purpose of solidarity and growth within the Community, thereby increasing the amount of allowances that those Member States auction under point (a) by the percentages specified in Annex IIa. For those Member States eligible under the Modernisation Fund as set out in Article 10d, their share of allowances specified in Annex IIa shall be transferred to their share in the Modernisation Fund.”

Amendment 19

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point b – point ii

Directive 2003/87/EC

Article 10 – paragraph 2 – point b


Text proposed by the Commission	Amendment
(ii) point (b) is replaced by the following:	deleted
(b) 10% of the total quantity of allowances to be auctioned being distributed amongst certain Member States for the purpose of solidarity and growth within the Community, thereby increasing the amount of allowances that those Member States auction under point (a) by the percentages specified in Annex IIa."; and

Amendment 20

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point c

2003/87/EC

Article 10 – paragraph 3


Text proposed by the Commission	Amendment
(c) In paragraph 3, the following points (j), (k) and (l) are added:	(c) Paragraph 3 is replaced by the following:
3 Member States shall determine the use of revenues generated from the auctioning of allowances. At least 50 % of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c), or the equivalent in financial value of these revenues, should be used for one or more of the following:	“3 Member States shall determine the use of revenues generated from the auctioning of allowances. At least 80% of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c), or the equivalent in financial value of these revenues, shall be used for one or more of the following:
(a) to reduce greenhouse gas emissions, including by contributing to the Global Energy Efficiency and Renewable Energy Fund and to the Adaptation Fund as made operational by the Poznan Conference on Climate Change (COP 14 and COP/MOP 4), to adapt to the impacts of climate change and to fund research and development as well as demonstration projects for reducing emissions and for adaptation to climate change, including participation in initiatives within the framework of the European Strategic Energy Technology Plan and the European Technology Platforms;	(a) to reduce greenhouse gas emissions, including by contributing to the Global Energy Efficiency and Renewable Energy Fund and to the Adaptation Fund as made operational by the Poznan Conference on Climate Change (COP 14 and COP/MOP 4), and to the Green Climate Fund, to adapt to the impacts of climate change and to fund research and development as well as demonstration projects for reducing emissions and for adaptation to climate change, including participation in initiatives within the framework of the European Strategic Energy Technology Plan and the European Technology Platforms;
(b) to develop renewable energies to meet the commitment of the Community to using 20 % renewable energies by 2020, as well as to develop other technologies contributing to the transition to a safe and sustainable low-carbon economy and to help meet the commitment of the Community to increase energy efficiency by 20 % by 2020;	(b) to develop renewable energies to meet the commitment of the Community to using [update in accordance with agreement by the co-legislators] % renewable energies by 2030, as well as to develop other technologies contributing to the transition to a safe and sustainable low-carbon economy and to help meet the commitment of the Community to increase energy efficiency by [update in accordance with agreement by the co-legislators]% by 2030;
(c) measures to avoid deforestation and increase afforestation and reforestation in developing countries that have ratified the international agreement on climate change, to transfer technologies and to facilitate adaptation to the adverse effects of climate change in these countries;	(c) measures to avoid deforestation and increase afforestation and reforestation in developing countries that have ratified the international agreement on climate change, to transfer technologies and to facilitate adaptation to the adverse effects of climate change in these countries;
d) forestry sequestration in the Community;	(d) forestry sequestration in the Community;
(e) the environmentally safe capture and geological storage of CO2, in particular from solid fossil fuel power stations and a range of industrial sectors and subsectors, including in third countries;	(e) the environmentally safe capture and geological storage or use of CO2, in particular from solid fossil fuel power stations and a range of industrial sectors and subsectors, including in third countries;
(f) to encourage a shift to low-emission and public forms of transport;	(f) to encourage a shift to low-emission and public forms of transport;
(g) to finance research and development in energy efficiency and clean technologies in the sectors covered by this Directive;	(g) to finance research and development in energy efficiency and clean technologies in the sectors covered by this Directive;
(h) measures intended to increase energy efficiency and insulation or to provide financial support in order to address social aspects in lower and middle income households;	(h) measures intended to increase energy efficiency and insulation or to provide financial support in order to address social aspects in lower and middle income households;
(i) to cover administrative expenses of the management of the Community scheme.	(i) for climate financing actions in vulnerable third countries, including adaptation to the impacts of climate change.;
(j) to fund financial measures in favour of sectors or subsectors that are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, provided that these measures meet the conditions set out in Article 10a(6);	(j) to encourage resource efficiency and a circular economy;
(k) for climate financing actions in vulnerable third countries, including adaptation to the impacts of climate change.;	(k) In addition, revenues may be used for one or more of the following:
	(i) to cover administrative expenses of the management of the Community scheme;
	(ii) to fund financial measures in favour of sectors or subsectors that are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, provided that these measures meet the conditions set out in Article 10a(6);
(l) to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy in close coordination with the social partners.
Member States shall be deemed to have fulfilled the provisions of this paragraph if they have in place and implement fiscal or financial support policies, including in particular in developing countries, or domestic regulatory policies, which leverage financial support, established for the purposes set out in the first subparagraph and which have a value equivalent to at least 50 % of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c).	Member States shall be deemed to have fulfilled the provisions of this paragraph if they have in place and implement fiscal or financial support policies, including in particular in developing countries, or domestic regulatory policies, which leverage financial support, established for the purposes set out in the first subparagraph and which have a value equivalent to at least 50 % of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c).
Member States shall inform the Commission as to the use of revenues and the actions taken pursuant to this paragraph in their reports submitted under Decision No 280/2004/EC."	Member States shall inform the Commission as to the use of revenues and the actions taken pursuant to this paragraph in their reports submitted under Decision No 280/2004/EC. That information shall be provided through a standardised template provided by the Commission, with a minimum level of detail allowing for transparency and comparability, including information on additionality of the funds. The Commission shall make this information available to the public on its website.”

Amendment 21

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point c a (new)

Directive 2003/87/EC

Article 10 – paragraph 3a and 3b (new)


Text proposed by the Commission	Amendment
	(ca) the following paragraphs are inserted:
	“3a Up to 260 million of the total quantity of allowances, half of which are taken from the share of allowances to be auctioned as referred to in Article 10(1) and half of which would otherwise be allocated for free, shall be auctioned to establish a harmonised arrangement at Union level as set out in Article 10a(6).
	3b. Just Transition Fund
	A Just Transition Fund shall be created as of 1 January 2021 as a complement to the European Regional Development Fund and the European Social Fund and shall be funded through the pooling of 2% of the auctioning revenues.
	The revenues of those auctions would remain at Union level, with the goal of using them to cushion the social impact of climate policies in regions which combine a high share of workers in carbon-dependent sectors and a GDP per capita well below the Union average. Such measures shall respect the principle of subsidiarity.
	Those auctioning revenues aimed at just transition can be put to use in different ways, such as:
	- creating redeployments and/or mobility cells,
	- education/training initiatives to re-skill or upskill workers,
	- support in job search,
	- business creation, and
	- monitoring and pre-emptive measures to avoid or minimise the negative impact of restructuring process on physical and mental health.
	Since the core activities to be financed by a Just Transition Fund are, strongly related to the labour market, social partners shall be actively involved into the fund management – on the model of the European Social Fund committee – and the participation of local social partners shall be a key requirement for projects to get funding.”

Amendment 22

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point d a (new)

Directive 2003/87/EC

Article 10 – paragraph 5


Present text	Amendment
	(da) paragraph 5 is replaced by the following:
5. The Commission shall monitor the functioning of the European carbon market. Each year, it shall submit a report to the European Parliament and to the Council on the functioning of the carbon market including the implementation of the auctions, liquidity and the volumes traded. If necessary, Member States shall ensure that any relevant information is submitted to the Commission at least two months before the Commission adopts the report.	“5. The Commission shall monitor the functioning of the European carbon market. Each year, it shall submit a report to the European Parliament and to the Council on the functioning of the carbon market including the implementation of the auctions, liquidity and the volumes traded. The report shall also address the interaction between the EU ETS and other climate and energy measures at Union and national level, and shall analyse the implications of various policy instruments on the functioning of EU ETS market, especially on the supply-demand balance in the carbon market. The report shall also address the pass-through of the costs of allowances in the product prices for the most relevant sectors and sub-sectors, in particular in relation to their market shares. If necessary, Member States shall ensure that any relevant information is submitted to the Commission at least two months before the Commission adopts the report.”

Amendment 23

Proposal for a directive

Article 1 – paragraph 1 – point 4 – d b (new)

Directive 2003/87/EC

Article 10 – paragraph 5a (new)


Text proposed by the Commission	Amendment
	(db) the following paragraph is added:
	“5a. Member States shall communicate to the Commission the closures of electricity generation capacity due to national measures. The Commission shall calculate the equivalent number of allowances that those closures represent. Member States may retire a corresponding volume of allowances."

Amendment 24

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point a

Directive 2003/87/EC

Article 10a – paragraph 1 – subparagraph 1

Amendment 25

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point b

Directive 2003/87/EC

Article 10a – paragraph 2 – subparagraph 3


Text proposed by the Commission	Amendment
(b) a new third subparagraph is added to paragraph 2 as follows:	deleted
The benchmark values for free allocation shall be adjusted in order to avoid windfall profits and reflect technological progress in the period between 2007-8 and each later period for which free allocations are determined in accordance with Article 11(1). This adjustment shall reduce the benchmark values set by the act adopted pursuant to Article 10a by 1% of the value that was set based on 2007-8 data in respect of each year between 2008 and the middle of the relevant period of free allocation, unless:
(i) On the basis of information submitted pursuant to Article 11, the Commission shall identify whether the values for each benchmark calculated using the principles in Article 10a differ from the annual reduction referred to above by more than 0.5% of the 2007-8 value higher or lower annually. If so, that benchmark value shall be adjusted either 0.5% or 1.5% in respect of each year between 2008 and the middle of the period for which free allocation is to be made;
(ii) By way of derogation regarding the benchmark values for aromatics, hydrogen and syngas, these benchmark values shall be adjusted by the same percentage as the refineries benchmarks in order to preserve a level playing field for producers of these products.
The Commission shall adopt an implementing act for this purpose in accordance with Article 22a.

Amendment 26

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point c

Directive 2003/87/EC

Article 10a – paragraph 5


Text proposed by the Commission	Amendment
(c) paragraph 5 is replaced by the following:	(c) paragraphs 5, 6, 7 and 8 are replaced by the following:
5. In order to respect the auctioning share set out in Article 10, the sum of free allocations in every year where the sum of free allocations does not reach the maximum level that respects the Member State auctioning share, the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the Member State auctioning share in later years. Where, nonetheless, the maximum level is reached, free allocations shall be adjusted accordingly. Any such adjustment shall be done in a uniform manner.	“5. Where the sum of free allocations in every year does not reach the maximum level that respects the Member State auctioning share set out in Article 10, the remaining allowances up to that level shall be used to prevent or limit reduction of free allocations to respect the Member State auctioning share in later years. Where, nonetheless, the maximum level is reached, an amount of allowances equivalent to a reduction of up to five percentage points of the share of allowances to be auctioned by Member States over the entire ten-year period beginning on 1 January 2021 shall be distributed free of charge to sectors and sub-sectors pursuant to Article 10b. Where, nonetheless, this reduction is insufficient to meet the demand of sectors or subsectors pursuant to Article 10b, free allocations shall be adjusted accordingly. Any such adjustment shall be done in a uniform manner, applied so that the 10% best performers, as defined in Article 10a based on the information submitted pursuant to Article 11, are not impacted.”
Member States should adopt financial measures in favour of sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, taking into account any effects on the internal market. Such financial measures to compensate part of these costs shall be in accordance with state aid rules.	6. A harmonised arrangement at Union level is established to compensate installations, in favour of sectors and sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, taking into account any effects on the internal market. That harmonised compensation shall be financed as set out in Article 10 for such costs.
	Compensation shall be proportionate, take account of State aid rules, and shall be applied in a way to avoid negative effects on the internal market and overcompensation. The compensation measures shall maintain an incentive for energy efficiency and a switch from high-carbon to low-carbon electricity use. Where the amount of compensation as set out in Article 10 is not sufficient to compensate for all eligible costs, the amount of aid for all eligible installations shall be reduced uniformly. Such measures, including additional compensation by Member States according to Article 10(3), shall be in line with State aid rules, and shall not create new market distortions.
7. Allowances from the maximum amount referred to Article 10a(5) of this Directive which were not allocated for free up to 2020 shall be set aside for new entrants and significant production increases, together with 250 million allowances placed in the market stability reserve pursuant to Article 1(3) of Decision (EU) 2015/… of the European Parliament and of the Council(*).	7. Allowances from the maximum amount referred to Article 10a(5) of this Directive which were not allocated for free up to 2020 shall be set aside for new entrants and significant production increases, together with 250 million allowances placed in the market stability reserve pursuant to Article 1(3) of Decision (EU) 2015/… of the European Parliament and of the Council(*).
_____	_____
(*) [insert the full title of the Decision and the OJ reference].	(*) [insert the full title of the Decision and the OJ reference].
From 2021, allowances not allocated to installations because of the application of paragraphs 19 and 20 shall be added to the reserve.	From 2021, allowances not allocated to installations because of the application of paragraphs 19 and 20 shall be added to the reserve.
Allocations shall be adjusted by the linear factor referred to in Article 9.	Allocations shall be adjusted by the linear factor referred to in Article 9.
No free allocation shall be made in respect of any electricity production by new entrants.	No free allocation shall be made in respect of any electricity production by new entrants.
By 31 December 2010, the Commission shall adopt harmonised rules for the application of the definition of “new entrant”, in particular in relation to the definition of “significant extensions”.	By 31 December 2010, the Commission shall adopt harmonised rules for the application of the definition of “new entrant”, in particular in relation to the definition of “significant extensions”.
	7a. Where sectors and sub sectors concerned by Article 10b paragraphs 1 and 2 receive free allocations in excess, the monetary value of the excess allowances shall be exclusively invested (either engaged or paid) by 31 December 2030 in low carbon investments in the firm's installations covered by the EU ETS fulfilling the requirements in Article 10 paragraph 3 points (b), (e) and (g) as well as Article 10c paragraphs 2 and 3.
	A balance will be made twice during phase IV, in 2025 and 2030, with a possibility of sanctions under Article 16.
8. 400 million allowances shall be available to support innovation in low-carbon technologies and processes in industrial sectors listed in Annex I, and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage (CCS) of CO2 as well as demonstration projects of innovative renewable energy technologies, in the territory of the Union.	8. 600 million allowances, of which 200 million allowances shall be taken from the auction share set out in Article 10, shall be available to support and leverage investments, using grants and different instruments managed by the European Investment Bank, in innovation in the whole range of sustainable low-carbon technologies and processes in industrial sectors listed in Annex I, and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage (CCS) or use (CCU) of CO2 as well as demonstration projects, including pilot projects, of innovative renewable energy technologies and energy storage, in the territory of the Union.
The allowances shall be made available for innovation in low-carbon industrial technologies and processes and support for demonstration projects for the development of a wide range of CCS and innovative renewable energy technologies that are not yet commercially viable in geographically balanced locations. In order to promote innovative projects, up to 60% of the relevant costs of projects may be supported, out of which up to 40% may not be dependent on verified avoidance of greenhouse gas emissions provided that pre-determined milestones are attained taking into account the technology deployed.	The allowances shall be made available for innovation in low-carbon industrial technologies, products and processes in existing and new installations and support for demonstration projects for the development of a wide range of CCS, CCU and innovative renewable energy technologies that are not yet commercially viable. In order to promote innovative projects, up to 60% of the relevant costs of projects may be supported, out of which up to 40% may not be dependent on verified avoidance of greenhouse gas emissions provided that pre-determined milestones are attained taking into account the technology deployed. The Commission shall publish State-aid guidelines for Member State co-financing of eligible projects by... [12 months of the date of entry into force of this Directive]
In addition, 50 million unallocated allowances from the market stability reserve established by Decision (EU) 2015/… shall supplement any existing resources remaining under this paragraph for projects referred to above, with projects in all Member States including small-scale projects, before 2021. Projects shall be selected on the basis of objective and transparent criteria.	In addition, 50 million unallocated allowances from the market stability reserve established by Decision (EU) 2015/... shall supplement any existing resources remaining under this paragraph for projects referred to above, including small-scale projects, before 2021.
	The monetisation of allowances for the innovation fund shall time the auctioning of allowances in such a way to provide certainty of available funds, while avoiding a negative impact on the orderly functioning of the carbon market. The timetable for the monetisation of allowances shall be published no later than 18 months before the start of Phase IV and shall ensure an even monetisation of the allowances spread out throughout that phase.
	Projects shall be selected on the basis of objective and transparent criteria, taking into account their relevance in relation to the decarbonisation of the related sectors.
	Low-carbon industrial projects, including CCS/CCU, shall significantly contribute to emissions reductions and shall enhance competitiveness and productivity.
The Commission shall be empowered to adopt a delegated act in accordance with Article 23.	The Commission shall be empowered to adopt a delegated act in accordance with Article 23, taking into account that the projects should focus on research and innovation for the design and development of breakthrough solutions and implementation of demonstration programmes in real industrial environments, run close-to-market, address technological solutions with potential for widespread applications or transferability within and possibly beyond the sector, as well as taking geographical balance into consideration where feasible without compromising with the principle of excellence.
Allowances shall be set aside for the projects that meet the criteria referred to in the third subparagraph. Support for these projects shall be given via Member States and shall be complementary to substantial co-financing by the operator of the installation. They could also be co-financed by the Member State concerned, as well as by other instruments. No project shall receive support via the mechanism under this paragraph that exceeds 15 % of the total number of allowances available for this purpose. These allowances shall be taken into account under paragraph 7.	Allowances shall be set aside for the projects that meet the criteria referred to in the third subparagraph. Support for these projects shall be given via Member States and shall be complementary to substantial co-financing by the operator of the installation. They could also be co-financed by the Member State concerned, as well as by other instruments and programmes such as the European Fund for Strategic Investments and Horizon 2020. No project shall receive support via the mechanism under this paragraph that exceeds 15 % of the total number of allowances available for this purpose. These allowances shall be taken into account under paragraph 7.

Amendment 27

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point d

Directive 2003/87/EC

Article 10a – paragraph 6 – subparagraph 1


Text proposed by the Commission	Amendment
(d) the first subparagraph of paragraph 6 is replaced by the following:	deleted
Member States should adopt financial measures in favour of sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, taking into account any effects on the internal market. Such financial measures to compensate part of these costs shall be in accordance with state aid rules.

Amendment 28

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point e

Directive 2003/87/EC

Article 10a – paragraph 7


Text proposed by the Commission	Amendment
(e) paragraph 7 is amended as follows	deleted
7. Allowances from the maximum amount referred to Article 10a(5) of this Directive which were not allocated for free up to 2020 shall be set aside for new entrants and significant production increases, together with 250 million allowances placed in the market stability reserve pursuant to Article 1(3) of Decision (EU) 2015/… of the European Parliament and of the Council(*).
_____
(*) [insert the full title of the Decision and the OJ reference].
From 2021, allowances not allocated to installations because of the application of paragraphs 19 and 20 shall be added to the reserve.

Amendment 29

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point f

Directive 2003/87/EC

Article 10a – paragraph 8 – subparagraph 1, 2 and 3


Text proposed by the Commission	Amendment
(f) in paragraph 8, the first, second and third subparagraphs of paragraph 8 are replaced by the following:	deleted
400 million allowances shall be available to support innovation in low-carbon technologies and processes in industrial sectors listed in Annex I, and to help stimulate the construction and operation of commercial demonstration projects that aim at the environmentally safe capture and geological storage (CCS) of CO2 as well as demonstration projects of innovative renewable energy technologies, in the territory of the Union.
The allowances shall be made available for innovation in low-carbon industrial technologies and processes and support for demonstration projects for the development of a wide range of CCS and innovative renewable energy technologies that are not yet commercially viable in geographically balanced locations. In order to promote innovative projects, up to 60% of the relevant costs of projects may be supported, out of which up to 40% may not be dependent on verified avoidance of greenhouse gas emissions provided that pre-determined milestones are attained taking into account the technology deployed.
In addition, 50 million unallocated allowances from the market stability reserve established by Decision (EU) 2015/… shall supplement any existing resources remaining under this paragraph for projects referred to above, with projects in all Member States including small-scale projects, before 2021. Projects shall be selected on the basis of objective and transparent criteria.
The Commission shall be empowered to adopt a delegated act in accordance with Article 23.

Amendment 30

Proposal for a directive

Article 1 – paragraph 1 – point 6

Directive 2003/87/EC

Article 10b and Article 10c

Amendment 31

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive2003/87/EC

Article 10d


Text proposed by the Commission	Amendment
(7) the following Article 10d is inserted	(7) the following Article 10d is inserted
“Article 10d	“Article 10d
Modernisation Fund	Modernisation Fund
1. A fund to support investments in modernising energy systems and improving energy efficiency in Member States with a GDP per capita below 60% of the Union average in 2013 shall be established for the period 2021-30 and financed as set out in Article 10.	1. A fund to support and leverage investments in modernising energy systems, including district heating, transmission and distribution systems and interconnectors, and improving energy efficiency, in particular in buildings in Member States with a GDP per capita below 60% of the Union average in 2013 shall be established for the period 2021-30 and financed as set out in Article 10.
The investments supported shall be consistent with the aims of this Directive and the European Fund for Strategic Investments.	The investments supported shall be consistent with the aims of this Directive, the Union’s long-term climate and energy goals, the Energy Union and the European Fund for Strategic Investments.
	Supported projects shall fulfil the following conditions:
	(i) comply with the principles of transparency, non-discrimination, equal treatment and sound financial management;
	(ii) contribute to energy savings, renewable energy systems, energy storage and electricity interconnection, transmission and distribution sectors; where projects relate to electricity production, total greenhouse gas emissions per kilowatt hour of electricity produced in the installation shall not exceed 450 grams of CO2 equivalents; where projects relate to heat production, the Commission shall adopt a implementing act in accordance with Article 23a specifying the criteria.
	(iii) on the basis of a cost-benefit analysis, ensure a net positive gain in terms of emission reduction and realise a pre-determined significant level of CO2 reductions,
	(iv) are additional, clearly respond to replacement and modernisation needs and do not supply a market-driven increase in energy demand and were not funded through the national investment plan 2013-2020;
	(v) offer the best value for money;
	(vi) do not contribute to new coal-fired energy and heat generation capacity nor increase coal-dependency.
	Projects selected should aim to promote local- or community-driven integrated approaches.
	The Commission shall keep under review the requirements set out in this paragraph, taking into account technological progress and the climate strategy of the European Investment Bank, and, if appropriate, adopt a delegated act in accordance with Article 23a by 2024.
2. The fund shall also finance small-scale investment projects in the modernisation of energy systems and energy efficiency. To this end, the investment board shall develop guidelines and investment selection criteria specific to such projects.	2. The fund shall also finance small-scale investment projects in the modernisation of energy systems and energy efficiency. To this end, the investment board shall develop investment guidelines and the advisory board shall on this basis define selection criteria specific to such projects, in line with the objectives of this Directive and with the criteria set in paragraph 1. These rules shall be made public.
3. The funds shall be distributed based on a combination of a 50% share of verified emissions and a 50% share of GDP criteria, leading to the distribution set out in Annex IIb.	3. The funds shall be distributed based on a combination of a 50% share of verified emissions and a 50% share of GDP criteria, leading to the distribution set out in Annex IIb.
4. The fund shall be governed by an investment board and a management committee, which shall be composed of representatives from the beneficiary Member States, the Commission, the EIB and three representatives elected by the other Member States for a period of 5 years. The investment board shall be responsible to determine an Union-level investment policy, appropriate financing instruments and investment selection criteria. The management committee shall be responsible for the day-to-day management of the fund.	4. The beneficiary Member States shall be responsible for the governance of the fund, and shall jointly establish an investment board composed by one representative per beneficiary Member State, the Commission and three observers from interested parties (industrial federations, trade unions, NGOs). The board shall be responsible for determining a Union-level investment policy in line with the requirements set out in this Article and consistent with Union policies and take decisions on investments. .
	An advisory board shall be established, independent from the investment board, and shall be composed of experts with a high level of relevant market experience in project structuring and project financing. The advisory board shall be composed of three representatives from the beneficiary Member States, three representatives from the other Member States and experts from the Commission, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), selected for a period of 5 years. The advisory board shall provide advice with regard to specific projects with regard to pooling public and private financial resources, the eligibility of projects with investment requirements and the needs for project development assistance.
The investment board shall elect a representative from the Commission as chairman. The investment board shall strive to take decisions by consensus. If the investment board is not able to decide by consensus within a deadline set by the chairman, the investment board shall take a decision by simple majority.	The chairmanship of the investment board shall be elected from its members based on a one-year-term rotation model. The investment board shall strive to take decisions by consensus. The advisory board shall adopt its opinion by simple majority.
The management committee shall be composed of representatives appointed by the investment board. Decisions of the management committee shall be taken by simple majority.	The investment board and the advisory board shall operate in an open and transparent manner. The minutes of both board meetings shall be published. The composition of the investment board and advisory board shall be published and CVs and declarations of interests of the members shall be made public and regularly updated. The investment board and the advisory board shall on an ongoing basis check the absence of any conflict of interest. The advisory board shall submit twice a year to the European Parliament, the Council and the Commission a list of provided advice to projects.
If the EIB recommends not financing an investment and provides reasons for this recommendation, a decision shall only be adopted if a majority of two-thirds of all members vote in favour. The Member State in which the investment will take place and the EIB shall not be entitled to cast a vote in this case. For small projects funded through loans provided by a national promotional bank or through grants contributing to the implementation of a national programme serving specific objectives in line with the objectives of the Modernisation Fund, provided that not more than 10% of the Member States' share set out in Annex IIb is used under the programme, the two preceding sentences shall not apply.	If the EIB recommends not financing an investment and provides reasons for this recommendation in line with the investment policy adopted by the investment board and the selection criteria set out in paragraph 1, a positive opinion shall only be adopted if a majority of two-thirds of all members vote in favour. The Member State in which the investment will take place and the EIB shall not be entitled to cast a vote in this case.
5. The beneficiary Member States shall report annually to the management committee on investments financed by the fund. The report shall be made public and include:	5. The beneficiary Member States shall report annually to the investment board and the advisory board on investments financed by the fund. The report shall be made public and include:
(a) information on the investments financed per beneficiary Member State;	(a) information on the investments financed per beneficiary Member State;
(b) an assessment of the added value in terms of energy efficiency or modernisation of the energy system achieved through the investment;	(b) an assessment of the added value in terms of energy efficiency or modernisation of the energy system achieved through the investment;
6. Each year, the management committee shall report to the Commission on experience with the evaluation and selection of investments. The Commission shall review the basis on which projects are selected by 31 December 2024 and, where appropriate, make proposals to the management committee.	6. Each year, the advisory board shall report to the Commission on experience with the evaluation and selection of investments. The Commission shall review the basis on which projects are selected by 31 December 2024 and, where appropriate, make proposals to the advisory board and the investment board.
7. The Commission shall be empowered to adopt a delegated act in accordance with Article 23 to implement this Article.	7. The Commission shall be empowered to adopt a delegated act in accordance with Article 23 to implement this Article for the detailed arrangements and for the effective functioning of the Modernisation Fund.

Amendment 32

Proposal for a directive

Article 1 – paragraph 1 – point 8

Directive 2003/87/EC

Article 11 – paragraph 1 – subparagraph 2


Text proposed by the Commission	Amendment
A list of installations covered by this Directive for the five years beginning on 1 January 2021 shall be submitted by 30 September 2018, and lists for the subsequent five years shall be submitted every five years thereafter. Each list shall include information on production activity, transfers of heat and gases, electricity production and emissions at sub-installation level over the five calendar years preceding its submission. Free allocations shall only be given to installations where such information is provided.	A list of installations covered by this Directive for the two years beginning on 1 January 2021 shall be submitted by 30 September 2018, and lists for the subsequent two years shall be submitted every two years thereafter. Each list shall include information on production activity, transfers of heat and gases, electricity production and emissions at sub-installation level over the two calendar years preceding its submission. Free allocations shall only be given to installations where such information is provided.

Amendment 33

Proposal for a directive

Article 1 – paragraph 1 – point 8 a (new)

Directive 2003/87/EC

Article 11 – paragraph 1 – subparagraph 1 b (new)


Text proposed by the Commission	Amendment
	(8a) in Article 11, paragraph 1 the following third subparagraph is added:
	“From 2021 onwards, Member States shall also ensure that during each calendar year every operator reports production activity for adjustments to allocation in accordance with Article 10a paragraph 7.”

Amendment 34

Proposal for a directive

Article 1 – paragraph 1 – point 10 a (new)

Directive 2003/87/EC

Article 12 – paragraph 3 a


Present text	Amendment
	(10 a) In Article 12, paragraph 3a is amended as follows:
3a. An obligation to surrender allowances shall not arise in respect of emissions verified as captured and transported for permanent storage to a facility for which a permit is in force in accordance with Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide³.	“3a. An obligation to surrender allowances shall not arise in respect of emissions verified as captured and transported for permanent storage to a facility for which a permit is in force in accordance with Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide³, nor in respect of emissions verified as captured and/or re-used in an application ensuring a permanent bound of the CO2, for the purpose of carbon capture and re-use..”
__________________	__________________
³ OJ L 140, 5.6.2009, p. 114	³ OJ L 140, 5.6.2009, p. 114

Amendment 35

Proposal for a directive

Article 1 – paragraph 1 – point 12 a (new)

Directive 2003/87/EC

Article 14 – paragraph 1 –subparagraph 1 b (new)


Text proposed by the Commission	Amendment
	(12a) In Article 14, paragraph 1, a new subparagraph is added:
	'By 31 December 2018 the Commission shall adjust existing rules on monitoring and reporting of emissions as defined in Commission Regulation (EU) 601/2012^1a in order to remove regulatory barriers to investment in more recent low carbon technologies such as carbon capture and usage (CCU). Those new rules shall be effective for all CCU technologies as of 1 January 2019.'.
	__________________
	^1a Commission Regulation (EU) No 601/2012 of 21 June 2012 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council. (OJ L 181, 12.7.2012, p. 30).

Amendment 36

Proposal for a directive

Article 1 – paragraph 1 – point 19 – point b

Directive 2003/87/EC

Article 24 – paragraph 3 – subparagraph 2


Text proposed by the Commission	Amendment
The Commission shall be empowered to adopt delegated acts for such a regulation for the monitoring and reporting of emissions and activity data in accordance with Article 23	The Commission shall be empowered to adopt delegated acts for such a regulation for the monitoring and reporting of emissions and activity data in accordance with Article 23. As regards monitoring, reporting and verification of emissions, the Commission shall monitor the effective and coherent application and enforcement of penalty procedures at national level. The Commission shall establish an effective monitoring system for cross-border transactions of emission allowances at Union level to mitigate the risk of abuse and fraudulent activities.

Amendment 37

Proposal for a directive

Article 1 – paragraph 1 – point 20 a (new)

Directive2003/87/EC

Article 25 – paragraphs 1ba and 1bb (new)


Text proposed by the Commission	Amendment
	(20a) In Article 25, the following paragraphs are added:
	(1ba) Following up to Article 6(2) of the Paris Agreement, the European Commission shall assess in its report, to be prepared in accordance with Article 28aa, the development of climate mitigation policies, including market-based approaches, in third countries and regions and the effect of these policies on the competitiveness of European industry.
	(1bb) If this report concludes that a significant risk of carbon leakage remains, the Commission shall, if appropriate, come forward with a legislative proposal introducing a carbon border adjustment, fully compatible with WTO rules, based on a feasibility study to be initiated at the publication of this Directive in the OJ. This mechanism would include in the EU ETS importers of products which are produced by the sectors or sub-sectors determined in accordance with Article 10a.

Amendment 38

Proposal for a directive

Article 1 – paragraph 1 – point 22 a (new)

Directive2003/87/EC

Article 27 – paragraph 1


Present text	Amendment
	(22a) in Article 27, first paragraph is replaced by the following:
Following consultation with the operator, Member States may exclude from the Community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and, where they carry out combustion activities, have a rated thermal input below 35 MW, excluding emissions from biomass, in each of the three years preceding the notification under point (a), and which are subject to measures that will achieve an equivalent contribution to emission reductions, if the Member State concerned complies with the following conditions:	“Following consultation with the operator and subject to its agreement, Member States may exclude from the Community scheme installations which have reported to the competent authority emissions of less than 50 000 tonnes of carbon dioxide equivalent and, where they carry out combustion activities, have a rated thermal input below 35 MW, excluding emissions from biomass, in each of the three years preceding the notification under point (a), and which are subject to measures that will achieve an equivalent contribution to emission reductions, if the Member State concerned complies with the following conditions:
(a) it notifies the Commission of each such installation, specifying the equivalent measures applying to that installation that will achieve an equivalent contribution to emission reductions that are in place, before the list of installations pursuant to Article 11(1) has to be submitted and at the latest when this list is submitted to the Commission;	(a) it notifies the Commission of each such installation, specifying the equivalent measures applying to that installation that will achieve an equivalent contribution to emission reductions that are in place, before the list of installations pursuant to Article 11(1) has to be submitted and at the latest when this list is submitted to the Commission;
(b) it confirms that monitoring arrangements are in place to assess whether any installation emits 25 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year. Member States may allow simplified monitoring, reporting and verification measures for installations with average annual verified emissions between 2008 and 2010 which are below 5 000 tonnes a year, in accordance with Article 14;	(b) it confirms that monitoring arrangements are in place to assess whether any installation emits 50 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year. Member States may allow simplified monitoring, reporting and verification measures for installations with average annual verified emissions between 2008 and 2010 which are below 5 000 tonnes a year, in accordance with Article 14;
(c) it confirms that if any installation emits 25 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year or the measures applying to that installation that will achieve an equivalent contribution to emission reductions are no longer in place, the installation will be reintroduced into the Community scheme;	(c) it confirms that if any installation emits 50 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year or the measures applying to that installation that will achieve an equivalent contribution to emission reductions are no longer in place, the installation will be reintroduced into the Community scheme;
(d) it publishes the information referred to in points (a), (b) and (c) for public comment.	(d) it publishes the information referred to in points (a), (b) and (c) for public comment.
Hospitals may also be excluded if they undertake equivalent measures.	Hospitals may also be excluded if they undertake equivalent measures.

Amendment 39

Proposal for a directive

Article 1 – paragraph 1 – point 22 b (new)

Directive2003/87/EC

Article 28a (new)


Text proposed by the Commission	Amendment
	(22b) the following Article 28a is inserted:
	“Article 28a
	Adjustments upon global stocktake under the UNFCCC and the Paris Agreement
	1. Within six months of the global stocktake under the Paris Agreement in 2023 of the collective efforts of Parties in relation to progress towards the global long-term goal, and subsequent global stocktakes thereafter, the Commission shall submit a report assessing the need to update and enhance the Union's climate action, taking into account the efforts undertaken by other major economies, and competitiveness in the context of carbon and investment leakage risks. If appropriate, the report shall be followed by a legislative proposal.
	2. In its report, the Commission shall assess in particular the appropriate increase of the linear factor referred to in Article 9 and the necessity for additional policies and measures enhancing the greenhouse gas reduction commitments of the Union and of Member States, and may look into the feasibility of introducing an emission performance standard. The Commission shall also assess the carbon leakage provisions with a view to phase out of temporary free allocation.”

Amendment 40

Proposal for a directive

Article 1 – paragraph 1 – point 22 c (new)

Directive 2003/87/EC

Article 30 – paragraph 4a (new)


Text proposed by the Commission	Amendment
	(22c) in Article 30, the following paragraph is added:
	“4a. A general review of the interaction between the EU ETS and other climate- air quality- and energy policies at Union and national level shall be conducted every five years, with the view to have more coherence and to avoid antagonistic impacts of overlapping policies.”

Amendment 41

Proposal for a directive

Article 1 – paragraph 1 – point 22 d (new)

Directive2003/87/EC

Article 30a (new)


Text proposed by the Commission	Amendment
	(22d) the following Chapter IV is inserted:
	“Chapter IV Maritime and aviation sector
	Article 30a
	The Commission shall monitor that all sectors of the economy contribute to the reduction of CO2 emissions in accordance with the UNFCCC Paris Agreement, including whether targets and measures agreed at the international level, such as in the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO) are achieving adequate emissions reductions.”

Amendment 42

Proposal for a directive

Annex I – paragraph 1

Directive 2003/87/EC

Annex IIa


Text proposed by the Commission	Amendment
Increases in the percentage of allowances to be auctioned by Member States pursuant to Article 10(2)(a) for the purpose of solidarity and growth in order to reduce emissions and adapt to the effects of climate change	Increases in the percentage of allowances to be auctioned by Member States pursuant to Article 10(2)(a) for the purpose of solidarity and growth in order to reduce emissions and adapt to the effects of climate change For those Member States eligible for the Modernisation Fund as set out in Article 10d, their share of allowances specified in Annex IIa shall be transferred to their share in the Modernisation Fund.

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Cost-effective emission reductions and low-carbon investments
References	COM(2015)0337 – C8-0190/2015 – 2015/0148(COD)
Committee responsible Date announced in plenary	ENVI 7.9.2015
Opinion by Date announced in plenary	ITRE 7.9.2015
Associated committees - date announced in plenary	10.3.2016
Rapporteur Date appointed	Fredrick Federley 28.10.2015
Discussed in committee	17.3.2016	12.7.2016
Date adopted	13.10.2016
Result of final vote	+: –: 0:	45 13 4
Members present for the final vote	Nikolay Barekov, Nicolas Bay, Bendt Bendtsen, Xabier Benito Ziluaga, José Blanco López, David Borrelli, Jerzy Buzek, Angelo Ciocca, Edward Czesak, Jakop Dalunde, Pilar del Castillo Vera, Christian Ehler, Fredrick Federley, Ashley Fox, Adam Gierek, Theresa Griffin, Hans-Olaf Henkel, Eva Kaili, Kaja Kallas, Barbara Kappel, Krišjānis Kariņš, Seán Kelly, Jaromír Kohlíček, Zdzisław Krasnodębski, Miapetra Kumpula-Natri, Janusz Lewandowski, Ernest Maragall, Edouard Martin, Angelika Mlinar, Nadine Morano, Dan Nica, Morten Helveg Petersen, Miroslav Poche, Carolina Punset, Herbert Reul, Paul Rübig, Algirdas Saudargas, Sergei Stanishev, Neoklis Sylikiotis, Dario Tamburrano, Patrizia Toia, Evžen Tošenovský, Claude Turmes, Vladimir Urutchev, Henna Virkkunen, Martina Werner, Lieve Wierinck, Anna Záborská, Flavio Zanonato, Carlos Zorrinho
Substitutes present for the final vote	Michał Boni, Rosa D’Amato, Esther de Lange, Jens Geier, Benedek Jávor, Olle Ludvigsson, Vladimír Maňka, Marian-Jean Marinescu, Clare Moody, Maria Spyraki
Substitutes under Rule 200(2) present for the final vote	Salvatore Cicu, Albert Deß

OPINION of the Committee on Development (14.7.2016)

for the Committee on the Environment, Public Health and Food Safety

Rapporteur: Jordi Sebastià

SHORT JUSTIFICATION

The 5th Assessment Report by the Intergovernmental Panel on Climate Change (IPCC), completed in 2014, confirmed and further detailed the extreme gravity of the climate challenge and underlined the urgency of stepping up climate action. The response to this challenge represented by the intended nationally determined contributions (INDCs), submitted by Parties to the United Nations Framework Convention on Climate Change is far from sufficient, but represents major progress.

The Paris Agreement specifies the aim of global climate action to "holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C". Through this agreement, all countries are engaging in this endeavour. The agreement has also created better conditions for steady upward revision of efforts towards levels commensurate with the climate challenge.

The opportunity to effect a step change in global climate action must be fully exploited. As a big emitter with considerable resources, the EU has great responsibility. It must help foster a process in which the countries of the world under the influence of each other's increased efforts increase their own ones, making the steady upward revision of the global effort happen.

A key task for the EU in this is to repair its Emissions Trading System (ETS) and make it a truly efficient instrument for reduction of emissions, as well as for generation of funds for promotion of renewable energy, energy savings and support for adaptation to impacts of climate challenge both within the EU and in vulnerable developing countries, in particular the least developed countries (LDCs).

The Commission proposal for amending the ETS directive is insufficient for turning the ETS into the instrument that is now needed. Your draftsman therefore proposes amendments that:

- strengthen the environmental integrity through aligning the emission cap represented by the linear reduction factor, as a first step to the higher end of the current EU 2050 economy wide GHG reduction target, i.e. 95% compared to 1990, and, as a second step, through including a regular 5-yearly review of the cap, following the UNFCCC and Paris Agreement collective reviews;

- remove allowances from the surplus placed in the Market Stability Reserve that correspond to the use of international CDM and JI credits under the ETS, thereby making the achievement of the ETS' GHG reduction target a domestic effort;

- auction all ETS allowances and earmark all of the revenues to climate action, with half of the revenues going to vulnerable developing countries, and establish an allowance import requirement for the import of energy intensive goods in order to prevent potential carbon leakage;

- ensure the aviation sector contributes to the 2030 GHG reduction target at the same level as other sectors under the EU ETS, and earmark all revenues from aviation to climate action in vulnerable developing countries

- include international shipping under climate targets through a collective fund for ship operators' contributions in respect of emissions in EU ports and during voyages to and from EU ports;

- limit the zero emission factor for biomass to waste and residues in order to reduce incentives for land-grabbing in developing countries to supply the EU market for bioenergy. Global deforestation and loss of forest carbon stock is estimated to be responsible for approximately 20% of climate change. Increasing EU demand for forest biomass through questionable zero carbon accounting risks to be at best inefficient and at worst counterproductive from the perspective of mitigating climate change.

The earmarking of ETS revenues and inclusion of international shipping emissions in the scheme are also in line with the EP position on the issue in the 2008 climate package, repeated also on other occasions.

AMENDMENTS

The Committee on Development calls on the Committee on the Environment, Public Health and Food Safety, as the committee responsible, to take into account the following amendments:

Amendment 1

Proposal for a directive

Recital 2 a (new)


Text proposed by the Commission	Amendment
	(2a) Climate and environmental challenges are global in nature. The ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC) is to stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. The Paris Agreement on Climate Change (the ‘Paris Agreement’), approved at the 21st conference of the parties (COP-21) to the UNFCCC, marks a new level of global commitment to limit and reduce greenhouse gas emissions, with all countries engaging in the efforts.

Amendment 2

Proposal for a directive

Recital 2 b (new)


Text proposed by the Commission	Amendment
	(2b) The Union and its Member States, having signed the Paris Agreement, , committed themselves to holding “the increase in the global average temperature to well below 2°C above pre-industrial levels” and to pursuing “efforts to limit the temperature increase to 1,5°Cˮ. The Paris Agreement also aims to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, on the basis of equity. Those commitments should guide work towards emissions reductions and investment in renewable energy and energy efficiency.

Amendment 3

Proposal for a directive

Recital 2 c (new)

Text proposed by the Commission

Amendment

(2c) The Paris Agreement represents a global accord to limit and reduce greenhouse gas emissions, and seeks to achieve a 'just transition', from which developing nations are also to benefit.

Amendment 4

Proposal for a directive

Recital 2 d (new)

Text proposed by the Commission

Amendment

(2d) Developing countries are the most vulnerable to the impact of climate change. The Union should step up its support for such countries in order to strengthen their ability to adapt and their resilience to climate change. Policy coherence at Union level should be enhanced so that the EU ETS can provide an effective complement to development cooperation policy, particularly in the context of the 2030 Agenda for Sustainable Development and the fight against climate change.

Amendment 5

Proposal for a directive

Recital 2 e (new)


Text proposed by the Commission	Amendment
	(2e) Account should be taken of the progress represented by the Paris Agreement and of the better conditions it has created for steady upward revision of targets and efforts towards levels commensurate with the challenge posed by climate change. One of the best tools at the Union's disposal to meet the commitments laid down in the Paris Agreement is the EU ETS. As part of such efforts, it is essential that the EU ETS become a more efficient instrument for reduction of emissions, and that it support the transition to renewable energy, maximise energy efficiency and foster clean technology growth globally.

Amendment 6

Proposal for a directive

Recital 3


Text proposed by the Commission	Amendment
(3) The European Council confirmed that a well-functioning, reformed EU ETS with an instrument to stabilise the market will be the main European instrument to achieve this target, with an annual reduction factor of 2.2% from 2021 onwards, free allocation not expiring but existing measures continuing after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in other major economies, without reducing the share of allowances to be auctioned. The auction share should be expressed as a percentage figure in the legislation, to enhance planning certainty as regards investment decisions, to increase transparency and to render the overall system simpler and more easily understandable.	(3) The reformed EU ETS should set an annual reduction factor of 2,8% from 2021 onwards, and provide for an allowance import requirement (AIR) after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in third countries or subnational regions, without reducing the share of allowances to be auctioned.

Amendment 7

Proposal for a directive

Recital 3 a (new)


Text proposed by the Commission	Amendment
	(3a) In order to enhance ambition in the pre-2020 period and to reflect the well below 2°C global objective, the EU 2020 greenhouse reduction target of 20% below 1990 levels should be achieved with domestic efforts. An amount of allowances up to the level of international credits (Certified Emission Reductions from the Clean Development Mechanism and Emission Reduction Units from Joint Implementation) that have been used in the EU ETS should be withdrawn from the Market Stability Reserve.

Amendment 8

Proposal for a directive

Recital 3 b (new)


Text proposed by the Commission	Amendment
	(3b) Parties to the UNFCCC have requested the Intergovernmental Panel on Climate Change (IPCC) to prepare a special report in 2018 on the 1,5°C objective, and decided to organise a facilitative dialogue to take stock of the collective ambition and progress in implementing commitments, with a view to informing Parties before their final submissions of Nationally Determined Contributions. The Paris Agreement also provides for a periodical stocktake of the implementation to assess the collective progress made towards the agreement's long-term goals, starting in 2023 and occurring every five years thereafter. The EU ETS should provide for regular reviews in order to update and enhance the Union's climate action consistent with the Paris Agreement.

Amendment 9

Proposal for a directive

Recital 7 a (new)

Text proposed by the Commission

Amendment

(7a) The zero-rating of emissions from biomass in the EU ETS constitutes a support scheme within the meaning of Directive 2009/28/EC of the European Parliament and of the Council^1a. Bioliquids, biofuels and solid and gaseous biomass should only receive support and count towards the national targets where they comply with sustainability criteria set out in Directive 2009/28/EC or the Sustainable Bioenergy Policy. Consequently, the sustainability criteria should be applied for all sources of bioenergy that are consumed and zero-rated for greenhouse gas emissions within an installation or an aircraft operator's activities covered by the EU ETS.

_________________________________

^1a Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (OJ L 140, 5.6.2009, p. 16).

Justification

ETS currently excludes installations using exclusively biomass from its scope, treats all biomass used in installations as carbon neutral and does not subject solid biomass to any sustainability criteria. As a consequence, a significant share of emissions are unaccounted. It is essential to end the zero-counting of biomass and to subject it to sustainability criteria.

Amendment 10

Proposal for a directive

Recital 9

Text proposed by the Commission

Amendment

(9) Member States should partially compensate, in accordance with state aid rules, certain installations in sectors or sub-sectors which have been determined to be exposed to a significant risk of carbon leakage because of costs related to greenhouse gas emissions passed on in electricity prices. The Protocol and accompanying decisions adopted by the Conference of the Parties in Paris need to provide for the dynamic mobilisation of climate finance, technology transfer and capacity building for eligible Parties, particularly those with least capabilities. Public sector climate finance will continue to play an important role in mobilising resources after 2020. Acknowledging the global responsibility of the Union, Member States should promptly financially support efforts undertaken by the least developed countries (LDCs) aimed at developing low emission technologies based on the principle of technological neutrality and mitigation of climate change impact. In this regard a significant percentage of revenues generated by the auctioning of allowances by Member States should be granted to international funds, particularly: the Green Climate Fund, the Least Developed Countries Fund and the Special Climate Change Fund. The amount of climate finance to be mobilised will also depend on the ambition and quality of the proposed Intended Nationally Determined Contributions (INDCs), subsequent investment plans and national adaptation planning processes. Member States should also use auction revenues to promote skill formation and reallocation of labour affected by the transition of jobs in a decarbonising economy.

Amendment 11

Proposal for a directive

Recital 10 a (new)


Text proposed by the Commission	Amendment
	(10a) LDCs are especially vulnerable to the effects of climate change, and are responsible only for very low levels of greenhouse gas emissions. Therefore, particular priority should be given to addressing the needs of LDCs through the use of EU ETS allowances to fund climate action, in particular adaptation to the impacts of climate change through the Green Climate Fund.

Amendment 12

Proposal for a directive

Recital 13 a (new)


Text proposed by the Commission	Amendment
	(13a) In line with the commitment of the co-legislators expressed in Directive 2009/29/EC of the European Parliament and of the Council^1a and Decision No 406/2009/EC of the European Parliament and of the Council^1b, all sectors of the economy should contribute to achieving greenhouse gas emission reductions, including international maritime shipping and aviation. Aviation is contributing to the reductions through its inclusion in the EU ETS. Since no international agreement which includes international maritime emissions in its reduction targets has been adopted through the International Maritime Organisation, a fund should be established for collecting ship operators' contributions relating to CO₂ emissions released in Union ports and during voyages to and from such ports. The contributions should be set at the level of the market price for allowances, or higher. The fund should finance adaptation and mitigation in vulnerable developing countries. Operators of ships covered by Regulation (EU) 2015/757 of the European Parliament and of the Council^1c should be subject to the EU ETS in respect of any shortfall in contributions.
	________________________
	^1a Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2009/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community (OJ L 140, 5.6.2009, p. 63).
	^1b Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community's greenhouse gas emission reduction commitments up to 2020 (OJ L 140, 5.6.2009, p. 136).
	^1c Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and amending Directive 2009/16/EC (OJ L 123, 19.5.2015, p. 55).

Amendment 13

Proposal for a directive

Article 1 – paragraph 1 – point 1

Directive 2003/87/EC

Article 3d


Text proposed by the Commission	Amendment
(1) In Article 3d(3), the second subparagraph is replaced by the following:	(1) Article 3d is replaced by the following:
“The Commission shall be empowered to adopt a delegated act in accordance with Article 23”.	“Article 3d
	Method of allocation of allowances for aviation through auctioning
	The total quantity of allowances for aviation activities shall decrease annually by the same linear factor as for other activities under the Community scheme. All allowances for aviation activities shall be auctioned and the revenues used for climate financing in vulnerable developing countries, including adaptation to the impacts of climate change.”

Justification

The aviation sector should contribute to the 2030 GHG reduction target at the same level as other sectors under the EU ETS. In line with EP position on the aviation ETS proposal in 2007, and in order to be consistent with international aviation law, all revenues from EU ETS for aviation should be used to tackle climate change. In order to build confidence in developing countries regarding the EU policy measure, all revenues of aviation ETS should be earmarked for international climate finance.

Amendment 14

Proposal for a directive

Article 1 – paragraph 1 – point 1 a (new)

Directive 2003/87/EC

Article 3e


Text proposed by the Commission	Amendment
	(1a) Article 3e is deleted.

Justification

Linked to Amendment 9. All allowances to aviation sector should be auctioned by Member States.

Amendment 15

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2003/87/EC

Article 9 – paragraphs 2 and 3


Text proposed by the Commission	Amendment
"Starting in 2021, the linear factor shall be 2.2%."	"Starting in 2021, the linear factor shall be 2,8%."

Justification

In the Paris Agreement countries agreed to hold the temperature increase well below 2°C and to pursue efforts to limit it to 1.5°C. The proposed ETS linear factor does not even lead to the low end of the EU target for 2050 of 80-95% below 1990 levels, agreed on the basis of a 2°C objective. To be more consistent with the Paris Agreement, it is proposed to adjust the linear factor to 2,8%, corresponding to an economy wide reduction of 95% below 1990 for 2050, i.e. the upper end of the EU 2050 target, and as a second step provide for a review clause for adjusting the linear factor after UN reviews

Amendment 16

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point a

Directive 2003/87/EC

Article 10 – paragraph 1 – subparagraph 1 a


Text proposed by the Commission	Amendment
(a) three new subparagraphs are added to paragraph 1:	(a) the following subparagraphs are added to paragraph 1:
"From 2021 onwards, the share of allowances to be auctioned by Member States shall be 57%.
2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain Member States as set out in Article 10d of this Directive (“the Modernisation Fund”).	"2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain Member States as set out in Article 10d of this Directive (“the Modernisation Fund”).
	2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish the International Climate Action Fund to support climate action in vulnerable developing countries with low capacity, especially the Least Developed Countries, Small Island Development States and countries in Africa, in particular for adaptation to the impacts of climate change. Financial resources from the International Climate Action Fund shall be used to replenish the United Nations Green Climate Fund on an annual basis, which has a goal to allocate 50% for adaptation, with half of that amount destined for highly vulnerable countries.
	2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish the Just Transition Fund to support local communities and workers in regions impacted most strongly by the ongoing transition to a decarbonised economy. The resources of that fund shall be used for investments aimed at creating jobs, financing job training and other employment and health services in alternative economic activities in regions where traditional carbon intensive sectors are expected to lose a large number of jobs as a result of decarbonisation. A specific plan shall be developed by each Member State applying to utilise resources from the Just Transition Fund, in close partnership with the municipal and local authorities of the transformation regions as well as the social partners and civil society organisations.
The total remaining quantity of allowances to be auctioned by Member States shall be distributed in accordance with paragraph 2.";	The total remaining quantity of allowances to be auctioned by Member States shall be distributed in accordance with paragraph 2.";

Justification

The European Commission should:

- institute a Just Transition Fund as a strong EU-wide support mechanism for workers and regions that will lose out in the low-carbon transition.

- institute an International Climate Action Fund that would directly replenish the Green Climate Fund and would help put a stop to relying on aid budgets alone for the provision of international climate finance.

The share of allowances for the Modernisation fund, Just Transition fund, and International Climate Action Fund should be added to the auctioned allowances.

Amendment 17

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point b a (new)

Directive 2003/87/EC

Article 10 – paragraph 3 – introductory part


Present text	Amendment
	(ba) in paragraph 3, the introductory part is replaced by the following:
3. Member States shall determine the use of revenues generated from the auctioning of allowances. At least 50 % of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c), or the equivalent in financial value of these revenues, should be used for one or more of the following:	“3. Member States shall determine the use of revenues generated from the auctioning of allowances. At least 50 % of the revenues generated from the auctioning of allowances referred to in paragraph 2, including all revenues from the auctioning referred to in paragraph 2, points (b) and (c), or the equivalent in financial value of these revenues, shall be used for financing climate action in vulnerable developing countries, including to reduce greenhouse gas emissions, and to adapt to the impact of climate change. The rest shall be used for one or more of the following:"

Justification

In line with the EP position for the 2008 climate package, all revenues (or the equivalent in financial value) from EU ETS should be earmarked for climate action and 50% should be dedicated to EU’s collective contribution to international climate finance. Collective pledging by the EU and its Member States would increase EU influence in UNFCCC negotiations and effectiveness of EU climate finance.

Amendment 18

Proposal for a directive

Article 1 – paragraph 1 – point 4 – point c

Directive 2003/87/EC

Article 10 – paragraph 3 – point k


Text proposed by the Commission	Amendment
(k) for climate financing actions in vulnerable third countries, including adaptation to the impacts of climate change.;	(k) for financing of adaptation to impacts of climate change and of other climate actions in vulnerable third countries that is additional to the financing of actions through development cooperation instruments; this climate financing shall count towards the fulfilment of the Union’s climate financing commitments, but be additional to, and not count as financing for, development;

Amendment 19

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point a

Directive 2003/87/EC

Article 10a – paragraph 1


Text proposed by the Commission	Amendment
(a) the second paragraph of paragraph 1 is replaced by the following:	(a) paragraph 1 is replaced by the following:
"The Commission shall be empowered to adopt a delegated act in accordance with Article 23. This act shall also provide for additional allocation from the new entrants reserve for significant production increases by applying the same thresholds and allocation adjustments as apply in respect of partial cessations of operation."	"300 million allowances shall be used to finance climate action in Least Developed Countries, in particular for adaptation to the impacts of climate change, through the United Nations Green Climate Fund."

Justification

LDCs are especially vulnerable to the effects of climate change and are responsible only for a very low level of greenhouse gas emissions. Therefore, particular priority should be given to addressing the needs of LDCs through the use of EU ETS allowances to fund climate action, in particular adaptation to the impacts of climate change. Collective pledging by the EU would increase EU influence in the UNFCCC negotiations while contribution through the Green Climate Fund would also encourage others to contribute a portion of their own carbon pricing schemes to the Fund.

Amendment 20

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point d

Directive 2003/87/EC

Article 10 a – paragraph 6 – subparagraph 1


Text proposed by the Commission	Amendment
"Member States should adopt financial measures in favour of sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, taking into account any effects on the internal market. Such financial measures to compensate part of these costs shall be in accordance with state aid rules."	"Member States may adopt financial measures in favour of sectors or sub-sectors which are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred from greenhouse gas emission costs passed on in electricity prices, taking into account any effects on the internal market. Such financial measures to compensate part of these costs shall be in accordance with state aid rules."

Justification

The proposed wording 'should' is legally ambiguous. While a harmonised system may be desirable, forcing Member States to use state aid is legally unsound, therefore the word 'may' has been restored.

Amendment 21

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2003/87/EC

Article 10 d – paragraph 1 – subparagraph 1


Text proposed by the Commission	Amendment
1. A fund to support investments in modernising energy systems and improving energy efficiency in Member States with a GDP per capita below 60% of the Union average in 2013 shall be established for the period 2021-30 and financed as set out in Article 10.	1. A fund to support investments in modernising energy systems and improving energy efficiency (including as regards thermal energy, district heating, high efficiency cogeneration, renewable energy, and geothermal heat) in Member States with a GDP per capita below 60% of the Union average in 2013 shall be established for the period 2021-30 and financed as set out in Article 10.

Justification

Mentioned small-scale investments have a crucial role for modernization of the energy system and transition toward low emission economy, therefore should be underlined explicitly.

Amendment 22

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2003/87/EC

Article 10 d – paragraph 2


Text proposed by the Commission	Amendment
2. The fund shall also finance small-scale investment projects in the modernisation of energy systems and energy efficiency. To this end, the investment board shall develop guidelines and investment selection criteria specific to such projects.	2. The fund shall also finance small-scale investment projects in the modernisation of energy systems and energy efficiency (including as regards thermal energy, district heating, high efficiency cogeneration, renewable energy, and geothermal heat). To this end, the investment board shall develop guidelines and investment selection criteria specific to such projects.

Justification

Beneficiary Member States shall be given the right to select small-scale projects on their own especially when their fulfilment is envisaged within the existing national plan/programme in order to tailor the MF for national situation. In such a case only simple information to the advisory board should suffice.

Amendment 23

Proposal for a directive

Article 1 – paragraph 1 – point 10 a (new)

Directive 2003/87/EC

Article 11 c (new)


Text proposed by the Commission	Amendment
	(10a) The following article is inserted:
	“Article 11c
	Contribution from shipping to funding action in vulnerable developing countries
	As from 2019, in the absence of a comparable system operating under the IMO, a fund shall be established for ship operators to contribute to in respect of CO2 emissions released in Union ports and during voyages to and from Union ports of call, at least at the level of the market price for allowances in the preceding year. The revenues of the fund shall be used to finance adaptation and mitigation in vulnerable developing countries.
	Contributions as referred to in the first paragraph shall be made public. Operators of ships that fall under the scope of Regulation (EU) 2015/757 shall be required to surrender allowances in respect of any shortfall in contributions. If mitigation financed by the contributions does not result in reduced emissions equal to the level of emissions from contributors, the difference shall be cancelled in the Market Stability Reserve.”

(http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02003L0087-20151029&qid=1458208850750&from=EN)

Justification

In line with the EP position on ETS in 2008 and the agreement on the climate package in 2009, all sectors of the economy should contribute to emission reductions, including international maritime shipping and aviation. In the absence of action under the IMO a Fund should be established for ship operators to contribute to in respect of emissions in EU ports and for voyages to and from EU ports. If the climate action does not result in reduced emissions equal to the emissions of the covered operators, the difference should be cancelled from the Market Stability Reserve.

Amendment 24

Proposal for a directive

Article 1 – paragraph 1 – point 22 a (new)

Directive 2003/87/EC

Article 27 – paragraph 1


Present text	Amendment
	(22a) In Article 27, paragraph 1 is replaced by the following:
1. Following consultation with the operator, Member States may exclude from the Community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and, where they carry out combustion activities, have a rated thermal input below 35 MW, excluding emissions from biomass, in each of the three years preceding the notification under point (a), and which are subject to measures that will achieve an equivalent contribution to emission reductions, if the Member State concerned complies with the following conditions:	"1. Following consultation with the operator, Member States may exclude from the Community scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and, where they carry out combustion activities, have a rated thermal input below 35 MW, in each of the three years preceding the notification under point (a), and which are subject to measures that will achieve an equivalent contribution to emission reductions, if the Member State concerned complies with the following conditions:
(a) it notifies the Commission of each such installation, specifying the equivalent measures applying to that installation that will achieve an equivalent contribution to emission reductions that are in place, before the list of installations pursuant to Article 11(1) has to be submitted and at the latest when this list is submitted to the Commission;	(a) it notifies the Commission of each such installation, specifying the equivalent measures applying to that installation that will achieve an equivalent contribution to emission reductions that are in place, before the list of installations pursuant to Article 11(1) has to be submitted and at the latest when this list is submitted to the Commission;
(b) it confirms that monitoring arrangements are in place to assess whether any installation emits 25 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year. Member States may allow simplified monitoring, reporting and verification measures for installations with average annual verified emissions between 2008 and 2010 which are below 5 000 tonnes a year, in accordance with Article 14;	(b) it confirms that monitoring arrangements are in place to assess whether any installation emits 25 000 tonnes or more of carbon dioxide equivalent, in any one calendar year. Member States may allow simplified monitoring, reporting and verification measures for installations with average annual verified emissions between 2008 and 2010 which are below 5 000 tonnes a year, in accordance with Article 14;
(c) it confirms that if any installation emits 25 000 tonnes or more of carbon dioxide equivalent, excluding emissions from biomass, in any one calendar year or the measures applying to that installation that will achieve an equivalent contribution to emission reductions are no longer in place, the installation will be reintroduced into the Community scheme;	(c) it confirms that if any installation emits 25 000 tonnes or more of carbon dioxide equivalent, in any one calendar year or the measures applying to that installation that will achieve an equivalent contribution to emission reductions are no longer in place, the installation will be reintroduced into the Community scheme;
(d) it publishes the information referred to in points (a), (b) and (c) for public comment.	(d) it publishes the information referred to in points (a), (b) and (c) for public comment.
Hospitals may also be excluded if they undertake equivalent measures.	Hospitals may also be excluded if they undertake equivalent measures."

(http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1464179550809&uri=CELEX:02003L0087-20151029)

Amendment 25

Proposal for a directive

Article 1 – paragraph 1 – point 22 b (new)

Directive 2003/87/EC

Article -28 a (new)


Text proposed by the Commission	Amendment
	(22b) The following article is inserted:
	“Article -28a
	Adjustments following global stocktake under the UNFCCC and the Paris Agreement
	Within six months of the facilitative dialogue to be convened under the UNFCCC in 2018 to take stock of the collective efforts of Parties in relation to progress towards the global long-term goal, and within six months of the global stocktake in 2023 and subsequent global stocktakes thereafter, the Commission shall submit a report assessing the need to update and enhance the Union's climate action. The report shall be accompanied by a legislative proposal, where appropriate.
	In its report, the Commission shall assess in particular the appropriate increase of the linear factor referred to in Article 9 and the necessity for additional policies and measures enhancing the greenhouse gas reduction commitments of the Union and of Member States. ”

Justification

In the Paris Agreement, countries agreed to hold the temperature increase well below 2°C and to pursue efforts to limit it to 1.5°C. In order to be more consistent with the Paris Agreement, it is proposed, as a first step, to adjust the linear factor to 2,8%, corresponding to an economy wide reduction of 95% below 1990 for 2050, i.e. the upper end of the EU 2050 target, and as a second step provide for a review clause for adjusting the linear factor after UNFCCC and Paris Agreement review processes.

Amendment 26

Proposal for a directive

Article 1 – paragraph 1 – point 22 c (new)

Directive 2003/87/EC

Annex I – paragraph 1


Present text	Amendment
	(22c) Point 1 of Annex I is replaced by the following:
Installations or parts of installations used for research, development and testing of new products and processes and installations exclusively using biomass are not covered by this Directive.	"Installations or parts of installations used for research, development and testing of new products and processes are not covered by this Directive."

(http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1464179550809&uri=CELEX:02003L0087-20151029)

Amendment 27

Proposal for a directive

Article 1 – paragraph 1 – point 22 d (new)

Directive 2003/87/EC

Annex I – paragraph 3


Present text	Amendment
	(22d) Point 3 of Annex I is replaced by the following:
When the total rated thermal input of an installation is calculated in order to decide upon its inclusion in the Community scheme, the rated thermal inputs of all technical units which are part of it, in which fuels are combusted within the installation, are added together. These units could include all types of boilers, burners, turbines, heaters, furnaces, incinerators, calciners, kilns, ovens, dryers, engines, fuel cells, chemical looping combustion units, flares, and thermal or catalytic post-combustion units. Units with a rated thermal input under 3 MW and units which use exclusively biomass shall not be taken into account for the purposes of this calculation. 'Units using exclusively biomass' includes units which use fossil fuels only during start- up or shut-down of the unit.	"When the total rated thermal input of an installation is calculated in order to decide upon its inclusion in the Community scheme, the rated thermal inputs of all technical units which are part of it, in which fuels are combusted within the installation, are added together. These units could include all types of boilers, burners, turbines, heaters, furnaces, incinerators, calciners, kilns, ovens, dryers, engines, fuel cells, chemical looping combustion units, flares, and thermal or catalytic post-combustion units. Units with a rated thermal input under 3 MW shall not be taken into account for the purposes of this calculation."

(http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1464179550809&uri=CELEX:02003L0087-20151029)

Amendment 28

Proposal for a directive

Annex III

Directive 2003/87/EC

Annex IV – Part A


Text proposed by the Commission	Amendment
In Annex IV, Part A, to Directive 2003/87/EC, the paragraph under the fourth heading entitled "Monitoring of emissions of emissions of other greenhouse gases" replaced by the following:	Part A of Annex IV to Directive 2003/87/EC is amended as follows:
	(1) The third paragraph under the second subheading entitled "Calculation" is replaced by the following:
	"Accepted emission factors shall be used. Activity-specific emission factors are acceptable for all fuels. Default factors are acceptable for all fuels except non- commercial ones (waste fuels such as tyres and industrial process gases). Seam- specific defaults for coal, and EU-specific or producer country-specific defaults for natural gas shall be further elaborated. IPCC default values are acceptable for refinery products. The emission factor for biomass waste and residues shall be zero.";
	(2) The paragraph under the fourth heading entitled "Monitoring of emissions of emissions of other greenhouse gases" is replaced by the following:
"Standardised or accepted methods shall be used, developed by the Commission in collaboration with all relevant stakeholders and adopted pursuant to Article 14(1).".	"Standardised or accepted methods shall be used, developed by the Commission in collaboration with all relevant stakeholders and adopted pursuant to Article 14(1).".

(http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1464179550809&uri=CELEX:02003L0087-20151029)

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Cost-effective emission reductions and low-carbon investments
References	COM(2015)0337 – C8-0190/2015 – 2015/0148(COD)
Committee responsible Date announced in plenary	ENVI 7.9.2015
Opinion by Date announced in plenary	DEVE 17.12.2015
Rapporteur Date appointed	Jordi Sebastià 20.10.2015
Discussed in committee	24.5.2016
Date adopted	12.7.2016
Result of final vote	+: –: 0:	12 11 0
Members present for the final vote	Louis Aliot, Ignazio Corrao, Nirj Deva, Doru-Claudian Frunzulică, Maria Heubuch, György Hölvényi, Teresa Jiménez-Becerril Barrio, Arne Lietz, Linda McAvan, Norbert Neuser, Maurice Ponga, Cristian Dan Preda, Lola Sánchez Caldentey, Elly Schlein, Eleni Theocharous, Bogdan Brunon Wenta, Anna Záborská
Substitutes present for the final vote	Seb Dance, Jordi Sebastià, Adam Szejnfeld, Joachim Zeller
Substitutes under Rule 200(2) present for the final vote	Maria Arena, Petras Auštrevičius

PROCEDURE – COMMITTEE RESPONSIBLE

Title	Cost-effective emission reductions and low-carbon investments
References	COM(2015)0337 – C8-0190/2015 – 2015/0148(COD)
Date submitted to Parliament	15.7.2015
Committee responsible Date announced in plenary	ENVI 7.9.2015
Committees asked for opinions Date announced in plenary	DEVE 17.12.2015	BUDG 7.9.2015	ITRE 7.9.2015	IMCO 7.9.2015
Not delivering opinions Date of decision	BUDG 3.9.2015	IMCO 22.9.2015
Associated committees Date announced in plenary	ITRE 10.3.2016
Rapporteurs Date appointed	Ian Duncan 16.9.2015
Discussed in committee	21.6.2016	29.9.2016
Date adopted	15.12.2016
Result of final vote	+: –: 0:	53 5 7
Members present for the final vote	Marco Affronte, Pilar Ayuso, Zoltán Balczó, Catherine Bearder, Ivo Belet, Simona Bonafè, Biljana Borzan, Paul Brannen, Soledad Cabezón Ruiz, Nessa Childers, Birgit Collin-Langen, Mireille D’Ornano, Miriam Dalli, Seb Dance, Angélique Delahaye, Ian Duncan, Bas Eickhout, Eleonora Evi, José Inácio Faria, Karl-Heinz Florenz, Francesc Gambús, Elisabetta Gardini, Gerben-Jan Gerbrandy, Jens Gieseke, Julie Girling, Sylvie Goddyn, Françoise Grossetête, Andrzej Grzyb, Jytte Guteland, György Hölvényi, Anneli Jäätteenmäki, Jean-François Jalkh, Benedek Jávor, Karin Kadenbach, Kateřina Konečná, Giovanni La Via, Peter Liese, Norbert Lins, Valentinas Mazuronis, Susanne Melior, Miroslav Mikolášik, Massimo Paolucci, Piernicola Pedicini, Bolesław G. Piecha, Frédérique Ries, Daciana Octavia Sârbu, Annie Schreijer-Pierik, Davor Škrlec, Renate Sommer, Ivica Tolić, Jadwiga Wiśniewska, Tiemo Wölken, Damiano Zoffoli
Substitutes present for the final vote	Caterina Chinnici, Linnéa Engström, Merja Kyllönen, Ulrike Müller, Bart Staes, Keith Taylor, Mihai Ţurcanu, Claude Turmes, Carlos Zorrinho
Substitutes under Rule 200(2) present for the final vote	Linnéa Engström, Olle Ludvigsson, Jiří Maštálka, Jens Nilsson
Date tabled	13.1.2017

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