ETS - EU Emissions Trading System
The European Union is tightening its climate reporting rules, and if your company is part of the EU’s Emissions Trading System (ETS), these changes could impact you. The amendments to the Implementing Regulation (EU) 2020/1208 introduce new requirements for reporting greenhouse gas emissions and how revenues from carbon allowances are used. Here’s a breakdown of what these updates mean for your business.
What’s new in reporting requirements?
- Updated reporting formats: The EU has updated the formats for how greenhouse gas emissions data should be reported. These new formats are designed to align with global standards under the Paris Agreement. If your company is involved in sectors covered by the ETS, you’ll need to make sure your emissions data is submitted using these updated formats.
- More frequent data reviews: The European Commission will now conduct additional reviews of national greenhouse gas inventory data in 2025, on top of the previously scheduled reviews in 2027 and 2032. This means that companies need to ensure their data is accurate and up to date more frequently, as any discrepancies could be flagged earlier.
- Detailed use of auction revenues: For companies that generate revenue through the auctioning of carbon allowances, there are now stricter requirements for reporting how these funds are used. The EU wants to see that auction revenues are being reinvested in climate-related initiatives, such as improving marine ecosystems or supporting international climate finance.
- Simplified reporting processes: To make life easier, the EU is combining several reporting tables into one. This should reduce the administrative burden on companies, but it also means that you need to ensure all relevant data is captured in this new, streamlined format.
- Clarification on biomass emissions: If your company uses biomass as a fuel, it’s important to note that only emissions from sustainable biomass will be considered zero-rated. This means that you’ll need to verify that your biomass meets the EU’s sustainability criteria to take advantage of this benefit.
- Inclusion of maritime transport: Companies in the maritime sector will now see their emissions included in the EU ETS. The updated regulation includes specific reporting requirements for these emissions, so maritime companies will need to adjust their reporting practices accordingly.
- Emphasizing carbon removals: The EU is starting to place more focus on carbon removal technologies. While these are not yet fully integrated into the current regulations, businesses investing in carbon capture and storage should keep an eye on future developments, as these technologies could become a key part of EU climate strategy.
What should companies do next?
- Review your reporting processes: Ensure your company’s reporting aligns with the new formats and schedules. This may involve updating your internal data management systems or working with external consultants to ensure compliance.
- Plan for Revenue reporting: If your company generates revenue through the EU ETS, prepare to provide more detailed information on how these funds are being used for climate-related purposes.
- Stay informed on biomass and maritime rules: Companies in these sectors should review the specific changes to ensure they comply with the new guidelines.
- Monitor carbon removal developments: If your business is involved in carbon capture or storage, stay updated on potential new regulations that could affect how these technologies are reported and incentivized.
These updates are part of the EU’s broader push to meet its ambitious climate goals. By understanding and complying with these new regulations, your company can not only avoid potential penalties but also contribute positively to Europe’s climate future. Make sure your teams are aware of these changes and are prepared to adapt to the new requirements.
At Carbon Complete, we will support you every step of the way, helping to ensure compliance with these new regulations and guiding you through the entire process from start to finish. Contact us to make sure your company is fully prepared for what’s ahead.
