EPA announces final decision for Ireland's National Allocation Plan

Date released: Mar 05 2008

Following EU Commission acceptance on 5th February 2008 of the final draft of Ireland’s National Allocation Plan for 2008 – 2012, the Environmental Protection Agency (EPA) yesterday took the Final Allocation Decision on the Plan. This decision finalises the allocations of greenhouse gas (GHG) emission allowances which will be made under the Emissions Trading Directive to Ireland’s major GHG emitters for the next five years, the “Kyoto” period 2008 - 2012.

This completes a process which began two years ago with the Government Decision, conveyed to the EPA on 10th April 2006, on the number of allowances to be divided between over 100 installations covered by the Emissions Trading scheme. The first public consultation on the draft plan took place from 12th May – 12th June 2006.  Following consideration of the points raised the draft plan was submitted to the EU Commission on 12th July 2006.

The EU Commission issued their approvals on 29th November 2006 and 13th July 2007, subject to certain changes which resulted in revised Government Directions being issued to the EPA.  All of these changes were incorporated into an updated plan which was then made available in October 2007 to participants and the public for a second public consultation. The submissions received were assessed resulting in a number of amendments to the text.  This was subsequently confirmed by the EU Commission on 5th February 2008 as being consistent with their conditional approvals.

The allocations are now final and will be issued to the installations on an annual basis over the next five years.

Commenting, Dr Mary Kelly, Director General, EPA said:

"In finalising the National Allocation Plan for the 2008 – 2012 period, full recognition has been given to the increasingly important role of renewables in electricity generation, as envisaged under the National Climate Change Strategy 2007-2012 and as set out in the White Paper, Delivering a Sustainable Energy Future for Ireland.  Power generation accounts for two thirds of the available national allowances.  In addition, the EPA has increased the dedicated set-aside of emissions allowances designed to promote Combined Heat and Power (CHP) facilities in the power generation sector to 750,000 allowances. CHP is a highly-efficient technology for energy production and one in which Ireland lags behind many of our EU partners."

Emissions Trading is a cap and trade scheme where participating installations are given a fixed allocation each year and must either abate CO2 emissions to that level or purchase allowances to meet any exceedance.  It is designed to bring about reductions in emissions at least cost, and is seen to play an increasingly important role in assisting European industry implement the type of reductions envisaged in the EU Commission’s recent proposals for a 20% reduction of GHG emissions by 2020. 

Commenting, Dr Ken Macken, Programme Manager, EPA said that:

“Continued implementation of the Emissions Trading Directive will help Ireland to meet its Kyoto obligations in a cost effective manner. Developing the National Allocation Plan has been a complex task. I believe our proposals are fair and transparent and take into account the environmental integrity of the scheme and the potential effects on the economy.”

“The EPA is aware of the potentially significant economic consequences associated with the implementation of the Directive, and is being advised by a National Allocation Advisory Group, which was appointed by Government to assist the EPA on how best to discharge its obligations in formulating the National Allocation Plan”,
he added.

Over 100 major industrial and institutional sites in Ireland are covered by the plan.  These include power generation, other combustion, cement, lime, glass and ceramic plants and oil refining. Also included are large companies in areas such as food & drink, pharmaceuticals and semi-conductors.
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Under the revised plan the total quantity of allowances to be allocated in the period 2008-2012 represents 87% of forecasted emissions in that period, with the burden falling mostly on the power generation and cement sectors.  New entrants to the scheme in the five-year period are catered for through a specific set aside of allowances.

Notes to Editors

Key Elements of the National Allocation Plan (2008-2012)

  • The total allocation of allowances is set at an average of 22.281 million allowances per annum for the five years 2008 – 2012;
  • Over 90 per cent of the these allowances will be allocated free of charge to existing installations;
  • Allocations will be made based on historical emissions from existing participants;
  • Almost 9 per cent of the available allowances will be held back by the EPA for issue to new entrants;
  • Allocations adjusted for increased use of renewables in electricity production; Combined Heat and Power (CHP) to receive special treatment;
  • Where companies close during the Kyoto phase, the EPA will withhold the issue of allowances for future years to these companies (except for   rationalisations between smaller companies under the same operator where special transfer arrangements will apply). Allowances retained in this way will be added to the new entrant set aside;
  • 0.5 per cent of allowances are to be sold to defray the expenses of administering the emissions trading scheme;
  • Certain smaller installations will be excluded from the scheme under a new de-minimis threshold;
  • The total amount of additional linking credits from the Kyoto Protocol project mechanisms that can be used by operators in the scheme for the period 2008 – 2012 has been set at 11% of the allocation to each installation in the Powergen Sector, 11% in the Cement Sector and 5% in the General Sector.

The National Allocation Advisory Group comprises the Chief Executives (or their senior nominees) of the Commission for Energy Regulation, Forfas, the National Treasury Management Agency and Sustainable Energy Ireland, together with the Director General of the EPA, under the chairmanship of Dr Edward Walsh, Emeritus President of the University of Limerick.