EuLA (2019) EU ETS position paper on Activity Level Changes (ALC)

Position of the lime industry on the consultation of the European Commission Implementing act on free allocation adjustments due to Activity Level Changes

The European Lime sector (represented by EuLA) supports allocation changes starting in 2021 based on the average activity level data for the years 2020 and 2019; as the best way to align as close as possible the number of free allowances with the actual level of production. However, EuLA would like to raise the following concerns/ points for consideration as regarding the current ALC Draft (please see attached the EuLA position paper for further explanation of the 8 points):

  • Full linear approach as the most straightforward and simplest option to apply at both operation and administrative level. The full linear approach not only will make the system more dynamic but also will reduce the complexity of the IT system needed for the real calculation of activity level changes.
  • Annual reports on the activity level of each sub-installation starting in 2021, for both new entrants and incumbents. This will ensure the minimum different treatment between both in terms of timing of allocation.
  • No quantitative minimum threshold; in order to respect Article 20 of the ETS Directive.
  • Aligning the deadline for reporting verified activity level data with the deadline for submitting the verified emissions report (March 31st). It would also be convenient to set in Article 3 of the draft implementing act, the 28th February as the earliest day that national competent authorities can request the reporting verified activity level data.
  • The time-lag between measuring activity levels and receiving an updated allocation following an activity level change should be as short as possible, to prevent competitive distortions.
  • While the ALC draft appears to ensure equal treatment between new entrants and new sub-installations at incumbent sites, not all investments at incumbent sites will necessarily result in a new sub-installation.
  • As regarding article 5 (4) of the ALC draft, “if the activity level of a sub-installation is reported as zero, the free allocation of this sub-installation shall be set to zero in the following year”. In order to respect the ETS Directive, we ask for a clarification considering that even if the activity level is zero in any of the two years of the rolling average, those two years are still considered as the main triggering a potential allocation change.
  • Current Art.5 (4) wording has no legal basis for applying the principle of no free allocation to installations that despite no emission during a year, are not fulfilling the condition of a cessation of operation. Moreover, this provision constitutes an exception of the principle of the adaptation of allocation based on the rolling average of the two preceding years.