Eiropas Parlaments
2014-2019
Budžeta kontroles komiteja
2.9.2015
DARBA DOKUMENTS
on ECA Special Report N°6/2015 (2014 Discharge) on "The integrity and
implementation of the EU ETS"
Budžeta kontroles komiteja
Referents: Markus Pieper
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Introduction
The European Union’s Emissions Trading Scheme (EU ETS) is the EU’s flagship policy to
combat climate change. It is the world’s largest cap-and-trade system for greenhouse gas
(GHG) emissions, its objective being to promote reductions of greenhouse gas emissions in a
cost-effective and economically efficient manner. This scheme also belongs to the climate and
energy package with its well-known '20-20-20 targets'1.
The EU ETS is often quoted as the reference model for emerging climate change policy and
emissions trading schemes elsewhere in the world. This innovative scheme introduced in
2005 was organised and progressively improved through three trading periods (2005-2012,
2008-2012 and 2013-2020). At European level, the environmental goal of the EU ETS is not
just reducing emissions in line with the cap from high-emitting industry sectors, but also
putting a price on carbon and giving a financial value to each tonne of CO2 saved. The price
is determined by the market in allowances. Thus, the ETS is a market based instrument, which
works to this purpose. For the participants it provides a legal system on which large
investment decisions are taken. Therefore, it needs to be predictable and reliable. Constant
changes in the system lead to legal uncertainty, bureaucratic burden and additional costs.
For the EU ETS to work as intended, Member States are required to set-up the necessary
systems and administrative arrangements to implement the EU ETS at national level whilst
the Commission is responsible for ensuring a coordinated functioning of the system2.
However, as the scheme foresees the creation of a market for emissions allowances, both
Member States and the Commission are responsible for ensuring the integrity of the system
and its correct implementation in order to achieve its environmental objectives.
Audit scope and objectives
The Court focused on the fundamental issues of the system’s integrity and implementation.
The audit did not examine the overall effectiveness of the EU ETS. The objective of the audit
was to answer the question ‘Is the European Union Emissions Trading Scheme managed
adequately by the Commission and the Member States?’
This was done by addressing the following sub-questions:
a) Is there an appropriate framework for protecting the integrity of the EU ETS?
In order to answer this question, the Court examined the appropriateness of market
regulation and oversight rules that apply to emissions trading, the legal status and
definition of allowances, and the Union Registry system for recording and disclosing
EU ETS data. The audit scope did not include an assessment of national measures to
address the risk of VAT carousel fraud;
b) Is the EU ETS correctly implemented?
To answer to this question, the Court examined the implementation of the EU ETS by
the Member States and the Commission during phase II of the EU ETS.
1
The targets are the following: 20% reduction in EU greenhouse gas emissions from 1990 levels, raising the share of EU
energy consumption produced from renewable resources to 20% and 20% improvement in the EU's energy efficiency.
2
These provisions are included in the directive 2003/87/EC establishing the EU ETS.
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The audit was carried out at both the Commission and Member State level. The work at
Commission level examined how the Commission guided the implementation of the EU ETS
by the Member States and whether it fulfilled its own obligations under the applicable legal
framework. Seven Member States were selected on their volumes and types of emissions.
Visits were made to relevant authorities in Germany, France, Italy, Poland and the United
Kingdom and documentary evidence was obtained from Greece and Spain. The audit at
Member State level focused on the National Allocation Plans (NAPs) and surrendering of
allowances, on systems for monitoring, reporting and verification of emissions and on
sanctions applied in case of non-compliance. Auctioning was not covered as it is still only
implemented at a very small scale and in a limited number of Member States. In addition,
substantive testing of documentation available at national Competent Authorities was carried
out relating to 150 installations selected from these seven Member States.
Court's Findings and Observations
I - The framework for protecting the integrity of the EU ETS
The protection of the integrity of the scheme is a key condition to allow a stable and attractive
market for investors. The Court observed that overall the management of the EU ETS by the
Commission and Member States was not adequate in all respects. It was hindered by certain
issues related to the robustness of the framework for protecting its integrity, and by significant
weaknesses in the implementation of phase II of the EU ETS.
There have been significant improvements to create a tailor-made regime for the carbon
market and for protecting the integrity and security of the system, notably through the
inclusion of most of the spot market for allowances under the markets in financial instruments
directive (MIFID) and market abuse (MAD - market abuse directive / MAR - market abuse
regulation) regimes by the qualification of emission allowances as financial instruments, the
reinforcement of the Union registry of allowances against cyber-crimes, the possibility for
Member States to apply a reverse charge mechanism to address the VAT fraud or the
integration of anti-money laundering provisions.
However the Court found a number of issues still to be addressed in order to make the
framework sufficiently robust, to provide better regulation and supervision, and to encourage
investor confidence for leveraging the EU ETS as a tool of environmental policy:
a) There are remaining issues regarding the regulation and oversight of the emission
market related to compliance traders who need MIFID authorisation, bilateral over the
counter (OTC) spot trading acting on the markets with limited visibility for regulators
and smaller market participants for which there is a lack of information on their
identities and behaviours on the emissions markets;
b) There is no EU level oversight of the emissions market with insufficient regulatory
cooperation between (i) the Commission and national financial regulators next to a
Union register that does not record price and financial information related to
transactions and (ii) between the Directorates General of the Commission1;
1
The cooperation between DG Climate Action and Energy responsible for the EU ETS and DG Internal Market,
Industry, Entrepreneurship and SMEs dealing with financial markets regulation is only informal and does not
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c) The legal definition of emission allowances is not sufficiently clear in the EU ETS
directive or inexistent in most of the Member States and there is also a lack of clarity
regarding the creation and protection of security interests in allowances;
d) The Union Registry processes fundamental EU ETS information and has a high risk
profile due to the financial stakes and wide range of account holders. According to the
Court, Member States procedures should include identification, targeted or crossborder tracking transactions as well as rigorous controls and identification of account
holders (i.e. KYC checks)1 . Those measures are vital to enhance market integrity and
to detect fraudulent or criminal activities. The Court identified persistent weaknesses
in opening of accounts in Member States and a lack of sharing information on
suspicious applications for accounts opening (an EU wide list of refused accounts
openings does not exists).
Besides these significant shortcomings in the cooperation with regulatory authorities, the
Court audit work showed the Commission's limitations to adequately monitor at EU level
transactions due to data protection considerations2.
Furthermore, the Court also found that the development and operation of the Union Registry
at the Commission was hindered by internal coordination issues (the IT and business
responsibilities were not sufficiently defined and segregated within DG Climate Action) and
resource constraints leading to security threats for the Union Registry.
II - The implementation
The Court concluded that the Commission has had a limited role in ensuring the
harmonisation of key controls in the implementation of the EU ETS by Member States.
Moreover, the Court was not able to find evidence of that the Commission duly monitored
and assessed risks such as the distortion of competition or potential impact of diverging
implementation practices among Member States on the functioning and integrity of the EU
ETS.
In addition, the Court reported several significant weaknesses in Member States’ and in the
Commission’s guidance and monitoring of Member States' implementation of the EU ETS
control framework in phase II (2008-2012) that have to be addressed during phase III (20132020) in order to reach sufficient assurance that the system is operating as intended:
a) Shortcomings and delays were identified in the approval of monitoring plans by the
Member States and in the verification of the correctness of their data that are
subsequently used for issuing emissions reporting and were not sufficiently well
implemented or harmonised;
facilitate a coordinated approach to monitor the emissions market.
1
KYC checks or 'Know Your Customer' is a process use by financial institutions to conduct customer due
diligence (i.e. carrying out identity checks, verification of the identity of the beneficial owner, understanding of
the nature of the business relationship, especially in the context of anti-money laundering legislation or
countering the financing of terrorism).
2
This situation was reflected in the repeated reservation by DG Climate Action in its 2012 and 2013 Annual
activity Reports.
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b) Some Member States did not provide all the required annual reports on the operation
and results of the EU ETS, and the Commission did not publish during the
period 2008-2012 the consolidated annual implementation report required under the
EU ETS directive;
c) Finally, the Court could not assess the effectiveness of the Member States’ diverse
sanction systems1 due to a lack of consolidated information at Member States and
European level.
The Court's recommendations
The Court recommends that remaining issues in emission market regulation and oversight
should be addressed by the Commission in order to further improve market integrity and to
make possible that the Parliament and the Council accurately supervising the whole system;
The Commission should analyse the benefits of treating emission allowances as property
rights across the EU and consider how to provide an express registration mechanism. The
Commission also should consider how effective cross border transaction monitoring can be
developed and coordinated at EU level to mitigate risks of abuse and fraudulent activities;
In addition, during phase III, the Commission should improve the level of guidance and
information about the implementation of the EU ETS by Member States in order to identify
areas where more harmonisation is imperative and publish regularly the required report on the
implementation of the EU ETS, specifically addressing issues of non-harmonisation and
resulting risks;
Member States should improve cooperation and ensure better coordination between
competent authorities and accreditation bodies. They should also implement coherent,
effective control frameworks for monitoring, reporting and verification activities, and provide
on time to the Commission the annual reports foreseen by the directive;
Finally the implementation of sanctions in relation to the EU ETS should be made more
transparent. Up to date and accurate information should be available at Member State and EU
level on the implementation and results of penalty procedures, and the Commission should
better monitor enforcement practises across the EU as well as the consistent application of
national penalties.
1
According to the EU ETS directive, Member States establish and implement national rules on penalties
applicable to infringements of the EU ETS legislation. The EU ETS directive foresees a specific EU-wide
penalty for excess emissions amounting to 100 euro for each tonne of CO2 for which the operation has
surrendered allowances.
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Referenta ieteikumi iespējamai iekļaušanai ikgadējā ziņojumā par budžeta izpildes
apstiprinājuma sniegšanu Komisijai
1. Referents pauž aizkaitinājumu, ka nav bijis iespējams iegūt dažādu izmantoto piešķiršanas
sistēmu efektivitātes pilnīgu analīzi, kas būtu bijusi ārkārtīgi noderīga, lai pieņemtu
politiskus ieteikumus, pamatojoties uz ERP revīzijas rezultātiem.
2. Pauž nožēlu, ka izmantotās sistēmas nav pārredzamas un pieļauj krāpšanas iespēju.
3. Uzskata, ka Komisijai kā Līgumu izpildes uzraudzītājai būtu stingri jāuzrauga īstenošana
dalībvalstīs un tām vairāk jāpalīdz šajā procesā; Komisijai ir jānodrošina tiesisko lēmumu
paredzamība un tiesiskā noteiktība, jo īpaši attiecībā uz iespējamu ETS sistēmas,
piemēram, tirgus stabilitātes rezerves mehānisma, pielāgošanu.
4. Revīzijas palātai ETS sistēmas efektivitātes analīzes pārskatā būtu jāiekļauj arī ETS mērķa
īstenošanas analīze; ir jāuzsver ETS pārvaldības efektivitāte dažādās dalībvalstīs, jo īpaši
attiecībā uz ES un dalībvalstu tiesību aktu sadursmi un pārklāšanos, piemēram, tādās
jomās kā atjaunojamo enerģijas veidu attīstība un energoefektivitātes pasākumi, kam arī ir
būtiska ietekme uz CO2 emisijām un līdz ar to oglekļa emisiju tirgu.
5. Prasa Revīzijas palātai savā analīzē iekļaut arī skartās rūpniecības nozares, jo īpaši
attiecībā uz tiesisko noteiktību un paredzamību un to, cik lielā mērā ir nodrošināts
uzticams tiesiskais regulējums, un būtu bijusi vēlama arī kritiska piezīme par pastāvīgo
ETS tiesiskā regulējuma pielāgošanu un iejaukšanos oglekļa emisiju tirgū, kā arī aizvien
pieaugošajām pielāgošanas izmaksām.
6. Pauž pārsteigumu, ka Revīzijas palāta nav komentējusi visnotaļ acīmredzamo pārrobežu
krāpšanas risku PVN jomā, piemēram, attiecībā uz Deutsche Bank.
7. Uzskata, ka ir svarīgi darīt visu iespējamo, lai nepieļautu oglekļa emisiju pārvirzi, un
nodrošināt godīgu starptautisku konkurētspēju, īstenojot pasākumus attiecībā emisiju
kvotu bezmaksas piešķiršanu; prasa Komisijai novērtēt rūpniecības nozares un
uzņēmumus, kurus ietekmē oglekļa emisiju pārvirze, lai skaidri apzinātu jomas, kurās ir
notikusi uzņēmējdarbības pārcelšana no Eiropas uz valstīm, kurās nav stingru tiesību aktu
klimata pārmaiņu jomā.
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