ENERGYQUOTE JHA
28th APRIL 2015
GREEN TUESDAY • Data Management • Legislation • Compliance
A Unique Perspective
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A Unique Perspective | Green Tuesday | 28.04.2015
UK: Updated Guidance on Measures Supporting Energy Intensive Industries in EU ETS and Carbon Price
The UK is committed to reducing greenhouse gas (GHG) emissions by at least 80% by 2050
Background The binding EU emissions reduction targets and UK’s own commitment to reducing greenhouse gas (GHG) emissions by at least 80% by 2050 have significant impact on the competitiveness of UK businesses whose production processes consume large amounts of energy. Both the EU Emissions Trading System (EU ETS) and Carbon Price Support Scheme (CPS) force businesses to incorporate the price of carbon into their bottom line costs. The UK government is therefore committed to helping energy intensive industries (EIIs) counter the rising electricity price by allowing businesses to claim compensations towards the indirect costs of EU ETS and CPS if certain criteria are met.
Updates
the EU ETS and CPS force businesses to incorporate the price of carbon into their bottom line costs
On 17 April 2015, the Department of Energy and Climate Change (DECC) and the Department of Business, Innovation and Skills (BIS) published updated guidance to replace the previous one (July 2014) to compensate for eligible costs incurred from 2015.
The guidance explains • Eligibility criteria: The eligible sectors are defined and published in the guidance by the European Commission (EC) and the firms must satisfy a 5% test that mandates their carbon cost is at least 5% of the gross value added (GVA) at the aggregate business level. This approach is meant to filter out and target the companies who are most severely impacted by carbon price increase.
The formula will involve benchmarks set by EC for both EU ETS and CPS
• Compensation calculation: Unlike the 5% test that is based on the entire business, the compensation is calculated based on the installation level depending on how many units a business owns. The formula will involve benchmarks set by EC for both EU ETS and CPS.
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A Unique Perspective | Green Tuesday | 28.04.2015
• Compensation application process: To be compensated the claimant will have to file an initial claim form, quarterly declaration and end of year report. This process is administered by BIS and the payments will be made on a quarterly basis.
Next Steps
To be compensated the claimant will have to file an initial claim form, quarterly declaration and end of year report
Businesses included within the eligible sectors who have incurred indirect costs of EU ETS or CPS in 2015 can now apply for compensation.
EU: European Commission Launches Antitrust Legal Action Against Gazprom The European Commission (EC) began a legal procedure against Gazprom that could potentially lead to a fine set at 10% of Gazprom’s total turnover.
Businesses who have incurred indirect costs of EU ETS or CPS in 2015 can now apply for compensation
The company is being accused of anticompetitive measures such as partitioning the Central and Eastern European gas markets, which if substantiated, could mean that its customers’ ability to resell their gas abroad is reduced. This would allow Gazprom to charge unfair prices in certain member states up to 40% above market rate. Gazprom is accused of using this practice in all East European countries except for Romania and Slovenia. The company is also under investigation for allegedly using its dominant market position to obtain unrelated commitments from wholesalers in purchasing gas transport infrastructure. The announcement took place under the backdrop of the Russian-Greek talks over the pipeline as EU regulators are growing concerned about the political implications. Gazprom has 12 months to respond to the allegations.
This would allow Gazprom to charge unfair prices in certain member states up to 40% above market rate
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Need more info? Email: n.chlupka@energyquote.com or call Niels Chlupka on: +44 (0)20 7605 2362
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