Commission Delegated Regulation (EU) 2024/873 of 30 January 2024 amending Delegated Regulation (EU) 2019/331 as regards transitional Union-wide rules for harmonised free allocation of emission allowances

The operator of an installation, applying for or receiving free allocation pursuant to Article 10a of Directive 2003/87/EC shall monitor the data to be submitted as listed in Annex IV to this Regulation, based on a monitoring methodology plan approved by the competent authority.’

By way of derogation from Article 16(2), point (a), and Article 18(1), point (a), the preliminary annual number of emission allowances allocated free of charge for a product benchmark sub-installation and relating to the production of high value chemicals (HVC) shall correspond to the value of the steam cracking product benchmark for the relevant allocation period multiplied by the historical activity level determined in accordance with Annex III. To the result of that calculation, 1,78 tonnes of carbon dioxide per tonne of hydrogen times the median historical production of hydrogen from supplemental feed expressed in tonnes of hydrogen, 0,24 tonnes of carbon dioxide per tonne of ethylene times the median historical production of ethylene from supplemental feed expressed in tonnes of ethylene, and 0,16 tonnes of carbon dioxide per tonne of HVC times the median historical production of other high value chemicals than hydrogen and ethylene from supplemental feed expressed in tonnes of HVC, shall be added.

By way of derogation from Article 16(2), point (a), and Article 18(1), point (a), the preliminary annual number of emission allowances allocated free of charge for a sub-installation and relating to the production of vinyl chloride monomer (VCM) shall correspond to the value of the VCM benchmark for the relevant allocation period multiplied by the historical activity level for VCM production expressed as tonnes and multiplied by the quotient of the direct emissions for the production of VCM including emissions from net imported heat, calculated on the basis of the historical net heat import expressed as terajoules times the value of the heat benchmark for the relevant allocation period, over the baseline period referred to in Article 15(2) or of the first calendar year after the calendar year where the start of normal operation occurs referred to in Article 17, point (a), as appropriate, expressed as tonnes of carbon dioxide equivalent and the sum of those direct emissions and the hydrogen-related emissions for the production of VCM over the baseline period referred to in Article 15(2) or of the first calendar year after the calendar year where the start of normal operation occurs referred to in Article 17, point (a), as appropriate, expressed as tonnes of carbon dioxide equivalent calculated on the basis of the historical heat consumption stemming from hydrogen combustion expressed as terajoules times the value of the heat benchmark for the relevant allocation period.

Where a product-benchmark sub-installation encompasses measurable heat imported from an installation or other entity not included in the EU ETS or only included for the purposes of Articles 14 and 15 of Directive 2003/87/EC, the preliminary annual number of emission allowances allocated free of charge for the product benchmark sub-installation concerned determined pursuant to Article 16(2), point (a), or Article 18(1), point (a), as appropriate, shall be reduced by the amount of heat historically imported from an installation or other entity not included in the EU ETS or only included for the purposes of Articles 14 and 15 of that Directive in the year concerned multiplied by the value of the heat benchmark for measurable heat for the relevant allocation period.’

1 The final annual amount of emission allowances allocated free of charge, determined pursuant to Article 16(8) of this Regulation to the installation referred to in Article 10a(1), third subparagraph, of Directive 2003/87/EC, shall be reduced by 20 % in accordance with Article 10a(1) of that Directive if the operator cannot demonstrate to the satisfaction of the competent authority that all recommendations under Article 8 of Directive 2012/27/EU of the European Parliament and of the Council have been implemented. By way of derogation from the first subparagraph, no such reduction shall apply if the operator can demonstrate to the satisfaction of the competent authority that any of the following conditions apply: (a) the pay-back time for the relevant investments of a recommendation exceeds three years; (b) the investment costs for the implementation of a recommendation exceed either of the following thresholds: (i) 5 % of the installation’s annual turnover or 25 % of the installation’s profit, calculated on the basis of the corresponding annual averages over the three calendar years prior to the date on which the application for free allocation shall be submitted in accordance with Article 4; (ii) 50 % of the average annual economic equivalent of the amount reduced in accordance with the first subparagraph from the final annual amount of emission allowances allocated free of charge pursuant to Article 16(8) calculated based on the average price of allowances on the common auction platform in the relevant calendar year preceding the application referred to in Article 4(2); (c) other measures have been implemented during or after the relevant baseline period which lead to greenhouse gas emission reductions within the installation equivalent to those recommended by the energy audit report or the certified energy management system under Article 8 of Directive 2012/27/EU; (d) the recommendations would not lead to energy savings within the system boundaries of the industrial process carried out at the installation; (e) the installation-specific operating conditions, including planned or unplanned periods of maintenance, based on which the pay-back period referred to under point (a) was determined, have not occurred yet; (f) the recommendations of the audit report or of the certified energy management system were not issued during the first four years of the relevant baseline period.

2 The operator shall establish, implement, document and maintain a procedure for implementing recommendations and, where applicable, demonstrating the application of the conditions as referred to in paragraph 1.

3 The verifier shall check as part of the verification of the baseline data report referred to in Article 4(2) whether the recommendations referred to in paragraph 1, first subparagraph, are implemented and whether the conditions set out in paragraph 1, second subparagraph, are met, where applicable. Where relevant, the verifier shall check, as part of the verification of the annual activity level report in accordance with Article 7 of Commission Implementing Regulation (EU) 2018/2067 , whether the recommendations referred to in paragraph 1, first subparagraph, are implemented and whether the conditions set out in paragraph 1, second subparagraph, are met, where applicable.

4 The competent authority shall only consider the recommendations referred to in paragraph 1, first subparagraph, as implemented where all of the following conditions are met: (a) the operator demonstrates the completion of the implementation of those recommendations; (b) the verifier has confirmed the completion referred to in point (a) in accordance with paragraph 3.

1 For the purposes of Article 10a(1), fifth subparagraph, of Directive 2003/87/EC, the final annual number of emission allowances allocated free of charge, determined pursuant to Article 16(8) of this Regulation, shall be reduced by 20 % for an installation with product benchmark sub-installations where the greenhouse gas emission levels of at least one of those product-benchmark sub-installations were higher than the 80th percentile of emission levels for the relevant product benchmarks in the years 2016 and 2017. By way of derogation from the first subparagraph, no such reduction shall apply if the following conditions are fulfilled: (a) the operator of an installation referred to in the first subparagraph has submitted a climate-neutrality plan for its activities covered by Directive 2003/87/EC to the competent authority by 30 May 2024, or as appropriate, pursuant to Article 4 of this Regulation as part of the application for free allocation; (b) the achievement of the targets and milestones referred to in Article 10b(4), third subparagraph, point (b), of Directive 2003/87/EC has been confirmed by the verification carried out in accordance with Article 10b(4), fourth subparagraph, of that Directive; (c) the competent authority has checked and deemed compliant the content and format of the climate-neutrality plan pursuant to paragraph 4.

2 Paragraph 1, first subparagraph, shall not apply where the relevant product benchmark sub-installation does not contribute to more than 20 % of the sum of all sub-installations’ preliminary annual numbers of emission allowances allocated free of charge in respect of the period from 2021 to 2025, calculated in accordance with Article 16, paragraphs 2 to 5.

3 For the purposes of Article 10b(4), second, third and fourth subparagraphs, of Directive 2003/87/EC, the preliminary annual number of emission allowances allocated free of charge to a district heating sub-installation, calculated in accordance with Article 16, paragraphs 2 and 3, of this Regulation, shall be increased by 30 % of the number calculated in accordance with paragraph 2 of Article 16, where the operator of a district heating sub-installation has submitted an application in accordance with Article 4 of this Regulation and where, in respect of the period until the end of 2025 or in respect of the period from 2026 to 2030, all of the following conditions are met: (a) the installation or district heating company is located in a Member State that meets the criteria set out in Article 10b(4), second subparagraph, of Directive 2003/87/EC and as referred to in Annex VIII; (b) the installation or district heating company invested a volume at least equivalent to the economic value of the additional number of free allowances for the period from 2026 to 2030, in accordance with the intermediate targets and milestones as set out in the climate-neutrality plan to measure, by 31 December 2025 and by 31 December of each fifth year thereafter, progress made towards reaching climate-neutrality; (c) the investment referred to under point (b) leads to significant emission reductions before 2030; (d) the installation or district heating company submits a climate neutrality plan by 30 May 2024 pursuant to Article 4(1) or as appropriate, for its activities covered by Directive 2003/87/EC; (e) the achievement of the targets and milestones referred to in Article 10b(4), third subparagraph, point (b), of Directive 2003/87/EC is confirmed by the verification carried out in accordance with Article 10b(4), fourth subparagraph, of that Directive; (f) the competent authority has checked and deemed compliant the content and format of the climate-neutrality plan pursuant to paragraph 4. For the purposes of point (b), the economic value of the additional 30 % allowances shall be determined by multiplying the additional number of free allowances over the period from 2026 to 2030 by the average price of allowances on the common auction platform in the calendar year preceding the application referred to in Article 4(2) and multiplied by the factor determined in accordance with Article 14(6), as applicable to the installation. For the purposes of point (c), emission reductions are significant where the specific emissions, expressed as tonnes of CO2 per terajoules of district heating supplied, of the installation or district heating company are reduced below the average specific emissions during the relevant baseline period with an emission reduction rate equivalent to the application of the linear reduction factors referred to in Article 9 of Directive 2003/87/EC, starting from the mid-point of the relevant baseline period.

4 The competent authority shall check, by 30 September 2024, that the content and format of the climate-neutrality plans referred to in paragraphs 1 and 3 of this Article comply with Implementing Regulation (EU) 2023/2441.

The 20 % reduction referred to in Articles 22a and 22b shall be applied to an installation only once in the relevant allocation period.

1 The operators shall, at periods specified in the climate-neutrality plan referred to in Article 22b and whenever necessary, evaluate the effectiveness of the climate-neutrality plan regarding greenhouse gas emissions reductions and implement corrective actions where appropriate to ensure that the milestones and targets are met. Any update shall only affect future milestones and targets.

2 Where the climate-neutrality plan is updated with respect to milestones and targets, the operator shall submit the updated plan to the competent authority without undue delay.

1 Competent authorities shall publish the climate-neutrality plan submitted pursuant to Article 22b.

2 If an operator considers that the climate-neutrality plan contains commercially sensitive elements which, if disclosed, would harm its commercial interests, the operator may request the competent authority not to publish those elements. Where the request is justified the competent authority shall publish the climate-neutrality plan without those elements.

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union. It shall apply to allocations relating to the period from 1 January 2024. However, Article 1, points (1), (4)(a), (4)(b), (4)(c)(ii), (4)(d)(i), (4)(d)(ii), (4)(d)(iv), (6) and (7), (10) and (11) and points (16) and (17) shall apply to allocations relating to the period from 1 January 2026 to new entrants whose applications were submitted by 31 December 2023 and to incumbent installations.