This Directive establishes a Community GHG emissions trading scheme from 2005, to enable the Community and the Member States to meet their Kyoto Protocol commitments. Directive 2004/101/EC reinforces the link between the EU's emission allowance trading scheme and the Kyoto Protocol by making the latter's 'project-based' mechanisms (Joint Implementation and the Clean Development Mechanism) compatible with the scheme. From 2005, all installations in the energy sector, iron and steel production and processing, the mineral industry, and the wood pulp, paper and board industry, and emitting the specific GHG associated with that activity, must possess a permit issued by the appropriate authorities. Each Member State must draw up a national plan indicating the allowances it intends to allocate for the relevant period and how it proposes to allocate them to each installation. The Directive also provides for flights that arrive or depart from a Member State's territory to be subject to the EU ETS (from 2012), measure that so far applies to intra-EU flights. Any operator failing to surrender the quantity of allowances commensurate with the emissions from his/her installation during the previous year will have to pay EUR100 (USD 125) per tCO2e and buy allowances for the excess emissions.
The 2003 Directive was amended by:
- Directive 2004/101/EC
- Directive 2008/101/EC
- Regulation (EC) No 219/2009
- Directive 2009/29/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community.
- Decision No 1359/2013/EU
- Commission Regulation (EU) No 389/2013
- Regulation (EU) No 421/2014
- Decision (EU) 2015/1814 concerning the establishment and operation of a Market Stability Reserve.
- Regulation (EC) 2017/2392
- Directive (EU) 2018/410 to enhance cost-effective emission reductions and low-carbon investments.
- Commission Delegated Decision (EU) 2020/1071
- Commission Delegated Regulation (EU) 2021/1416
- Decision (EU) 2023/136
- Regulation (EU) 2023/435
- Decision (EU) 2023/852 amending the number of allowances to be places in the Market Stability Reserve.
- Directive (EU) 2023/958 to alter allowances provided to the aviation sector.
- Directive (EU) 2023/959 to ensure the legislative framework supports to the latest climate ambition, with amendments related to introducing a second EU ETS to cover buildings, road transport and other sectors not currently in the EU ETS; mitigating carbon leakage risks; incentivising uptake of low-carbon technologies; reporting/verification of emissions from maritime transport; and reviewing the Market Stability Reserve.
