From 21 May 2024 to 18 June 2024, the Decree amending the Emissions Trading Decree[1] (hereinafter: the Decree) is open for consultation. The Decree involves little text, but includes an important change for inland navigation, among others. The Decree extends the activities covered by the new emissions trading scheme, which means that emission rights for emissions from inland vessels and other means of transport must also be purchased (and surrendered). In this blog, we discuss the main points.
ETS(2) and the opt-in option
The Emissions Trading Scheme (ETS) is the trading system for CO2 emissions from (initially) industry in Europe. The ETS Directive (2003/87/EC) was amended in May 2023, by extending the ETS to other sectors, including emissions released from fuel combustion in the built environment, road transport and small industry. This broadened ETS – separate from the existing ETS for industry – takes place within a separate trading system, and is commonly referred to as ETS2. On 30 March 2024, the bill entered into force, implementing the amended ETS Directive into Dutch law as well. [2]
Under the new ETS Directive, an ‘opt-in’ option exists for national member states, allowing member states to extend the scope of ETS2 nationally to sectors not yet included the ETS Directive. The government announced that it would introduce the opt-in system for ETS2 as widely as possible. In April 2024, it took the decision to fully include the mobility sector under ETS2.[3]
The consultation
The Decision broadens the scope of ETS2 and brings the mobility sector almost entirely under ETS2. To broaden the scope, an additional category of end-use sectors is defined in Annex II of the Emissions Trading Decree, the so-called extension sectors. In addition to road transport, these include fuels for agricultural traffic, rail traffic, inland navigation and recreational boating.
Consequences and conclusion
Auctions in ETS2 are expected to start in 2027. End users of fuels can expect a cost increase from then on, as regulated entities (fuel suppliers) will pass on the cost of participating in ETS2, such as the price of an ETS2 allowance, in the price of fuels. The European Commission has estimated the price for one allowance in 2030 at €48 (per ton of CO2 emissions). This would lead to an expected mark-up of 13 cents per liter of diesel (11 cents for gasoline).
The consultation version of the amendment to the Emissions Trading Decree can be found here.
[1] Decision from ……… amending the Emissions Trading Decree in connection with the expansion of regulated activities covered by the emissions trading scheme for the purpose of enhancing practicability (25 April 2024).
[2] Decree of 26 March 2024 determining the time of entry into force of the Act of 28 February 2024 amending the Environmental Management Act and the Economic Offences Act for the purpose of implementing Directive No 2023/959, Directive No 2023/958 and Regulation No. 2023/957 of the European Parliament and the Council of the European Union of 10 May 2023 (OJEU 2023, L130) with a view to adapting the emissions trading system in the field of greenhouse gas installations and aviation and an extension to shipping and fuel suppliers (Stb 2024, 65).
[3] See the Spring Memorandum (Parliamentary Papers II, 2022/23, 36 350 no. 1), the room letter Spring Climate Decision (Parliamentary Papers II, 2022/23, 32 813 no. 1230) and Parliamentary Papers II, 2023/24, 32 813 no. 1374.
