On behalf of the Ministry for the Environment and Transport of the German State Baden-Württemberg, the Centre for European Economic Research (ZEW) and the Institute for Applied Ecology (Öko-Institut) have reviewed the proposed Directive on the implementation of an EU-wide emissions trading scheme (COM(2001581).

Based on the Ministry´s contribution to the debate, the following issues have been dealt with:<HTML>

  • allocation / initial issue,
  • voluntary or obligatory participation, enabling clauses
  • project-based mechanisms
  • consideration of other greenhouse gases
  • regulatory overlapping
  • inclusion of the electricity sector


In its timing, the Proposal fits well into the international framework laid down in the Kyoto Protocol. Similar to the Protocol, the Proposal provides for five-year budget periods from the year 2008.

The proposed Directive strives for a compromise between the four - partly competing - criteria of simplicity, effectiveness, subsidiarity and transparency; a considerable task, bearing in mind the only slowly emerging international framework and the diversity of variedly-involved interests, which has been largely coped with successfully.

In conclusion, attention is drawn to two important proposals to supplement the present draft:

1) substantiation of Annex III: The criteria for national allocation plans are of a very general nature. In this respect, the relationship between subsidiarity and transparency does not appear to be well-balanced, to the detriment of transparency. With regard to the crediting of earlier abatement action, the criteria catalogue could, for instance, specifically provide that the Commission limit the period of time to which allocation applies, and also lay down precise demands concerning available data, or a procedure for determining values in the case of missing data. The inclusion of new emitters was also largely left open. The application of EU-wide benchmarks (uniform emission factors) would restrict the scope for potential distortions in competition and ensure greater planning security for the business enterprises involved.

2) consideration of electricity generation from combined heat and power (CHP): The present draft Directive can lead to a deterioration in the competitiveness of CHP plants on the heating market, where they will likely compete with supplies that are not covered by the emissions trading system (for example, gas-fired condensation boilers). The draft Directive should therefore be amended with regard to the inclusion of CHP plants. A possible solution would be for the proportion of fuel in CHP plants, which is employed for the generation of district heating, to be exempted from the obligation to dispose of emission allowances.

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Ministerium für Umwelt und Verkehr Baden-Württemberg , Stuttgart , DE

Project duration

01.10.2001 - 28.02.2002

Project members

Marcus Stronzik (Coordinator)

Cooperation partner

Öko-Institut, Berlin