Spain updates its greenhouse gas emission allowance trading market to EU rules

Automatic summary, not yet reviewed

1. The law amends Law 1/2005, of March 9, to bring Directive (EU) 2018/410 into Spanish law. That directive strengthens the EU emission allowance trading system in its phase IV, covering 2021-2030.
2. Allowances issued from January 1, 2013 are valid indefinitely and count as financial instruments. The 2021-2030 trading period is split, for stationary installations, into two allocation periods: 2021-2025 and 2026-2030.
3. Auctioning remains the basic method for allocating allowances, and the State Secretariat for the Environment organizes the auctions and acts as auctioneer. If an installation stops generating electricity because of additional national measures, allowances pending auction can be canceled.
4. Sectors at significant risk of carbon leakage keep receiving 100 % of their allowances for free. Other sectors see their free allocation reduced: 30 % until 2026, then a yearly cut down to zero by 2030, except urban heating, which keeps the 30 %.
5. If an installation's activity level rises or falls more than 15 % compared with the level used to calculate its free allocation, the number of allowances is adjusted. Excess allowances must also be returned, and failing to do so is a very serious offense.
6. Installations receiving free allowances must monitor the activity levels of their sub-installations and submit a verified report every February 28, in addition to the annual emissions report.
7. For aviation, non-commercial aircraft operators emitting under 1,000 metric tons of CO2 per year are excluded from the system until December 31, 2030, and the exemption for flights to or from outside the European Economic Area is extended until 2023.
8. Small installations (under 25,000 metric tons of CO2 equivalent per year) and hospitals can remain excluded from the system until 2025 if they adopt equivalent mitigation measures. A report is due in 2023, and the Government may extend the exclusion from 2026.

Who it affects

• Operators of stationary installations covered by the system (industry and energy): They must hold an emissions permit, monitor and report their emissions and activity levels, and surrender allowances each year by April 30.
• Small installations and hospitals: They can be excluded from the system until 2025 if they adopt equivalent mitigation measures and meet simplified monitoring requirements.
• Aircraft operators managed by Spain: They must submit monitoring plans and verified emissions reports, and can request free allocation or access to the special allowance reserve.
• Companies and individuals trading emission allowances: They can buy allowances at auctions and trade in the market, but must open an account in the European Union Registry.
• Autonomous communities (regional governments): They issue emissions permits and sanction most offenses by stationary installations in their territory.

Words worth knowing

Derecho de emisión (emission allowance)

A permit to release one metric ton of CO2 equivalent into the atmosphere. Those who pollute less than their allocation can sell their leftover allowances.

Fuga de carbono (carbon leakage)

When a factory moves to a country with no comparable emission rules, increasing pollution there instead of reducing it.

Asignación gratuita (free allocation)

Emission allowances an installation receives without paying for them, under EU rules.

Nuevo entrante (new entrant)

An installation that obtains its emissions permit for the first time within a set period around an allocation period.

Subinstalación (sub-installation)

Each of the parts an installation is divided into to calculate free allocation and adjust it to actual activity.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries