Monday 8 October 2007

Revised draft of Ireland's second National Allocation Plan

The Environmental Protection Agency (EPA) has published a revised draft of Ireland's second National Allocation Plan for Emissions Trading in Ireland.

This follows the conditional approvals given by the EU Commission in November 2006 and July 2007 to the previous draft and the subsequent revised directions from Government. The plan sets out the EPA's proposals for distributing these allowances to the various industrial sectors and participants involved.

A consultation process on the revised draft plan commenced on 4th October 2007. The purpose of this second public consultation is to facilitate the public in expressing their views on the revised draft second National Allocation Plan. All submissions received by 5.00pm on October 31st 2007 will be considered with a view to improving the plan before the EPA takes the Final Allocation Decision for the 2008-2012 period, as required under the Emissions Trading Regulations.

Commenting, Dr Mary Kelly, Director General, EPA said - "In revising the Draft Plan, full recognition has been given to the increasingly important role of renewables in electricity generation (power generation accounts for two-thirds of the available national allowances) as envisaged under the National Climate Change Strategy 2007-2012 and as set out in the White Paper - Delivering a Sustainable Energy Future for Ireland.

"In addition, the EPA is proposing to increase the dedicated set-aside of emissions allowances - designed to promote Combined Heat and Power (CHP) facilities in the power generation sector from 450,000 to 750,000 allowances. CHP is a highly-efficient technology for energy production and one in which Ireland lags behind many of our EU partners."

Emissions Trading is a cap-and-trade scheme, where participating installations are given a fixed allocation each year and must either abate CO2 emissions to that level, or purchase allowances to meet any exceedance. It is designed to bring about reductions in emissions at least cost.

Dr Ken Macken, Programme Manager, EPA said that - "Continued implementation of the Emissions Trading Directive will help Ireland to meet its Kyoto obligations in a cost-effective manner. Whereas, developing the Draft Plan has been a complex task, I believe our proposals are fair and transparent and take into account the environmental integrity of the scheme and the potential effects on the economy.

"The EPA is aware of the potentially significant economic consequences associated with the implementation of the Directive and is being advised by a National Allocation Advisory Group, which was appointed by Government to advise the EPA on how best to discharge its obligations in formulating the National Allocation Plan" - he added.

Over 100 major industrial and institutional sites in Ireland are covered by the plan. These include - power generation, other combustion, cement, lime, glass and ceramic plants and oil refining. Also included are large companies in areas such as food & drink, pharmaceuticals and semi-conductors.

Under the revised plan, the total quantity of allowances to be allocated in the period 2008-2012 represents 87% of forecasted emissions in that period, with the burden falling mostly on the power generation and cement sectors. New entrants to the scheme in the five-year period are catered for through a specific set aside of allowances.

To download the draft second National Allocation Plan - Click Here

Key Changes in the Revised Draft of the National Allocation Plan (2008-2012)

* The total allocation of allowances is reduced from a previous average of 22.638 million allowances per annum, to a revised average of 22.262 million allowances for the five years 2008-2012;
* Over 90 per cent of the these allowances will be allocated free of charge to existing installations;
* Allocations will be made, based on historical emissions from existing participants;
* Approximately 9 per cent of the available allowances will be held back by the EPA for issue to new entrants;
* Adjustment for increased use of renewables in electricity production;
* Combined Heat and Power (CHP) to receive special treatment;
* Where companies close during the Kyoto phase, the EPA will withhold the issue of allowances for future years to these companies (except for rationalisations between smaller companies under the same operator, where special transfer arrangements will apply).

Allowances retained in this way will be added to the new entrant set aside;

* 0.5 per cent of allowances are to be sold to defray the expenses of administering the emissions trading scheme;
* Certain smaller installations will be excluded from the scheme under a new de minimis threshold.
* The total amount of additional linking credits from the Kyoto Protocol project mechanisms that can be used by operators in the scheme for the period 2008-2012 has been set at -

- 12% of the allocation to each installation in the Powergen Sector
- 11% in the Cement Sector - and
- 1% in the General Sector.

The National Allocation Advisory Group comprises the Chief Executives (or their senior nominees) of the Commission for Energy Regulation, Forfás, the National Treasury Management Agency and Sustainable Energy Ireland - together with the Director General of the EPA - under the chairmanship of Dr Edward Walsh, Emeritus President of the University of Limerick.

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