An EU-wide April 30 deadline for firms to surrender emissions trading system (ETS) carbon allowances will stand, the European Commission said, despite calls from the cement and steel industry to extend it due to the coronavirus pandemic.
Industry, utilities and airlines running flights in Europe must report their ETS emissions for the previous calendar year by 31 March, and surrender enough carbon permits to cover these emissions by 30 April under the bloc’s ETS rules.
The European Commission said on Thursday (26 March) it recognised that the coronavirus crisis might make it difficult for companies to submit verified emissions reports by the end of March, but the existing rules provide flexibility around this deadline.
National authorities can make a “conservative estimate” of emissions for firms that miss the March deadline, so long as this is done in time for the April compliance deadline, it said.
“The Commission underlines the importance of the timely surrender of allowances by the mandatory deadline of 30 April 2020,” it added.
Cement and steel lobbies call for delay
Some industrial lobbies had asked the Commission to delay this year’s carbon market compliance deadlines, arguing that firms were struggling to have a verifier check their reported emissions matched actual production.
Firms that left this to the last minute face the problem that coronavirus has shut factories and kept staff at home.
“Our members have flagged the need for flexibility with compliance deadlines under the ETS,” European cement producers association Cembureau chief executive Koen Coppenholle said.
“We support postponing the 31 March compliance deadline of the EU ETS,” European steel association Eurofer said.
The UK steel association said it had asked the British government to urge the Commission to delay the deadlines, citing “on-site disruptions” amid the pandemic.
Risk of carbon market disruption
But the Commission dismissed those calls, saying the existing rules allow for verifiers to check emissions without carrying out site visits under certain conditions.
Green groups said a prolonged delay to compliance deadlines would have disrupted the carbon market.
The EU uses firms’ annual emissions data to work out how many surplus permits are in the ETS. A market stability reserve (MSR) then removes a share of these permits, to avoid a build-up of oversupply that could depress the carbon price.
If the MSR cannot do its job, it would cause “major regulatory uncertainty” and upset the market’s balance, NGO Carbon Market Watch policy director Sam Van den plas said.
Germany’s emissions agency – which oversees ETS data at a national level – had previously indicated it may waive financial penalties for companies that miss compliance deadlines.
Others disagree. The Swedish Energy Agency said it had not received indications that domestic firms would miss compliance deadlines this year.