On 15 April, the European Commission approved Finland’s extension of its ETS2 and a corresponding adjustment of the number of allowances. Chapter IVa of the EU ETS Directive regulates the new ETS for emissions from fuels used for road transport, buildings and small industries (defined in Annex III). A special provision in Article 30j sets the procedure for adding unilaterally sectors not listed in Annex III. A member state can address a request to the European Commission, which is empowered to assess and decide following a brief consultation period and subject to scrutiny from the European Parliament and the Council. Last autumn, the Commission approved similar requests from Austria, the Netherlands, and Sweden.

An annex to the recent delegated decision, available here (scroll down to bottom), lists the additional sectors subject to the ETS 2 in Finland. It includes emissions from fuels used in waterborne navigation, stationary combustion for agriculture/forestry/fishing, and off-road vehicles and other machinery mobile combustion.

The announcement followed five feedback contributions received between 17 February and 17 March, of which 1 was from a non-governmental organisation, 1 was from a company, 1 was from a business association and 2 were from citizens.

Regarding the effect on ETS 2 supply, the Commission refers to the 2020 calculation of emissions in 2016, 2017 and 2018, and stipulates that the emissions from the sectors Finland requested to add amount to 1,179,206 tCO2, equivalent to 1,179,206 ETS 2 allowances (EUA2s). In comparison, the general ETS 2 cap for 2027 across Europe, across all default sectors (not counting scope expansions) amount to 1,036,288,784 allowances, in other words nearly nine-hundred times the size of the Finnish expansion.

This amount of 1,179,206 will used as a basis for calculating the future number of additional allowances to be issued as of 2027.

Absent any protest from the European Parliament or the member states in the Council, the Commission’s delegated act will be published in the Official Journal shortly after 15 June and enter into force immediately.