EU registry of emissions trading system allowances (2013–2020)

SUMMARY OF:

Regulation (EU) No 389/2013 establishing a Union Registry

WHAT IS THE AIM OF THE REGULATION?

It sets up a Union Registry for the European Union (EU), an online database that holds accounts for stationary installations, for aircraft operators and for any person interested in trading emission allowances.
The registry aims to guarantee accurate accounting for allowances issued under the EU emissions trading system (EU ETS), a system designed to reduce greenhouse gas emissions cost-effectively.
The regulation has been repealed by Delegated Regulation (EU) 2019/1122 (see summary) from 1 January 2021. However, it continues to apply until 31 December 2025 to, among other things, all operations required in relation to the trading period between 2013 and 2020, and notably for the second commitment period of the Kyoto Protocol (KP) until the period for fulfilling commitments (true-up period) in 2023.

KEY POINTS

EU emissions trading system

The EU ETS is a cornerstone of the EU’s policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively. It is the world’s first major carbon market and remains the biggest. The EU ETS works on the ‘cap and trade’ principle. A cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall.

Within the cap, companies receive or buy emission allowances which they can trade with one another as needed. In the third phase of the ETS (2013–2020) the companies could also buy limited amounts of international credits from emission-saving projects around the world. The limit on the total number of allowances available ensures that they have a value.

By the end of April each year, installations and aircraft operators covered by the EU ETS must surrender enough allowances to cover all their emissions in the previous year, or risk heavy fines. If a company reduces its emissions, it can keep its spare allowances to cover its future needs or sell them to another company that is short of allowances.

Union Registry

The regulation sets up, from 1 January 2013, an EU-wide Union Registry, an online database that holds accounts for stationary installations, aircraft operators (included in the EU ETS since January 2012) and for any person interested in trading emission allowances.

Auctioning is the default method for allocating allowances, rather than free allocation. Harmonised allocation rules apply to those allowances that are still freely allocated.

The registry records:

lists of installations and aircraft operators covered by the ETS directive (Directive 2003/87/EC) in each EU Member State and any free allocation to each of them;
accounts of companies or individuals holding emission allowances;
transfers of allowances (‘transactions’) carried out by account holders;
annual verified CO₂ emissions from installations and aircraft operators;
the annual reconciliation of allowances and verified emissions, where each company must have surrendered enough allowances to cover all its verified emissions.

Opening an account

To participate in the EU ETS, companies or individuals have to open an account in the Union Registry, sending a request to the national administrator, who collects and checks all supporting documentation.

EU Transaction Log

The EU Transaction Log (EUTL) automatically checks, records and authorises all transactions between accounts in the Union Registry, ensuring that all transfers comply with EU ETS rules.

The EUTL is the successor of the Community Independent Transaction Log, which had a similar role before the Union Registry was introduced.

Kyoto registries

The Union Registry also acts as a KP registry to assist the EU and its Member States in meeting their obligations as parties to the KP.

Amendments

Amending Delegated Regulation (EU) 2015/1844 outlines the implications and new procedures for the Union Registry and the national KP registries following the Doha Amendment to the Kyoto Protocol, for consistent implementation of internationally agreed accounting requirements.
Regulations (EU) 2018/208 and 2019/401 introduced the possibility to protect the integrity of the EU ETS in the case of Brexit.
Regulation (EU) 2019/1122, which will replace this Regulation from 1 January 2021, sets out the possibility of linking with the registries of other greenhouse gas emissions trading systems.

Repeal

Regulation (EU) No 389/2013 has been repealed by Delegated Regulation (EU) 2019/1122 fromf 1 January 2021, although it continues to apply until 31 December 2025 to, among other things, all operations required in relation to the trading period between 2013 and 2020 and notably for the second commitment period of the KP.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 4 May 2013.

BACKGROUND

For further information, see:

Kyoto 2nd commitment period (2013–2020) (European Commission)
Paris Agreement (European Commission)
EU Emissions Trading System (EU ETS) (European Commission)
Union Registry (European Commission).

MAIN DOCUMENT

Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations (EU) No 920/2010 and No 1193/2011 (OJ L 122, 3.5.2013, pp. 1–59).

Successive amendments to Regulation (EU) No 389/2013 have been incorporated into the original document. This consolidated version is of documentary value only.