1. Emissions Trading Dr. Ken Macken

2. Emissions Trading Directive The Directive was approved by the European Parliament on 2 July 2003, and by the Council on 22 July. Emissions trading will start on 1 st. January 2005 and cover the Member States of the enlarged European Union. The EU scheme will be the first multi-national emissions trading scheme in the world and is considered a forerunner of the international emissions trading scheme under the Kyoto Protocol.

3. How will Emissions Trading Operate? Based on a “ Cap and Trade ” approach. Participants will be issued with a permit entitling them to trade and obliging them to report their emissions of CO 2. Each EU Member State will set annual limits (in the National Allocation Plan) on the CO 2 emissions to be allowed from each installation in the scheme. At the beginning of each year participants will be given their allowances for that year. Reductions in emissions below the limits will be tradable. Exceedences must be matched by allowances purchased from others. At the end of each year participants must surrender allowances equal to actual emissions or face penalties. Independent auditors will verify the emissions.

4. National Allocation Plan The NAP will indicate how allocations are to be divided among the participants involved. The draft NAP is subject to public consultation and must be submitted to the EU for approval by 31 st. March 2004. The NAP must be based on objective and transparent criteria (including those in Annex III of the Directive). The Government will decide on how many tonnes/a of CO 2 is to be allocated to the trading scheme. The EPA is in the process of engaging consultants to advise on the fairest and most cost effective way of sharing out our allocation.

5. Who will Participate in Trading? In the EU: –Approximately 10,000 steel factories, power plants, oil refineries, paper mills, and glass and cement installations. –It is estimated that these account for almost half of the EU's total CO 2 emissions. Other sectors, such as aluminium producers, the chemicals industry and the transport sector, might be brought in later. In Ireland: –About 70 installations will be involved (mostly power plants or sites with large boilers) These also account for about half of our total CO 2 emissions (about one third of our total emissions of Greenhouse Gases.)

6. What Sectors are covered by the Directive? Energy Activities –Combustion installations with a rated thermal input exceeding 20 MW –Mineral oil refineries –Coke ovens Production and processing of ferrous metals –Metal ore installations –Pig iron or steel Mineral industry –Cement installations over a certain size –Glass installations –Ceramic products installations Other activities –Paper and cardboard

7. Main Sectors in Ireland Power Generation Large Boiler Plant Cement Lime Glass Ceramics Oil Refining Paper Mills In all about 70 separate sites will be involved.

8. Consultation Workshop A Consultation Workshop is being held in Dublin on Friday, 3 rd. October for those covered by Emissions Trading. EPA has placed advertisements in national papers and has written to anyone we suspect may be involved, but… If in doubt request details by e-mail from trading@epa.ie trading@epa.ie Visit our web site at www.epa.ie and click on Emissions Tradingwww.epa.ie