Free allocation of allowances during the emissions trading period 2013–2020

From 2021 onwards, the list of installations eligible for free allocation will be updated every five years, that is, for the periods 2021—2025 and 2026—2030 in the fourth trading period. The free allocation of allowances will be based on EU-level benchmark values, which will be updated for both five-year periods to reflect technological development.

Sectors particularly susceptible to carbon leakage will be entitled to free allocation equivalent to 100 per cent of the amount calculated on the basis of rules for free allocation during the entire trading period. Other sectors entitled to free allocation will initially receive 30 per cent of the calculated amount but the percentage will be gradually reduced after 2026 to zero in 2030. This reduction does not apply to district heating or cooling.  If necessary, the installation-specific emission allowances may be reduced using different coefficients.

Detailed rules regarding the application and granting of free allocation are included in the Commission Regulation on free allocation issued in December 2018, which will be supplemented with the Emissions Trading Act and other national decrees in Finland.

The Energy Authority has the main responsibility for the official duties associated with free allocation in the period 2021—2030. However, the Ministry of Economic Affairs and Employment will handle the basic information reports which operators of incumbent installations are required to attach to their applications for the first five-year period 2021—2025.

Operators of incumbent installations applying for free allocation for the period 2021—2025 have already submitted their applications to the Energy Authority. The application deadline is 30 June 2019 for installations that start their operations in the first half of 2019. More information regarding the submission of applications and the required appendices is available on the website of the Energy Authority.

Installations that are granted the first greenhouse gas emissions permit on or after 1 July 2019 will be regarded as new participants in the period 2021—2025. Practices applicable to new participants and the deadline for the free allowance application will be specified in a Government decree in 2019. 

In the fourth trading period, free allocation to installations that have reported a production increase or decrease of at least 15 per cent assessed as a rolling average of two years, will be annually modified.  This ensures that the production data used as grounds for free allocation reflect actual production levels more accurately. More detailed provisions will be included in the Regulation, which according to the European Commission will be issued in summer 2019. 

 

Inquiries: juha.rajala(at)tem.fi