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Netherlands to Launch Legislation on NOx and CO2 Emissions Trading
By Chris DekkersThe Dutch Ministry of environment (VROM) is to launch draft legislation this month that will allow trading of NOx and CO2 emissions from industrial installations. The proposed amendments to the Environmental Management Act will include a new Chapter 16 “Emission Trading” which will provide the legal basis for various systems of emissions trading, in particular NOx and CO2. The legal structure provides for enactment of separate decrees for each type of emission trading. The allocation of credits in the decree on NOx emissions trading will be based on a system of “performance standard rates (PSR)”. This rate-based approach allocates “dynamically” saleable emission credits to the industrial facilities based on the PSR multiplied by the facility’s actual fuel use. All industrial facilities with energy use exceeding 20 MWth will have to meet this annually declining PSR, through abatement measures or purchases of credits from other facilities. Those “cleaner” than the PSR for that year can sell excess credits to others with an allocation that is less than their actual NOx emission. Process emissions in the Steel and Glass industry, for instance, have a similar PSR based reduction. After a three-month “true up” period the facility has to submit an emission report to a new authority, i.e. the Netherlands Emission Authority (NEA) before April 1, showing that its NOx emissions are equivalent to the NOx credits allocated or acquired.
The decree on CO2 emission trading constitutes the implementation into Dutch law of the draft EU directive1 establishing trading of CO2 emissions in the EU. Pursuant to this draft directive the Dutch decree on CO2 emissions trading will be based on the “Cap & “Trade” approach. It is expected that the new directive will involve very short implementation deadlines for the Member States in order to allow trading in 2005. The core issue of the new decree on CO2 is the allocation of allowances to individual facilities in line with the criteria listed in Annex III of the draft directive. A working group of government and industry representatives has been instructed to formulate concrete proposals for the CO2 allocation plan on the basis of which each facility will be allocated its portion of CO2 credits. In line with the monitoring and reporting structure for NOx emissions trading, each facility is required to submit a report on the previous year’s CO2 emissions before April 1, showing its allocation or acquisitions of CO2-credits equivalent to the year’s total CO2 emissions.
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