1. Experiences with the Dutch NOx trading system
Kees Hoppener
Ministry of Environment
Brussels, 3 April 2009

2. Contents of the presentations
History
How it works
Lessons learned

3. Fact and figures National system Started at 1-6-2005
About 350 installations involved:
Combustion plants in all industrial installations>20 MWth (i.e. power plants, refineries, chemical plats etc. or 85% of industrial emission)
Industrial processes within industrial installations (15% of industrial NOx emissions)
glass manufacturing,
steel production,
nitrogen acid production
Strong integration of ETS and NOx- trading (80 – 90 %) caused by fossil fuels

4. Why NOx emission trading?
NOx is difficult as well local as trans-boundary effects
Stringent NOx-ceiling (NECD 2010)
Request by the industry for more flexible approaches
NEPP: more market based instruments
Permanent reward for pro-active, good environmental behaviour

5. a new phenomenon IPPCD gives ELV’s by source= relative approach
NECD gives maximum emission ceilings = absolute approach
Trading = a solution to distribute space under an emission ceiling or absolute cap

6. Goals of NOx emission trading
Reduction based on cost-effectiveness 
Distribution of the costs: the polluter pays
Flexible allocation of the room under the NOx-emission ceiling
Compliance with the NOx-ceiling
Uniformity in practice: one-stop shop

8. PSR 2010, 40 g/GJ PSR 2020, 27.5 g/GJ ? Tough challenges
Bron: Vrom 2006

9. Allocation of allowances
Yearly allocation of NOx allowances based on a Baseline&Credit (B&C) approach
performance standard rate (PSR): grams of NOx allowances per unit of energy (GJ) input in the facility or per produced products (ton product)
a general binding rule: yearly the value PSR goes downwards
2005: 68 gr/GJ : 37 gr/GJ

10. performance standard rate (PSR)

11. NOx-emission trading: year by year – similarities with EU ETS compliance requirements
1a. Submit verified annual emission report
1b. Register the allowances
1c. Confirm of the data by a verifier
Year x
1 January
budget period x
Trading period x
31 March
2. Hand in NOx allowances
x + 1

12. How does it work? shortage: buy or measures surplus:Sell or
Measures, sell or buy
shortage: buy
or measures
1200
surplus:Sell or
Save permits
1000
800

13. Balance after 4 years cost-effectiveness? limited by the IPPC-permits
Settlement of the costs? Yes there are buyers and sellers
Flexible distribution of the available emissions space? allocation of emission allowances functions well
Enforcement of NECD? a political linking between allocation and the NECD-ceiling
One-stop shop? Dutch emission authority for NOx trading whereas for IPPC industrial installations 20 licensing authority

14. Is everybody happy: industry
Too many allowances in the market
Complaining on the burden of monitoring and reports
Complaining on double regulation: IPPCD and emission trading
Lack of flexibility caused by the command and control approach of the IPPCD

15. Is everybody happy: authorities
High quality of monitoring of NOx – would not have been possible without ETS
possibility to enforce the NECD
The relation between the IPPC and emission trading is not clear: State Advisory Council took very principled position
In 2010 the market is expected to be in balance: the price will rise more incentives
The budget period of NECD is too short to provide sufficient support

16. Future for the Dutch NOx trading system?
An European directive to structure NOx-trading would be highly welcomed
Emission trading needs room and flexibility under the IPPC
Emission trading is the only way to guarantee ambitious objectives in future
command and control approach is coming to a dead end for NOx and SOx
Special attention for local air quality
A long tem budget period under the NECD

17. Alternatives for trading?
Temporary licences: on going sharpening of the ELV’s
NOx an SO2 tax system
Denying the problem and window dressing

18. Thanks for your attention
Are there any questions? Now
Or later:
Programme leader Industry & Air pollution Climate & Air quality Directorate Ministry of Housing, Spatial Planning and the Environment P.O. box EZ The Hague Internal P.O. box 650 The Netherlands phone: mobile: @: