1. German greenhouse gas emission inventories vs. EU emissions trading system in Germany Michael Strogies Dr. Volker Kathöfer German Environmental Agency (UBA, Berlin, Dessau) Copenhagen, 09. February, 2006

2. State of the art

3. OUTLINE Brief description of the National Authority (NaKo), Brief description on the Emission Trading Agency (DEHSt) tasks and functions and timing

4. NaKo Single National Entity Federal Environmental Agency (I 4.6) focal point and national coordination draft reports Implementation / update of Zentralised System on Emission ZSE consistent data management for all existing obligations Implementation of a Quality System Emissioninventories QSE QA/QS – system Responsibilities / cooperation regulation on climate statistics (KlimaStatG - in preparation)

5. NaKo Quality System Emissions inclusion of whole process determination of methods, data gathering, data processing and estimation, reporting Should be followed by all participants of the national system agency in house standard (internal regulation) others regulated by KlimaStatG

6. NaKo Content and parts of QSE (11/2005 and KlimaStatG): single national entity responsibilities for specific source and sink categories time schedule for all steps of data flow minimum requirements for data (documentation, QA/QC) cooperation for review procedures specific taskstreatment of confidentiality

7. GERMAN EMISSIONS TRADING AUTHORITY: TARGETS Ambition is to set up Emission Trading as environmentally and economically effective as possible... that requires... to ensure the ecological integrity of the instrument to avoid market distortions to minimize transaction costs to facilitate the trading by an efficient interaction between traders, trading platforms and registries

8. Total Staff: 75 Department E 1 Industry Sector Allocations, Customer Service and Legal matters Department E 2 Energy Sector Allocations, Reserve Management, and Registry JI/CDM (optional)Emissions Trading Legal Office Process Control, Quality Control Customer Service, Communications Industry Installations IIIndustry Installations I Energy Installations I IT, Quality Control Central Registry Energy Installations II Reserve Management, Reports, National Allocation plans Division E German Emissions Trading Authority (DEHSt) GERMAN EMISSIONS TRADING AUTHORITY: ORGANISATION

9. GERMAN EMISSIONS TRADING AUTHORITY: TASKS to allocate and issue allowances to control operator s Monitoring Reports to operate the ETS Registry (Account management); + Kyoto to draft national and international Reports to co-operate with the EU and the UNFCCC to contribute and to develop future National Allocation Plans (NAP) to support the integration of the Kyoto-Mechanisms (CDM/JI)

10. LEGAL FRAMEWORK (GERMANY) Greenhouse gas emission allowance trading law (TEHG), 15th July, 2004 (legal und institutional basis for ETS) Allocation law 2007 (ZuG 2007), 31th August, 2004 (ET-Budget and allocation rules for 2005-2007) additional ordinances Allocation Ordinance Cost Ordinance, 01st Sept., 2004 Registry Ordinance

11. GERMAN NAP Total amount of allowances to be allocated: 495 million t CO 2 annually +3 million tons CO 2 national reserve Allocation method for existing installations: Grandfathering, based on emissions in 2000-2002 Allocation method for new entrants: Benchmarking, based on BVT-Benchmarks Special rules for early action, process emissions, CHP

12. TIMETABLE FOR ALLOCATION / ISSUANCE On the basis of the provisions of the EC Directive and German national legislation (TEHG, ZuG) (Electronic) Application Procedure 1. January 2005Start of the first commitment period Early March, 2005Issuance of allowances (1st trench) 31. August 2004 – 20. September 2004 21. September 2004 – December 2004 2,300 Applications under examination – allocation of allowances free of charge for the first commitment period 2005

13. FIRST RESULTS OF ALLOCATION 1,849 allocation notices total of allowances for 1,485 million tons CO 2 for commitment period 2005-2007 (495 million tons per year) proposed amount exceeds defined maximal budget by 42 million tons (14 million tons per year, 2.8 %) -> proportionate adjustments for certain installations reason: surprisingly high rate of companies applying based on the allocation rule for new entrants (~ 77 million tons CO 2 per year)

14. CO 2 N2ON2O HFC SF 6 PFC CH 4 Stationary Combustion Emission Trading Scheme GHG and ETS

15. National Energy Balance National Inventory Report ET Monitoring (each installation) NIR, ET, EB

16. Energy SectorConsumption 1.007.9501.592.641431.8672.024.50850% 1.258.4491.461.71882.3951.544.11381% 187.392391.0894.147.2644.538.3534% 416.020472.3032.333.1922.805.49515% 274.955200.511475.46650%236.113 hard coal Lignite Mineral oil Natural gas Other fuels ET AllocationEnergy Balance Comparison total consumption (TJ, 2000)

17. hard coal 1.007.9501.592.64163% Lignite 1.258.4491.461.71886% Mineral oil 187.392391.08948% Natural gas 416.020472.30388% Other gases 81.596274.95586% Other fuels 154.516 AR, Energy Sector (TJ, 2000) ET AllocationEnergy Balance

18. National Energy Balance National Inventory Report ET Allocation AR – hard coal, energy sector (2000) 64.630 TJ 61.000 TJ 64.630 TJ

19. Emission Value (ET Allocation) hard coalligniteoilgas 0 50 100 150 200 other t CO 2 /TJ

20. Result We assume some new time series that are yet not estimated, due to detailed information by certain installations We assume new mapping of fuel types and installations We do not assume changes in total, pending from monitoring We are not amused reporting many changes in time series in the next Inventory base year problematic

21. emission factor set for CO2 comparability issue, analysis for solid fuels implementation of annual different EF for brown and hard coal basic set of EF, taking into account the region and specific fuel characteristics annually mixed EF is used in the inventories (basis import statistic) slightly modifications behind the dot Interaction between ETS and Inventory (I)

22. new sources completeness issue, analysis of information provided by operators for NAP 1 (implemented in the inventories 2006) limestone and dolomite use: (+ appr. 6 Mio t CO2 1990) iron and steel large combustion plants others (e.g. ceramic industrie) detailed refinery process: (+ appr. 4 Mio.t CO2 1990) H2 generation use of catalysts reallocation between energy and process related emissions) Interaction between ETS and Inventory (II)

23. First: I had a dream … take validated plant specific information, where available, run statistic estimates for the remaining sources but…. No clear information what share of a specific source category is covered by ETS future dealing: use ETS data only for verification and methodological questions clear need: improved characterization of ETS facilities on detailed level according to detailed IPCC systematic (checked by the authority) Methodological: top down vs. bottom up

24. big issue treatment on level of operator and authority For regulation update it would be very helpful to have a EU-given obligation to use information provided by ETS for the purpose of improving the emission inventories. Need: dealing the confidentiality

25. harmonized monitoring and reporting on emissions trading in Germany needs to be established (implementation of EU Monitoring Guidelines, coordination with international reports on climate protection - national) harmonizing Emission and Activity Data of greenhouse gases, CAFE and ET (EU and national) harmonization between ET Monitoring and Energy Balances (national) FUTURE WORK 2006 – 2007

26. Thank you very much for your attention! …