Amendment to the Emissions Certificate Act (EZG Amendment 2020)

The European Emissions Trading System (“EU ETS”) is entering its fourth trading period in January 2021. Therefore, it is high time the Austrian legislature made the National Emissions Certificate Act (EZG) fit for this occasion and adapt it to the altered European regulations.

The following article is intended to give an overview of the EZG amendment 2020, which was decided only yesterday in the Federal Assembly and is to be announced soon.

Aims of the Emissions Trading System

The European Emissions Trading System serves to reduce CO2 emissions in the Union and thus to achieve the emissions and climate targets set by the EU. Companies which emit greenhouse gases have to submit certificates for these emissions. If a company has too few certificates or too high CO2 emissions, it has to buy additional certificates. If, on the other hand, it falls below the forecasted amount of emissions, certificates can be sold at a profit. This creates an incentive for energy-efficient production.

Recent developments

Recently, the European Commission published guidelines on certain state aid measures related to the greenhouse gas emission allowance trading scheme (“Community scheme”). We have already reported on that here.

The Commission’s initiative aims to bring the problem of “carbon leakage” under control and is also related to the EU’s goal of climate neutrality and the associated restructuring of the energy sector (“Green Deal”).

At this point it should be noted that the prices for emission certificates have risen sharply in recent months. In addition, the emission certificates in the next trading period are to be awarded almost exclusively via auctions – the previous system of free allocation is to be the exception. The current amendment to the Austrian EZG has to be seen against this background.

Key points of the EZG-Amendment 2020

To begin with, it should be mentioned that the Austrian legislature has proceeded cautiously with the current reform. Still, when looking at the draft in detail, significant changes to the previous legal situation can be seen. On the one hand, this concerns the basic approach to certificate trading and the change from a (free) allocation to an auction system, in line with the principles of Union law. Furthermore, a significant relief of the administration should be ensured.

The following is an overview of some of the major changes:

• The previous regulation, according to which plants that receive an allocation of certificates remain in the emissions trading system for the current period, no longer applies.
• The exception for biomass plants will persist.
• In certain cases, greenhouse gas emission permits expire ex lege.
• New regulations on the shutdowns, splits and mergers of plants give plant owners additional options. If a plant falls below certain thresholds, it is automatically considered to be shut down, which can mean that emissions trading obligations are no longer applicable. Moreover, there is the possibility of splitting or merging existing plants. This traces back to European regulations, which leads to a certain emancipation of emissions trading law from the remaining Austrian plant law.
• In contrast, the previous exception for smaller plants does not apply anymore.

This amendment to the Emissions Certificate Act will soon be announced and come into effect. We will continue to report on the details of the reform and its application in practice.

Our expert Johannes Hartlieb and our other experts from the Environmental Law Team will be happy to answer any further questions you may have on this topic.

Disclaimer

This article provides only general information and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this contribution.

 

17. December 2020

 

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