On Monday 15 March, in the Official Journal of the European Union, the European Commission published the Implementing Regulation that sets out the revised benchmarks used to determine the number of free allowances to be allocated to installations covered by the EU Emissions Trading Scheme (ETS).
The aim of the regulation is to reduce the benchmark values for the 2021–2025 period to “reflect technological progress”, while ensuring that the basic objective of free allocation of allowances is met, primarily to prevent the risk of ‘carbon leakage’.
There are currently 54 such product benchmarks and they are calculated using the average greenhouse gas emissions of the 10% most efficient installations in a sector that produce a specific product (steel, aluminium, hydrogen etc.) in the EU.
Installations that comply with their product benchmark will then, in principle, receive all of the emission allowances they require. If that is not the case, they will receive fewer emission allowances than required, thereby forcing them to reduce their emissions and/or buy additional allowances in order to cover excess emissions.
See the implementing regulation: https://bit.ly/30VjlrT (Original version in French by Damien Genicot)