Compensatory aid for the costs of indirect CO2 emissions
Royal Decree 655/2017, of 23 June, which amends Royal Decree 1055/2014, of 12 December, establishes a compensation mechanism for indirect costs attributable to greenhouse gas emissions passed on in electricity prices from which installations belonging to sectors exposed to a significant risk of “carbon leakage” (installations that cannot pass on these costs in product prices without losing a significant part of the market, and whose competition in third countries do not face the same costs in electricity prices) may benefit.
RD 655/2017 approves the regulatory bases for these subsidies, extending their validity until 31 December 2020.
Who is eligible for indirect cost offsetting mechanisms?
Private sector companies, whether or not they are included in the emissions trading scheme, whatever their legal form, that are validly constituted at the time of submitting the application, that carry out one or more activities in the sectors or sub-sectors that are considered, a priori, to be exposed to a significant risk of carbon leakage, and that demonstrate productive activity during the year prior to the call for applications.
Verification of offset mechanisms with EQA
EQA complies with the requirements for the verification of the documentation to be submitted as it is accredited by ENAC, no. 1/VV028, as Greenhouse Gas Verifiers, for the Verification of Annual Emission Reports in accordance with the European Regulation (EU) 601/2012 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council.
EQA guarantees the accuracy of the verified data, ensuring a transparent and consistent verification process.
Frequently Asked Questions
Verification process for compensatory allowances
Applications must be accompanied by an Explanatory Report, verified by an accredited verification body, in emissions trading.
Aspects to be considered in the verification process:
- Verify that the products included in the corresponding application questionnaire by means of their NACE and Prodcom code are included in Annex II of the RD.
- Verify the actual production and the calculation method used, as well as the link to the beneficiary entity’s accounting statements.
- Verify electricity consumption on the basis of the payment receipts, which must have been made within sixty calendar days of the service being provided. – Verify whether there is a significant increase in capacity for the year prior to the call for proposals.
- Verify, from the accounting statements, the production or consumption values for the years taken to calculate the BO or BEC in those cases where these parameters are used to calculate the eligible costs instead of the actual production or electricity consumption for the year prior to the call (only in the case of installations NOT included in the European Emissions Trading Scheme).
Result of the verification process
– Verification report, including verification opinion, stating, with reasonable assurance, that the data provided by the operator does not contain material inaccuracies.
– Verified Explanatory Report.
Calls for applications for compensatory aid for indirect emission costs
Every year, the Ministry of Industry, Trade and Tourism publishes a call for applications establishing the maximum amount of aid to be granted, for all beneficiaries, and the maximum deadline for applications.
More information on the verification process for compensatory aid.
Sectors most at risk of carbon leakage
The sectors and sub-sectors that are a priori considered to be exposed to a significant risk of carbon leakage are the following:
- 12742: Aluminium production.
- 21430: Extraction of ores for fertilisers and chemical products.
- 32413: Manufacture of other inorganic chemicals.
- 42743: Production and primary processing of lead, zinc and tin.
- 62710: Manufacture of basic iron, steel and ferro-alloy products.
- 51810: Manufacture of leather garments.
- 272210: Seamless steel tubes.
- 72112: Manufacture of paper and paperboard.
- 82415: Manufacture of fertilizers and nitrogen compounds.
- 92744: Production and primary processing of copper.
- 102414: Manufacture of other basic organic chemicals.
- 111711: Spinning of cotton fibres.
- 122470: Manufacture of artificial and synthetic fibres.
- 131310: Mining of iron ore.
- 14: The following sub-sectors of the Manufacture of primary plastics (2416).
- 24161039: Low-density polyethylene (LDPE).
- 24161035: Linear Low Density Polyethylene (LLPDE).
- 24161050: High Density Polyethylene (HPDE).
- 24165130: Polypropylene (PP).
- 24163010: Polyvinyl chloride (PVC).
- 24184040: Polycarbonate (PC).
- 15: The following sub-sector of the pulp manufacturing sector (2111).
- 211111400: Mechanical pulp.
More information on the sectors with the highest risk of carbon leakage.
Contact us for more information on CO2 Emission Cost Allowances
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