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 08 August 2007
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EU Emissions Trading Scheme: Phase 1

Phase I of the EU ETS started on 1 January 2005 and runs until 31 December 2007.

A UK provisional National Allocation Plan for Phase I of 736 million allowances (equating to 736 million tonnes of CO2) was submitted to the Commission in April 2004 and conditionally approved by the Commission in July 2004.

In November 2004 the Government submitted revised proposals to the Commission, increasing the total number of UK allowances for Phase I to 756.1 million allowances. This increase was based on ongoing work on emissions projections and new climate change agreement targets agreed with industry.

The Commission has refused to consider the substance of the amendment submitted in November 2004.  On 24 May 2005, the Government announced the installation level allocations for Phase I. The total quantity of allowances was allocated on the basis of the provisional total of 736.3 million allowances already approved by the European Commission.

The UK’s National Allocation Plan can be obtained via the 'External Links' menu to the right of this page.

The Plan sets out:

  • The total quantity of allowances to be allocated in the UK
  • The quantity of allowances to be allocated at sector level
  • The quantity of allowances to be allocated at installation level
  • Technical aspects; Community legislation and policy
  • Public consultation

DTI has commissioned various independent reports, providing analysis to help inform its policy decisions which can be found under 'Related Documents' and 'External Links'.

UK Response to Commission Decision on the UK NAP Amendment of 22 February 2006

The Government has decided that it will not pursue further court action against the European Commission for consideration of its amended Phase I National Allocation Plan.

The Government is disappointed that the Commission has again decided not to consider the UK's NAP, as it was made clear that the figures in the provisional NAP for Phase I were subject to change. The Government also considers that the proposed amendment notified to the Commission is compatible with the relevant Community legislation.

However, the UK has decided not to launch a court case in the interests of establishing certainty for installations covered by the scheme for the remainder of Phase I. Given the timescales, there is a strong possibility that the UK would not be able to allocate the allowances within Phase I even if successful.

In addition, the Government has discussed with the Commission the unique circumstances surrounding its Phase I NAP. In considering where the final total allocation for Phase II will lie within the published range of 3 - 8MtC of effort below business as usual, the Government will take into account the 20M allowances which were the subject of the amended Phase I NAP, as well as the other factors referred to in the draft Phase II NAP.

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