National Allocation Plans decisions

When searching for Commission State aid decisions when approving the national allocation plans (NAPs) submitted by the various Member States under the EU ETS, however, there is a significant dearth of material. 

National allocation plans will constitute State aid under Article 87(1) EC and will therefore have to be notified to the Commission for assessment under State aid rules. Competition policy procedural rules will apply in this respect. The Commission intends to take at the same time the two decisions legally required on the Plan as regards the assessment as required in the common position and the State aid assessment. 

The final traditional area of dispute concerns administrative costs. The phase I national allocation plans (NAPs) involved negotiation over allowances with a total asset value of almost 50 billion per year (assuming an average price of 20/tCO2). Political decisions on how to allocate these assets between sectors and individual installations naturally creates intensive lobby activity by all participants in order to obtain the maximum possible share of the rents.21 The time and energy devoted by companies, governments, and indeed consultancy and research sectors, to this enormous rent allocation process represents huge transactional costs.22... 

European Commission 2004b. Communication on Commission Decisions of 7 July 2004 concerning national allocation plans for the allocation of greenhouse gas emission allowances of Austria, Denmark, Germany, Ireland, the Netherlands, Slovenia, Sweden, and the United Kingdom in accordance with Directive 2003/87/EC , COM(2004) 500, July 2004. 

As a result of the decisions of the German Federal Government and the Federal Environmental Ministry Conference, in March and May 2003 respectively, it was implicitly established that only the data for the years 2000 until 2002, the base period for the first National Allocation Plan, would be collected. Allocation on the basis of a very early base period (e.g. in the 1990s) as well as the determination of benchmarks on the basis of historical emissions from the 1990s were rendered invalid as a result of this decision. 

European Commission 2004. Commission Decision of 27 December 2004 concerning the National Allocation Plan for the Allocation of Greenhouse Gas Emission Allowances notified by Spain in accordance with Directive 2003/87/EC of the European Parliament and of the Council , C(2004) 5285, Brussels. 

Within three months of notification of a national allocation plan by a Member State under paragraph 1, the Commission may reject that plan, or any aspect thereof, on the basis that it is incompatible with the criteria listed in Annex III or with Article 10. The Member State shall only take a decision under Article 11(1) or (2) if proposed amendments are accepted by the Commission. Reasons shall be given for any rejection decision by the Commission. 

For the three-year period beginning 1 January 2005, each Member State shall decide upon the total quantity of allowances it will allocate for that period and the allocation of those allowances to the operator of each installation. This decision shall be taken at least three months before the beginning of the period and be based on its national allocation plan developed pursuant to Article 9 and in accordance with Article 10, taking due account of comments from the public. 

Evidence of this mechanism could be observed in negotiations over the Phase 1 National Allocation Plans (NAP) in the EU ETS on the basis of a pre-announced formula, the EU Commission successfully rejected several national allocation plans in which countries had endowed themselves with generous allocations (Zapfel, 2007). As pointed out by Ellerman et al. (2007, p.350), the possibility of blaming the EU Commission as an institution representing some greater good sometimes helped to justify the adoption of unpopular decisions vis-a-vis the domestic constituency. In this sense, the multilateral architecture of the EU ETS helped to uphold the environmental ambition of the system. 

Article 9(3) mandates the Commission to assess a notified allocation plan and empowers it to prevent the implementation of a plan at national level, if it finds the plan to be incompatible with the criteria in Annex III of the Directive or the provisions of Article 10. The Commission is given three months from the notification of a plan to carry out the assessment. It is furthermore obliged to justify any rejection decision. In the event that a plan is rejected the Commission has to accept amendments proposed by the Member State before the plan can be implemented at national level. 

Article 11(1) regulates the allocation process following the approval of the plan by the Commission. It foresees the implementation of the plan by taking a final national allocation decision at least three months before the beginning of the first trading period. 

Ex-post adjustments in many variants were also disallowed in more than half of the plans. The national allocation decision based on the plan as approved by the Commission has a final and irreversible character. This implies that neither the total number of allowances nor the quantities indicated in the notified plan and the final allocation decision may be revised ex post. A number of notified allocation plans had various provisions that would possibly result in ex-post adjustments of allowances allocated to individual installations. A few examples in the Dutch plan it was intended that any allowances not allocated to newly constructed installations out of the new entrants reserve would be distributed pro rata to installations listed in the plan towards the end of the trading period. In several plans it was intended that the allowances allocated to an installation would be curtailed, in case the installation was found to emit less than a certain percentage of its baseline emissions or allocation in a given year.17 These examples demonstrate that ex-post adjustments were intended both upwards (increasing the allocation of an installation) and downwards (reducing the allocation of an installation). Most intended ex-post adjustments were rule-based, i.e. the circumstances under which they would be applied and the exact character were laid down in abstract terms in the plan. 

In contrast to the procedures followed by other Member States and recommended by the Commission s guidelines on NAPs, the Italian allocation process did not develop through a two-step top-down approach a first decision on overall allocation based on macro level policy goals which sets the constraints for the following second decision on sector level allocations. The Italian NAP decisions were, instead, intrinsically linked to the GHG National Reduction Plan (NRP) characterised by a one-step bottom-up approach a first-step single decision on... 

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