EUR-Lex - 32003L0008 - EN Avis juridique important | 32003L0008 Council Directive 2002/8/EC of 27 January 2003 to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputes Official Journal L 026 , 31/01/2003 P. 0041 - 0047 Council Directive 2002/8/ECof 27 January 2003to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputesTHE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community, and in particular Articles 61(c) and 67 thereof,Having regard to the proposal from the Commission(1),Having regard to the opinion of the European Parliament(2),Having regard to the opinion of the Economic and Social Committee(3),Whereas:(1) The European Union has set itself the objective of maintaining and developing an area of freedom, security and justice in which the free movement of persons is ensured. For the gradual establishment of such an area, the Community is to adopt, among others, the measures relating to judicial cooperation in civil matters having cross-border implications and needed for the proper functioning of the internal market.(2) According to Article 65(c) of the Treaty, these measures are to include measures eliminating obstacles to the good functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States.(3) The Tampere European Council on 15 and 16 October 1999 called on the Council to establish minimum standards ensuring an adequate level of legal aid in cross-border cases throughout the Union.(4) All Member States are contracting parties to the European Convention for the Protection of Human Rights and Fundamental Freedom of 4 November 1950. The matters referred to in this Directive shall be dealt with in compliance with that Convention and in particular the respect of the principle of equality of both parties in a dispute.(5) This Directive seeks to promote the application of legal aid in cross-border disputes for persons who lack sufficient resources where aid is necessary to secure effective access to justice. The generally recognised right to access to justice is also reaffirmed by Article 47 of the Charter of Fundamental Rights of the European Union.(6) Neither the lack of resources of a litigant, whether acting as claimant or as defendant, nor the difficulties flowing from a dispute's cross-border dimension should be allowed to hamper effective access to justice.(7) Since the objectives of this Directive cannot be sufficiently achieved by the Member States acting alone and can therefore be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.(8) The main purpose of this Directive is to guarantee an adequate level of legal aid in cross-border disputes by laying down certain minimum common standards relating to legal aid in such disputes. A Council directive is the most suitable legislative instrument for this purpose.(9) This Directive applies in cross-border disputes, to civil and commercial matters.(10) All persons involved in a civil or commercial dispute within the scope of this Directive must be able to assert their rights in the courts even if their personal financial situation makes it impossible for them to bear the costs of the proceedings. Legal aid is regarded as appropriate when it allows the recipient effective access to justice under the conditions laid down in this Directive.(11) Legal aid should cover pre-litigation advice with a view to reaching a settlement prior to bringing legal proceedings, legal assistance in bringing a case before a court and representation in court and assistance with or exemption from the cost of proceedings.(12) It shall be left to the law of the Member State in which the court is sitting or where enforcement is sought whether the costs of proceedings may include the costs of the opponent imposed on the recipient of legal aid.(13) All Union citizens, wherever they are domiciled or habitually resident in the territory of a Member State, must be eligible for legal aid in cross-border disputes if they meet the conditions provided for by this Directive. The same applies to third-country nationals who habitually and lawfully reside in a Member State.(14) Member States should be left free to define the threshold above which a person would be presumed able to bear the costs of proceedings, in the conditions defined in this Directive. Such thresholds are to be defined in the light of various objective factors such as income, capital or family situation.(15) The objective of this Directive could not, however, be attained if legal aid applicants did not have the possibility of proving that they cannot bear the costs of proceedings even if their resources exceed the threshold defined by the Member State where the court is sitting. When making the assessment of whether legal aid is to be granted on this basis, the authorities in the Member State where the court is sitting may take into account information as to the fact that the applicant satisfies criteria in respect of financial eligibility in the Member State of domicile or habitual residence.(16) The possibility in the instant case of resorting to other mechanisms to ensure effective access to justice is not a form of legal aid. But it can warrant a presumption that the person concerned can bear the costs of the procedure despite his/her unfavourable financial situation.(17) Member States should be allowed to reject applications for legal aid in respect of manifestly unfounded actions or on grounds related to the merits of the case in so far as pre-litigation advice is offered and access to justice is guaranteed. When taking a decision on the merits of an application, Member States may reject legal aid applications when the applicant is claiming damage to his or her reputation, but has suffered no material or financial loss or the application concerns a claim arising directly out of the applicant's trade or self-employed profession.(18) The complexity of and differences between the legal systems of the Member States and the costs inherent in the cross-border dimension of a dispute should not preclude access to justice. Legal aid should accordingly cover costs directly connected with the cross-border dimension of a dispute.(19) When considering if the physical presence of a person in court is required, the courts of a Member State should take into consideration the full advantage of the possibilities offered by Council Regulation (EC) No 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters(4).(20) If legal aid is granted, it must cover the entire proceeding, including expenses incurred in having a judgment enforced; the recipient should continue receiving this aid if an appeal is brought either against or by the recipient in so far as the conditions relating to the financial resources and the substance of the dispute remain fulfilled.(21) Legal aid is to be granted on the same terms both for conventional legal proceedings and for out-of-court procedures such as mediation, where recourse to them is required by the law, or ordered by the court.(22) Legal aid should also be granted for the enforcement of authentic instruments in another Member State under the conditions defined in this Directive.(23) Since legal aid is given by the Member State in which the court is sitting or where enforcement is sought, except pre-litigation assistance if the legal aid applicant is not domiciled or habitually resident in the Member State where the court is sitting, that Member State must apply its own legislation, in compliance with the principles of this Directive.(24) It is appropriate that legal aid is granted or refused by the competent authority of the Member State in which the court is sitting or where a judgment is to be enforced. This is the case both when that court is trying the case in substance and when it first has to decide whether it has jurisdiction.(25) Judicial cooperation in civil matters should be organised between Member States to encourage information for the public and professional circles and to simplify and accelerate the transmission of legal aid applications between Member States.(26) The notification and transmission mechanisms provided for by this Directive are inspired directly by those of the European Agreement on the transmission of applications for legal aid, signed in Strasbourg on 27 January 1977, hereinafter referred to as "1977 Agreement". A time limit, not provided for by the 1977 Agreement, is set for the transmission of legal aid applications. A relatively short time limit contributes to the smooth operation of justice.(27) The information transmitted pursuant to this Directive should enjoy protection. Since Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data(5), and Directive 97/66/EC of the European Parliament and of the Council of 15 December 1997 concerning the processing of personal data and the protection of privacy in the telecommunications sector(6), are applicable, there is no need for specific provisions on data protection in this Directive.(28) The establishment of a standard form for legal aid applications and for the transmission of legal aid applications in the event of cross-border litigation will make the procedures easier and faster.(29) Moreover, these application forms, as well as national application forms, should be made available on a European level through the information system of the European Judicial Network, established in accordance with Decision 2001/470/EC(7).(30) The measures necessary for the implementation of this Directive should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission(8).(31) It should be specified that the establishment of minimum standards in cross-border disputes does not prevent Member States from making provision for more favourable arrangements for legal aid applicants and recipients.(32) The 1977 Agreement and the additional Protocol to the European Agreement on the transmission of applications for legal aid, signed in Moscow in 2001, remain applicable to relations between Member States and third countries that are parties to the 1977 Agreement or the Protocol. But this Directive takes precedence over provisions contained in the 1977 Agreement and the Protocol in relations between Member States.(33) The United Kingdom and Ireland have given notice of their wish to participate in the adoption of this Directive in accordance with Article 3 of the Protocol on the position of the United Kingdom and Ireland annexed to the Treaty on European Union and to the Treaty establishing the European Community.(34) In accordance with Articles 1 and 2 of the Protocol on the position of Denmark annexed to the Treaty on European Union and to the Treaty establishing the European Community, Denmark is not taking part in the adoption of this Directive and is not bound by it or subject to its application,HAS ADOPTED THIS DIRECTIVE:CHAPTER ISCOPE AND DEFINITIONSArticle 1Aims and scope1. The purpose of this Directive is to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid in such disputes.2. It shall apply, in cross-border disputes, to civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.3. In this Directive, "Member State" shall mean Member States with the exception of Denmark.Article 2Cross-border disputes1. For the purposes of this Directive, a cross-border dispute is one where the party applying for legal aid in the context of this Directive is domiciled or habitually resident in a Member State other than the Member State where the court is sitting or where the decision is to be enforced.2. The Member State in which a party is domiciled shall be determined in accordance with Article 59 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters(9).3. The relevant moment to determine if there is a cross-border dispute is the time when the application is submitted, in accordance with this Directive.CHAPTER IIRIGHT TO LEGAL AIDArticle 3Right to legal aid1. Natural persons involved in a dispute covered by this Directive shall be entitled to receive appropriate legal aid in order to ensure their effective access to justice in accordance with the conditions laid down in this Directive.2. Legal aid is considered to be appropriate when it guarantees:(a) pre-litigation advice with a view to reaching a settlement prior to bringing legal proceedings;(b) legal assistance and representation in court, and exemption from, or assistance with, the cost of proceedings of the recipient, including the costs referred to in Article 7 and the fees to persons mandated by the court to perform acts during the proceedings.In Member States in which a losing party is liable for the costs of the opposing party, if the recipient loses the case, the legal aid shall cover the costs incurred by the opposing party, if it would have covered such costs had the recipient been domiciled or habitually resident in the Member State in which the court is sitting.3. Member States need not provide legal assistance or representation in the courts or tribunals in proceedings especially designed to enable litigants to make their case in person, except when the courts or any other competent authority otherwise decide in order to ensure equality of parties or in view of the complexity of the case.4. Member States may request that legal aid recipients pay reasonable contributions towards the costs of proceedings taking into account the conditions referred to in Article 5.5. Member States may provide that the competent authority may decide that recipients of legal aid must refund it in whole or in part if their financial situation has substantially improved or if the decision to grant legal aid had been taken on the basis of inaccurate information given by the recipient.Article 4Non-discriminationMember States shall grant legal aid without discrimination to Union citizens and third-country nationals residing lawfully in a Member State.CHAPTER IIICONDITIONS AND EXTENT OF LEGAL AIDArticle 5Conditions relating to financial resources1. Member States shall grant legal aid to persons referred to in Article 3(1) who are partly or totally unable to meet the costs of proceedings referred to in Article 3(2) as a result of their economic situation, in order to ensure their effective access to justice.2. The economic situation of a person shall be assessed by the competent authority of the Member State in which the court is sitting, in the light of various objective factors such as income, capital or family situation, including an assessment of the resources of persons who are financially dependant on the applicant.3. Member States may define thresholds above which legal aid applicants are deemed partly or totally able to bear the costs of proceedings set out in Article 3(2). These thresholds shall be defined on the basis of the criteria defined in paragraph 2 of this Article.4. Thresholds defined according to paragraph 3 of this Article may not prevent legal aid applicants who are above the thresholds from being granted legal aid if they prove that they are unable to pay the cost of the proceedings referred to in Article 3(2) as a result of differences in the cost of living between the Member States of domicile or habitual residence and of the forum.5. Legal aid does not need to be granted to applicants in so far as they enjoy, in the instant case, effective access to other mechanisms that cover the cost of proceedings referred to in Article 3(2).Article 6Conditions relating to the substance of disputes1. Member States may provide that legal aid applications for actions which appear to be manifestly unfounded may be rejected by the competent authorities.2. If pre-litigation advice is offered, the benefit of further legal aid may be refused or cancelled on grounds related to the merits of the case in so far as access to justice is guaranteed.3. When taking a decision on the merits of an application and without prejudice to Article 5, Member States shall consider the importance of the individual case to the applicant but may also take into account the nature of the case when the applicant is claiming damage to his or her reputation but has suffered no material or financial loss or when the application concerns a claim arising directly out of the applicant's trade or self-employed profession.Article 7Costs related to the cross-border nature of the disputeLegal aid granted in the Member State in which the court is sitting shall cover the following costs directly related to the cross-border nature of the dispute:(a) interpretation;(b) translation of the documents required by the court or by the competent authority and presented by the recipient which are necessary for the resolution of the case; and(c) travel costs to be borne by the applicant where the physical presence of the persons concerned with the presentation of the applicant's case is required in court by the law or by the court of that Member State and the court decides that the persons concerned cannot be heard to the satisfaction of the court by any other means.Article 8Costs covered by the Member State of the domicile or habitual residenceThe Member State in which the legal aid applicant is domiciled or habitually resident shall provide legal aid, as referred to in Article 3(2), necessary to cover:(a) costs relating to the assistance of a local lawyer or any other person entitled by the law to give legal advice, incurred in that Member State until the application for legal aid has been received, in accordance with this Directive, in the Member State where the court is sitting;(b) the translation of the application and of the necessary supporting documents when the application is submitted to the authorities in that Member State.Article 9Continuity of legal aid1. Legal aid shall continue to be granted totally or partially to recipients to cover expenses incurred in having a judgment enforced in the Member State where the court is sitting.2. A recipient who in the Member State where the court is sitting has received legal aid shall receive legal aid provided for by the law of the Member State where recognition or enforcement is sought.3. Legal aid shall continue to be available if an appeal is brought either against or by the recipient, subject to Articles 5 and 6.4. Member States may make provision for the re-examination of the application at any stage in the proceedings on the grounds set out in Articles 3(3) and (5), 5 and 6, including proceedings referred to in paragraphs 1 to 3 of this Article.Article 10Extrajudicial proceduresLegal aid shall also be extended to extrajudicial procedures, under the conditions defined in this Directive, if the law requires the parties to use them, or if the parties to the dispute are ordered by the court to have recourse to them.Article 11Authentic instrumentsLegal aid shall be granted for the enforcement of authentic instruments in another Member State under the conditions defined in this Directive.CHAPTER IVPROCEDUREArticle 12Authority granting legal aidLegal aid shall be granted or refused by the competent authority of the Member State in which the court is sitting, without prejudice to Article 8.Article 13Introduction and transmission of legal aid applications1. Legal aid applications may be submitted to either:(a) the competent authority of the Member State in which the applicant is domiciled or habitually resident (transmitting authority); or(b) the competent authority of the Member State in which the court is sitting or where the decision is to be enforced (receiving authority).2. Legal aid applications shall be completed in, and supporting documents translated into:(a) the official language or one of the languages of the Member State of the competent receiving authority which corresponds to one of the languages of the Community institutions; or(b) another language which that Member State has indicated it can accept in accordance with Article 14(3).3. The competent transmitting authorities may decide to refuse to transmit an application if it is manifestly:(a) unfounded; or(b) outside the scope of this Directive.The conditions referred to in Article 15(2) and (3) apply to such decisions.4. The competent transmitting authority shall assist the applicant in ensuring that the application is accompanied by all the supporting documents known by it to be required to enable the application to be determined. It shall also assist the applicant in providing any necessary translation of the supporting documents, in accordance with Article 8(b).The competent transmitting authority shall transmit the application to the competent receiving authority in the other Member State within 15 days of the receipt of the application duly completed in one of the languages referred to in paragraph 2, and the supporting documents, translated, where necessary, into one of those languages.5. Documents transmitted under this Directive shall be exempt from legalisation or any equivalent formality.6. The Member States may not charge for services rendered in accordance with paragraph 4. Member States in which the legal aid applicant is domiciled or habitually resident may lay down that the applicant must repay the costs of translation borne by the competent transmitting authority if the application for legal aid is rejected by the competent authority.Article 14Competent authorities and language1. Member States shall designate the authority or authorities competent to send (transmitting authorities) and receive (receiving authorities) the application.2. Each Member State shall provide the Commission with the following information:- the names and addresses of the competent receiving or transmitting authorities referred to in paragraph 1,- the geographical areas in which they have jurisdiction,- the means by which they are available to receive applications, and- the languages that may be used for the completion of the application.3. Member States shall notify the Commission of the official language or languages of the Community institutions other than their own which is or are acceptable to the competent receiving authority for completion of the legal aid applications to be received, in accordance with this Directive.4. Member States shall communicate to the Commission the information referred to in paragraphs 2 and 3 before 30 November 2004. Any subsequent modification of such information shall be notified to the Commission no later than two months before the modification enters into force in that Member State.5. The information referred to in paragraphs 2 and 3 shall be published in the Official Journal of the European Communities.Article 15Processing of applications1. The national authorities empowered to rule on legal aid applications shall ensure that the applicant is fully informed of the processing of the application.2. Where applications are totally or partially rejected, the reasons for rejection shall be given.3. Member States shall make provision for review of or appeals against decisions rejecting legal aid applications. Member States may exempt cases where the request for legal aid is rejected by a court or tribunal against whose decision on the subject of the case there is no judicial remedy under national law or by a court of appeal.4. When the appeals against a decision refusing or cancelling legal aid by virtue of Article 6 are of an administrative nature, they shall always be ultimately subject to judicial review.Article 16Standard form1. To facilitate transmission, a standard form for legal aid applications and for the transmission of such applications shall be established in accordance with the procedure set out in Article 17(2).2. The standard form for the transmission of legal aid applications shall be established at the latest by 30 May 2003.The standard form for legal aid applications shall be established at the latest by 30 November 2004.CHAPTER VFINAL PROVISIONSArticle 17Committee1. The Commission shall be assisted by a Committee.2. Where reference is made to this paragraph, Articles 3 and 7 of Decision 1999/468/EC shall apply.3. The Committee shall adopt its Rules of Procedure.Article 18InformationThe competent national authorities shall cooperate to provide the general public and professional circles with information on the various systems of legal aid, in particular via the European Judicial Network, established in accordance with Decision 2001/470/EC.Article 19More favourable provisionsThis Directive shall not prevent the Member States from making provision for more favourable arrangements for legal aid applicants and recipients.Article 20Relation with other instrumentsThis Directive shall, as between the Member States, and in relation to matters to which it applies, take precedence over provisions contained in bilateral and multilateral agreements concluded by Member States including:(a) the European Agreement on the transmission of applications for legal aid, signed in Strasbourg on 27 January 1977, as amended by the additional Protocol to the European Agreement on the transmission of applications for legal aid, signed in Moscow in 2001;(b) the Hague Convention of 25 October 1980 on International Access to Justice.Article 21Transposition into national law1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive no later than 30 November 2004 with the exception of Article 3(2)(a) where the transposition of this Directive into national law shall take place no later than 30 May 2006. They shall forthwith inform the Commission thereof.When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such a reference on the occasion of their official publication. The methods of making such a reference shall be laid down by Member States.2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.Article 22Entry into forceThis Directive shall enter into force on the date of its publication in the Official Journal of the European Communities.Article 23AddresseesThis Directive is addressed to the Member States in accordance with the Treaty establishing the European Community.Done at Brussels, 27 January 2003.For the CouncilThe PresidentG. Papandreou(1) OJ C 103 E, 30.4.2002, p. 368.(2) Opinion delivered on 25 September 2002 (not yet published in the Official Journal).(3) OJ C 221, 17.9.2002, p. 64.(4) OJ L 174, 27.6.2001, p. 1.(5) OJ L 281, 23.11.1995, p. 31.(6) OJ L 24, 30.1.1998, p. 1.(7) OJ L 174, 27.6.2001, p. 25.(8) OJ L 184, 17.7.1999, p. 23.(9) OJ L 12, 16.1.2001, p. 1; Regulation as amended by Commission Regulation (EC) No 1496/2002 (OJ L 225, 22.8.2002, p. 13).

Summary: Legal aid in civil and commercial matters Legal aid in civil and commercial matters SUMMARY OF: Directive 2003/8/EC — improved access to justice in cross-border disputes by establishing minimum common rules relating to legal aid WHAT IS THE AIM OF THIS DIRECTIVE? It seeks to: improve access to justice in cross-border civil cases; establish EU-wide rules on legal aid; make sure people who cannot afford legal help have access to it; encourage cooperation on legal aid between EU countries. KEY POINTS This directive covers all civil matters, including: business, employment, consumer protection. It gives people who cannot afford legal representation the right to legal aid. It is for EU citizens and nationals of non-EU countries living in the EU. Legal aid may include: legal advice, legal assistance and representation in court, exemption from court fees, exemption from certain fees in international cases (e.g. interpretation, translation, travel). In addition, the directive introduces rules on processing applications. National authorities must: make sure applicants understand how applications are processed; explain why they reject an application; let applicants appeal against rejection. To speed up applications, EU countries must provide the European Commission with a list of: authorities that can send and receive applications the languages in which they accept applications. Standard application forms Commission Decision 2004/844/EC establishes a standard form for legal aid applications. Commission Decision 2005/630/EC sets out the standard form for sending legal aid applications between EU countries. EU countries must ensure that the public and professional circles are informed via the European Judicial Network. EU countries can make more generous arrangements for legal aid applicants if they want. FROM WHEN DOES THE DIRECTIVE APPLY? It has applied since 31 January 2003. EU countries had to incorporate it into national law by 30 November 2004. The directive does not apply in Denmark. BACKGROUND In 2000, the European Commission published a Green Paper on legal aid in civil matters with a view to taking stock of difficulties encountered by cross-border litigants and proposing solutions. The Commission initiative was all the more necessary since existing conventions on the matter (the 1977 Strasbourg Agreement on the Transmission of Legal Aid Applications andthe Hague Convention to Facilitate the International Access to Justice, signed in 1980) had not been ratified by all EU countries. For more information, see: ‘Legal aid’ on the e-Justice portal. MAIN DOCUMENT Council Directive 2003/8/EC of 27 January 2003 to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputes (OJ L 26, 31.1.2003, pp. 41-47) Successive amendments and corrections to Directive 2003/8/EC have been incorporated in to the original document. This consolidated version is of documentary value only. RELATED DOCUMENTS Commission Decision 2004/844/EC of 9 November 2004 establishing a form for legal aid applications under Council Directive 2003/8/EC to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputes (OJ L 365, 10.12.2004, pp. 27-34) Commission Decision 2005/630/EC of 26 August 2005 establishing a form for the transmission of legal aid applications under Council Directive 2003/8/EC (OJ L 225, 31.8.2005, pp. 23-27) last update 12.12.2016


25.10.2003 EN Official Journal of the European Union L 275/32 DIRECTIVE 2003/87/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 175(1) thereof, Having regard to the proposal from the Commission (1), Having regard to the opinion of the European Economic and Social Committee (2), Having regard to the opinion of the Committee of the Regions (3), Acting in accordance with the procedure laid down in Article 251 of the Treaty (4), Whereas: (1) The Green Paper on greenhouse gas emissions trading within the European Union launched a debate across Europe on the suitability and possible functioning of greenhouse gas emissions trading within the European Union. The European Climate Change Programme has considered Community policies and measures through a multi-stakeholder process, including a scheme for greenhouse gas emission allowance trading within the Community (the Community scheme) based on the Green Paper. In its Conclusions of 8 March 2001, the Council recognised the particular importance of the European Climate Change Programme and of work based on the Green Paper, and underlined the urgent need for concrete action at Community level. (2) The Sixth Community Environment Action Programme established by Decision No 1600/2002/EC of the European Parliament and of the Council (5) identifies climate change as a priority for action and provides for the establishment of a Community-wide emissions trading scheme by 2005. That Programme recognises that the Community is committed to achieving an 8 % reduction in emissions of greenhouse gases by 2008 to 2012 compared to 1990 levels, and that, in the longer-term, global emissions of greenhouse gases will need to be reduced by approximately 70 % compared to 1990 levels. (3) The ultimate objective of the United Nations Framework Convention on Climate Change, which was approved by Council Decision 94/69/EC of 15 December 1993 concerning the conclusion of the United Nations Framework Convention on Climate Change (6), is to achieve stabilisation of greenhouse gas concentrations in the atmosphere at a level which prevents dangerous anthropogenic interference with the climate system. (4) Once it enters into force, the Kyoto Protocol, which was approved by Council Decision 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder (7), will commit the Community and its Member States to reducing their aggregate anthropogenic emissions of greenhouse gases listed in Annex A to the Protocol by 8 % compared to 1990 levels in the period 2008 to 2012. (5) The Community and its Member States have agreed to fulfil their commitments to reduce anthropogenic greenhouse gas emissions under the Kyoto Protocol jointly, in accordance with Decision 2002/358/EC. This Directive aims to contribute to fulfilling the commitments of the European Community and its Member States more effectively, through an efficient European market in greenhouse gas emission allowances, with the least possible diminution of economic development and employment. (6) Council Decision 93/389/EEC of 24 June 1993 for a monitoring mechanism of Community CO2 and other greenhouse gas emissions (8), established a mechanism for monitoring greenhouse gas emissions and evaluating progress towards meeting commitments in respect of these emissions. This mechanism will assist Member States in determining the total quantity of allowances to allocate. (7) Community provisions relating to allocation of allowances by the Member States are necessary to contribute to preserving the integrity of the internal market and to avoid distortions of competition. (8) Member States should have regard when allocating allowances to the potential for industrial process activities to reduce emissions. (9) Member States may provide that they only issue allowances valid for a five-year period beginning in 2008 to persons in respect of allowances cancelled, corresponding to emission reductions made by those persons on their national territory during a three-year period beginning in 2005. (10) Starting with the said five-year period, transfers of allowances to another Member State will involve corresponding adjustments of assigned amount units under the Kyoto Protocol. (11) Member States should ensure that the operators of certain specified activities hold a greenhouse gas emissions permit and that they monitor and report their emissions of greenhouse gases specified in relation to those activities. (12) Member States should lay down rules on penalties applicable to infringements of this Directive and ensure that they are implemented. Those penalties must be effective, proportionate and dissuasive. (13) In order to ensure transparency, the public should have access to information relating to the allocation of allowances and to the results of monitoring of emissions, subject only to restrictions provided for in Directive 2003/4/EC of the European Parliament and of the Council of 28 January 2003 on public access to environmental information (9). (14) Member States should submit a report on the implementation of this Directive drawn up on the basis of Council Directive 91/692/EEC of 23 December 1991 standardising and rationalising reports on the implementation of certain Directives relating to the environment (10). (15) The inclusion of additional installations in the Community scheme should be in accordance with the provisions laid down in this Directive, and the coverage of the Community scheme may thereby be extended to emissions of greenhouse gases other than carbon dioxide, inter alia from aluminium and chemicals activities. (16) This Directive should not prevent any Member State from maintaining or establishing national trading schemes regulating emissions of greenhouse gases from activities other than those listed in Annex I or included in the Community scheme, or from installations temporarily excluded from the Community scheme. (17) Member States may participate in international emissions trading as Parties to the Kyoto Protocol with any other Party included in Annex B thereto. (18) Linking the Community scheme to greenhouse gas emission trading schemes in third countries will increase the cost-effectiveness of achieving the Community emission reductions target as laid down in Decision 2002/358/EC on the joint fulfilment of commitments. (19) Project-based mechanisms including Joint Implementation (JI) and the Clean Development Mechanism (CDM) are important to achieve the goals of both reducing global greenhouse gas emissions and increasing the cost-effective functioning of the Community scheme. In accordance with the relevant provisions of the Kyoto Protocol and Marrakech Accords, the use of the mechanisms should be supplemental to domestic action and domestic action will thus constitute a significant element of the effort made. (20) This Directive will encourage the use of more energy-efficient technologies, including combined heat and power technology, producing less emissions per unit of output, while the future directive of the European Parliament and of the Council on the promotion of cogeneration based on useful heat demand in the internal energy market will specifically promote combined heat and power technology. (21) Council Directive 96/61/EC of 24 September 1996 concerning integrated pollution prevention and control (11) establishes a general framework for pollution prevention and control, through which greenhouse gas emissions permits may be issued. Directive 96/61/EC should be amended to ensure that emission limit values are not set for direct emissions of greenhouse gases from an installation subject to this Directive and that Member States may choose not to impose requirements relating to energy efficiency in respect of combustion units or other units emitting carbon dioxide on the site, without prejudice to any other requirements pursuant to Directive 96/61/EC. (22) This Directive is compatible with the United Nations Framework Convention on Climate Change and the Kyoto Protocol. It should be reviewed in the light of developments in that context and to take into account experience in its implementation and progress achieved in monitoring of emissions of greenhouse gases. (23) Emission allowance trading should form part of a comprehensive and coherent package of policies and measures implemented at Member State and Community level. Without prejudice to the application of Articles 87 and 88 of the Treaty, where activities are covered by the Community scheme, Member States may consider the implications of regulatory, fiscal or other policies that pursue the same objectives. The review of the Directive should consider the extent to which these objectives have been attained. (24) The instrument of taxation can be a national policy to limit emissions from installations temporarily excluded. (25) Policies and measures should be implemented at Member State and Community level across all sectors of the European Union economy, and not only within the industry and energy sectors, in order to generate substantial emissions reductions. The Commission should, in particular, consider policies and measures at Community level in order that the transport sector makes a substantial contribution to the Community and its Member States meeting their climate change obligations under the Kyoto Protocol. (26) Notwithstanding the multifaceted potential of market-based mechanisms, the European Union strategy for climate change mitigation should be built on a balance between the Community scheme and other types of Community, domestic and international action. (27) This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. (28) The measures necessary for the implementation of this Directive should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission (12). (29) As the criteria (1), (5) and (7) of Annex III cannot be amended through comitology, amendments in respect of periods after 2012 should only be made through codecision. (30) Since the objective of the proposed action, the establishment of a Community scheme, cannot be sufficiently achieved by the Member States acting individually, and can therefore by reason of the scale and effects of the proposed action be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective, HAVE ADOPTED THIS DIRECTIVE: Article 1 Subject matter This Directive establishes a scheme for greenhouse gas emission allowance trading within the Community (hereinafter referred to as the ‘Community scheme’) in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner. Article 2 Scope 1. This Directive shall apply to emissions from the activities listed in Annex I and greenhouse gases listed in Annex II. 2. This Directive shall apply without prejudice to any requirements pursuant to Directive 96/61/EC. Article 3 Definitions For the purposes of this Directive the following definitions shall apply: (a) ‘allowance’ means an allowance to emit one tonne of carbon dioxide equivalent during a specified period, which shall be valid only for the purposes of meeting the requirements of this Directive and shall be transferable in accordance with the provisions of this Directive; (b) ‘emissions’ means the release of greenhouse gases into the atmosphere from sources in an installation; (c) ‘greenhouse gases’ means the gases listed in Annex II; (d) ‘greenhouse gas emissions permit’ means the permit issued in accordance with Articles 5 and 6; (e) ‘installation’ means a stationary technical unit where one or more activities listed in Annex I are carried out and any other directly associated activities which have a technical connection with the activities carried out on that site and which could have an effect on emissions and pollution; (f) ‘operator’ means any person who operates or controls an installation or, where this is provided for in national legislation, to whom decisive economic power over the technical functioning of the installation has been delegated; (g) ‘person’ means any natural or legal person; (h) ‘new entrant’ means any installation carrying out one or more of the activities indicated in Annex I, which has obtained a greenhouse gas emissions permit or an update of its greenhouse gas emissions permit because of a change in the nature or functioning or an extension of the installation, subsequent to the notification to the Commission of the national allocation plan; (i) ‘the public’ means one or more persons and, in accordance with national legislation or practice, associations, organisations or groups of persons; (j) ‘tonne of carbon dioxide equivalent’ means one metric tonne of carbon dioxide (CO2) or an amount of any other greenhouse gas listed in Annex II with an equivalent global-warming potential. Article 4 Greenhouse gas emissions permits Member States shall ensure that, from 1 January 2005, no installation undertakes any activity listed in Annex I resulting in emissions specified in relation to that activity unless its operator holds a permit issued by a competent authority in accordance with Articles 5 and 6, or the installation is temporarily excluded from the Community scheme pursuant to Article 27. Article 5 Applications for greenhouse gas emissions permits An application to the competent authority for a greenhouse gas emissions permit shall include a description of: (a) the installation and its activities including the technology used; (b) the raw and auxiliary materials, the use of which is likely to lead to emissions of gases listed in Annex I; (c) the sources of emissions of gases listed in Annex I from the installation; and (d) the measures planned to monitor and report emissions in accordance with the guidelines adopted pursuant to Article 14. The application shall also include a non-technical summary of the details referred to in the first subparagraph. Article 6 Conditions for and contents of the greenhouse gas emissions permit 1. The competent authority shall issue a greenhouse gas emissions permit granting authorisation to emit greenhouse gases from all or part of an installation if it is satisfied that the operator is capable of monitoring and reporting emissions. A greenhouse gas emissions permit may cover one or more installations on the same site operated by the same operator. 2. Greenhouse gas emissions permits shall contain the following: (a) the name and address of the operator; (b) a description of the activities and emissions from the installation; (c) monitoring requirements, specifying monitoring methodology and frequency; (d) reporting requirements; and (e) an obligation to surrender allowances equal to the total emissions of the installation in each calendar year, as verified in accordance with Article 15, within four months following the end of that year. Article 7 Changes relating to installations The operator shall inform the competent authority of any changes planned in the nature or functioning, or an extension, of the installation which may require updating of the greenhouse gas emissions permit. Where appropriate, the competent authority shall update the permit. Where there is a change in the identity of the installation's operator, the competent authority shall update the permit to include the name and address of the new operator. Article 8 Coordination with Directive 96/61/EC Member States shall take the necessary measures to ensure that, where installations carry out activities that are included in Annex I to Directive 96/61/EC, the conditions of, and procedure for, the issue of a greenhouse gas emissions permit are coordinated with those for the permit provided for in that Directive. The requirements of Articles 5, 6 and 7 of this Directive may be integrated into the procedures provided for in Directive 96/61/EC. Article 9 National allocation plan 1. For each period referred to in Article 11(1) and (2), each Member State shall develop a national plan stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them. The plan shall be based on objective and transparent criteria, including those listed in Annex III, taking due account of comments from the public. The Commission shall, without prejudice to the Treaty, by 31 December 2003 at the latest develop guidance on the implementation of the criteria listed in Annex III. For the period referred to in Article 11(1), the plan shall be published and notified to the Commission and to the other Member States by 31 March 2004 at the latest. For subsequent periods, the plan shall be published and notified to the Commission and to the other Member States at least 18 months before the beginning of the relevant period. 2. National allocation plans shall be considered within the committee referred to in Article 23(1). 3. Within three months of notification of a national allocation plan by a Member State under paragraph 1, the Commission may reject that plan, or any aspect thereof, on the basis that it is incompatible with the criteria listed in Annex III or with Article 10. The Member State shall only take a decision under Article 11(1) or (2) if proposed amendments are accepted by the Commission. Reasons shall be given for any rejection decision by the Commission. Article 10 Method of allocation For the three-year period beginning 1 January 2005 Member States shall allocate at least 95 % of the allowances free of charge. For the five-year period beginning 1 January 2008, Member States shall allocate at least 90 % of the allowances free of charge. Article 11 Allocation and issue of allowances 1. For the three-year period beginning 1 January 2005, each Member State shall decide upon the total quantity of allowances it will allocate for that period and the allocation of those allowances to the operator of each installation. This decision shall be taken at least three months before the beginning of the period and be based on its national allocation plan developed pursuant to Article 9 and in accordance with Article 10, taking due account of comments from the public. 2. For the five-year period beginning 1 January 2008, and for each subsequent five-year period, each Member State shall decide upon the total quantity of allowances it will allocate for that period and initiate the process for the allocation of those allowances to the operator of each installation. This decision shall be taken at least 12 months before the beginning of the relevant period and be based on the Member State's national allocation plan developed pursuant to Article 9 and in accordance with Article 10, taking due account of comments from the public. 3. Decisions taken pursuant to paragraph 1 or 2 shall be in accordance with the requirements of the Treaty, in particular Articles 87 and 88 thereof. When deciding upon allocation, Member States shall take into account the need to provide access to allowances for new entrants. 4. The competent authority shall issue a proportion of the total quantity of allowances each year of the period referred to in paragraph 1 or 2, by 28 February of that year. Article 12 Transfer, surrender and cancellation of allowances 1. Member States shall ensure that allowances can be transferred between: (a) persons within the Community; (b) persons within the Community and persons in third countries, where such allowances are recognised in accordance with the procedure referred to in Article 25 without restrictions other than those contained in, or adopted pursuant to, this Directive. 2. Member States shall ensure that allowances issued by a competent authority of another Member State are recognised for the purpose of meeting an operator's obligations under paragraph 3. 3. Member States shall ensure that, by 30 April each year at the latest, the operator of each installation surrenders a number of allowances equal to the total emissions from that installation during the preceding calendar year as verified in accordance with Article 15, and that these are subsequently cancelled. 4. Member States shall take the necessary steps to ensure that allowances will be cancelled at any time at the request of the person holding them. Article 13 Validity of allowances 1. Allowances shall be valid for emissions during the period referred to in Article 11(1) or (2) for which they are issued. 2. Four months after the beginning of the first five-year period referred to in Article 11(2), allowances which are no longer valid and have not been surrendered and cancelled in accordance with Article 12(3) shall be cancelled by the competent authority. Member States may issue allowances to persons for the current period to replace any allowances held by them which are cancelled in accordance with the first subparagraph. 3. Four months after the beginning of each subsequent five-year period referred to in Article 11(2), allowances which are no longer valid and have not been surrendered and cancelled in accordance with Article 12(3) shall be cancelled by the competent authority. Member States shall issue allowances to persons for the current period to replace any allowances held by them which are cancelled in accordance with the first subparagraph. Article 14 Guidelines for monitoring and reporting of emissions 1. The Commission shall adopt guidelines for monitoring and reporting of emissions resulting from the activities listed in Annex I of greenhouse gases specified in relation to those activities, in accordance with the procedure referred to in Article 23(2), by 30 September 2003. The guidelines shall be based on the principles for monitoring and reporting set out in Annex IV. 2. Member States shall ensure that emissions are monitored in accordance with the guidelines. 3. Member States shall ensure that each operator of an installation reports the emissions from that installation during each calendar year to the competent authority after the end of that year in accordance with the guidelines. Article 15 Verification Member States shall ensure that the reports submitted by operators pursuant to Article 14(3) are verified in accordance with the criteria set out in Annex V, and that the competent authority is informed thereof. Member States shall ensure that an operator whose report has not been verified as satisfactory in accordance with the criteria set out in Annex V by 31 March each year for emissions during the preceding year cannot make further transfers of allowances until a report from that operator has been verified as satisfactory. Article 16 Penalties 1. Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that such rules are implemented. The penalties provided for must be effective, proportionate and dissuasive. Member States shall notify these provisions to the Commission by 31 December 2003 at the latest, and shall notify it without delay of any subsequent amendment affecting them. 2. Member States shall ensure publication of the names of operators who are in breach of requirements to surrender sufficient allowances under Article 12(3). 3. Member States shall ensure that any operator who does not surrender sufficient allowances by 30 April of each year to cover its emissions during the preceding year shall be held liable for the payment of an excess emissions penalty. The excess emissions penalty shall be EUR 100 for each tonne of carbon dioxide equivalent emitted by that installation for which the operator has not surrendered allowances. Payment of the excess emissions penalty shall not release the operator from the obligation to surrender an amount of allowances equal to those excess emissions when surrendering allowances in relation to the following calendar year. 4. During the three-year period beginning 1 January 2005, Member States shall apply a lower excess emissions penalty of EUR 40 for each tonne of carbon dioxide equivalent emitted by that installation for which the operator has not surrendered allowances. Payment of the excess emissions penalty shall not release the operator from the obligation to surrender an amount of allowances equal to those excess emissions when surrendering allowances in relation to the following calendar year. Article 17 Access to information Decisions relating to the allocation of allowances and the reports of emissions required under the greenhouse gas emissions permit and held by the competent authority shall be made available to the public by that authority subject to the restrictions laid down in Article 3(3) and Article 4 of Directive 2003/4/EC. Article 18 Competent authority Member States shall make the appropriate administrative arrangements, including the designation of the appropriate competent authority or authorities, for the implementation of the rules of this Directive. Where more than one competent authority is designated, the work of these authorities undertaken pursuant to this Directive must be coordinated. Article 19 Registries 1. Member States shall provide for the establishment and maintenance of a registry in order to ensure the accurate accounting of the issue, holding, transfer and cancellation of allowances. Member States may maintain their registries in a consolidated system, together with one or more other Member States. 2. Any person may hold allowances. The registry shall be accessible to the public and shall contain separate accounts to record the allowances held by each person to whom and from whom allowances are issued or transferred. 3. In order to implement this Directive, the Commission shall adopt a Regulation in accordance with the procedure referred to in Article 23(2) for a standardised and secured system of registries in the form of standardised electronic databases containing common data elements to track the issue, holding, transfer and cancellation of allowances, to provide for public access and confidentiality as appropriate and to ensure that there are no transfers incompatible with obligations resulting from the Kyoto Protocol. Article 20 Central Administrator 1. The Commission shall designate a Central Administrator to maintain an independent transaction log recording the issue, transfer and cancellation of allowances. 2. The Central Administrator shall conduct an automated check on each transaction in registries through the independent transaction log to ensure there are no irregularities in the issue, transfer and cancellation of allowances. 3. If irregularities are identified through the automated check, the Central Administrator shall inform the Member State or Member States concerned who shall not register the transactions in question or any further transactions relating to the allowances concerned until the irregularities have been resolved. Article 21 Reporting by Member States 1. Each year the Member States shall submit to the Commission a report on the application of this Directive. This report shall pay particular attention to the arrangements for the allocation of allowances, the operation of registries, the application of the monitoring and reporting guidelines, verification and issues relating to compliance with the Directive and on the fiscal treatment of allowances, if any. The first report shall be sent to the Commission by 30 June 2005. The report shall be drawn up on the basis of a questionnaire or outline drafted by the Commission in accordance with the procedure laid down in Article 6 of Directive 91/692/EEC. The questionnaire or outline shall be sent to Member States at least six months before the deadline for the submission of the first report. 2. On the basis of the reports referred to in paragraph 1, the Commission shall publish a report on the application of this Directive within three months of receiving the reports from the Member States. 3. The Commission shall organise an exchange of information between the competent authorities of the Member States concerning developments relating to issues of allocation, the operation of registries, monitoring, reporting, verification and compliance. Article 22 Amendments to Annex III The Commission may amend Annex III, with the exception of criteria (1), (5) and (7), for the period from 2008 to 2012 in the light of the reports provided for in Article 21 and of the experience of the application of this Directive, in accordance with the procedure referred to in Article 23(2). Article 23 Committee 1. The Commission shall be assisted by the committee instituted by Article 8 of Decision 93/389/EEC. 2. Where reference is made to this paragraph, Articles 5 and 7 of Decision 1999/468/EC shall apply, having regard to the provisions of Article 8 thereof. The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at three months. 3. The Committee shall adopt its rules of procedure. Article 24 Procedures for unilateral inclusion of additional activities and gases 1. From 2008, Member States may apply emission allowance trading in accordance with this Directive to activities, installations and greenhouse gases which are not listed in Annex I, provided that inclusion of such activities, installations and greenhouse gases is approved by the Commission in accordance with the procedure referred to in Article 23(2), taking into account all relevant criteria, in particular effects on the internal market, potential distortions of competition, the environmental integrity of the scheme and reliability of the planned monitoring and reporting system. From 2005 Member States may under the same conditions apply emissions allowance trading to installations carrying out activities listed in Annex I below the capacity limits referred to in that Annex. 2. Allocations made to installations carrying out such activities shall be specified in the national allocation plan referred to in Article 9. 3. The Commission may, on its own initiative, or shall, on request by a Member State, adopt monitoring and reporting guidelines for emissions from activities, installations and greenhouse gases which are not listed in Annex I in accordance with the procedure referred to in Article 23(2), if monitoring and reporting of these emissions can be carried out with sufficient accuracy. 4. In the event that such measures are introduced, reviews carried out pursuant to Article 30 shall also consider whether Annex I should be amended to include emissions from these activities in a harmonised way throughout the Community. Article 25 Links with other greenhouse gas emissions trading schemes 1. Agreements should be concluded with third countries listed in Annex B to the Kyoto Protocol which have ratified the Protocol to provide for the mutual recognition of allowances between the Community scheme and other greenhouse gas emissions trading schemes in accordance with the rules set out in Article 300 of the Treaty. 2. Where an agreement referred to in paragraph 1 has been concluded, the Commission shall draw up any necessary provisions relating to the mutual recognition of allowances under that agreement in accordance with the procedure referred to in Article 23(2). Article 26 Amendment of Directive 96/61/EC In Article 9(3) of Directive 96/61/EC the following subparagraphs shall be added: ‘Where emissions of a greenhouse gas from an installation are specified in Annex I to Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (13) in relation to an activity carried out in that installation, the permit shall not include an emission limit value for direct emissions of that gas unless it is necessary to ensure that no significant local pollution is caused. For activities listed in Annex I to Directive 2003/87/EC, Member States may choose not to impose requirements relating to energy efficiency in respect of combustion units or other units emitting carbon dioxide on the site. Where necessary, the competent authorities shall amend the permit as appropriate. The three preceding subparagraphs shall not apply to installations temporarily excluded from the scheme for greenhouse gas emission allowance trading within the Community in accordance with Article 27 of Directive 2003/87/EC. Article 27 Temporary exclusion of certain installations 1. Member States may apply to the Commission for installations to be temporarily excluded until 31 December 2007 at the latest from the Community scheme. Any such application shall list each such installation and shall be published. 2. If, having considered any comments made by the public on that application, the Commission decides, in accordance with the procedure referred to in Article 23(2), that the installations will: (a) as a result of national policies, limit their emissions as much as would be the case if they were subject to the provisions of this Directive; (b) be subject to monitoring, reporting and verification requirements which are equivalent to those provided for pursuant to Articles 14 and 15; and (c) be subject to penalties at least equivalent to those referred to in Article 16(1) and (4) in the case of non-fulfilment of national requirements; it shall provide for the temporary exclusion of those installations from the Community scheme. It must be ensured that there will be no distortion of the internal market. Article 28 Pooling 1. Member States may allow operators of installations carrying out one of the activities listed in Annex I to form a pool of installations from the same activity for the period referred to in Article 11(1) and/or the first five-year period referred to in Article 11(2) in accordance with paragraphs 2 to 6 of this Article. 2. Operators carrying out an activity listed in Annex I who wish to form a pool shall apply to the competent authority, specifying the installations and the period for which they want the pool and supplying evidence that a trustee will be able to fulfil the obligations referred to in paragraphs 3 and 4. 3. Operators wishing to form a pool shall nominate a trustee: (a) to be issued with the total quantity of allowances calculated by installation of the operators, by way of derogation from Article 11; (b) to be responsible for surrendering allowances equal to the total emissions from installations in the pool, by way of derogation from Articles 6(2)(e) and 12(3); and (c) to be restricted from making further transfers in the event that an operator's report has not been verified as satisfactory in accordance with the second paragraph of Article 15. 4. The trustee shall be subject to the penalties applicable for breaches of requirements to surrender sufficient allowances to cover the total emissions from installations in the pool, by way of derogation from Article 16(2), (3) and (4). 5. A Member State that wishes to allow one or more pools to be formed shall submit the application referred to in paragraph 2 to the Commission. Without prejudice to the Treaty, the Commission may within three months of receipt reject an application that does not fulfil the requirements of this Directive. Reasons shall be given for any such decision. In the case of rejection the Member State may only allow the pool to be formed if proposed amendments are accepted by the Commission. 6. In the event that the trustee fails to comply with penalties referred to in paragraph 4, each operator of an installation in the pool shall be responsible under Articles 12(3) and 16 in respect of emissions from its own installation. Article 29 Force majeure 1. During the period referred to in Article 11(1), Member States may apply to the Commission for certain installations to be issued with additional allowances in cases of force majeure. The Commission shall determine whether force majeure is demonstrated, in which case it shall authorise the issue of additional and non-transferable allowances by that Member State to the operators of those installations. 2. The Commission shall, without prejudice to the Treaty, develop guidance to describe the circumstances under which force majeure is demonstrated, by 31 December 2003 at the latest. Article 30 Review and further development 1. On the basis of progress achieved in the monitoring of emissions of greenhouse gases, the Commission may make a proposal to the European Parliament and the Council by 31 December 2004 to amend Annex I to include other activities and emissions of other greenhouse gases listed in Annex II. 2. On the basis of experience of the application of this Directive and of progress achieved in the monitoring of emissions of greenhouse gases and in the light of developments in the international context, the Commission shall draw up a report on the application of this Directive, considering: (a) how and whether Annex I should be amended to include other relevant sectors, inter alia the chemicals, aluminium and transport sectors, activities and emissions of other greenhouse gases listed in Annex II, with a view to further improving the economic efficiency of the scheme; (b) the relationship of Community emission allowance trading with the international emissions trading that will start in 2008; (c) further harmonisation of the method of allocation (including auctioning for the time after 2012) and of the criteria for national allocation plans referred to in Annex III; (d) the use of credits from project mechanisms; (e) the relationship of emissions trading with other policies and measures implemented at Member State and Community level, including taxation, that pursue the same objectives; (f) whether it is appropriate for there to be a single Community registry; (g) the level of excess emissions penalties, taking into account, inter alia, inflation; (h) the functioning of the allowance market, covering in particular any possible market disturbances; (i) how to adapt the Community scheme to an enlarged European Union; (j) pooling; (k) the practicality of developing Community-wide benchmarks as a basis for allocation, taking into account the best available techniques and cost-benefit analysis. The Commission shall submit this report to the European Parliament and the Council by 30 June 2006, accompanied by proposals as appropriate. 3. Linking the project-based mechanisms, including Joint Implementation (JI) and the Clean Development Mechanism (CDM), with the Community scheme is desirable and important to achieve the goals of both reducing global greenhouse gas emissions and increasing the cost-effective functioning of the Community scheme. Therefore, the emission credits from the project-based mechanisms will be recognised for their use in this scheme subject to provisions adopted by the European Parliament and the Council on a proposal from the Commission, which should apply in parallel with the Community scheme in 2005. The use of the mechanisms shall be supplemental to domestic action, in accordance with the relevant provisions of the Kyoto Protocol and Marrakesh Accords. Article 31 Implementation 1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 31 December 2003 at the latest. They shall forthwith inform the Commission thereof. The Commission shall notify the other Member States of these laws, regulations and administrative provisions. When Member States adopt these measures, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States. 2. Member States shall communicate to the Commission the text of the provisions of national law which they adopt in the field covered by this Directive. The Commission shall inform the other Member States thereof. Article 32 Entry into force This Directive shall enter into force on the day of its publication in the Official Journal of the European Union. Article 33 Addressees This Directive is addressed to the Member States. Done at Luxembourg, 13 October 2003. For the European Parliament The President P. COX For the Council The President G. ALEMANNO (1) OJ C 75 E, 26.3.2002, p. 33. (2) OJ C 221, 17.9.2002, p. 27. (3) OJ C 192, 12.8.2002, p. 59. (4) Opinion of the European Parliament of 10 October 2002 (not yet published in the Official Journal), Council Common Position of 18 March 2003 (OJ C 125 E, 27.5.2003, p. 72), Decision of the European Parliament of 2 July 2003 (not yet published in the Official Journal) and Council Decision of 22 July 2003. (5) OJ L 242, 10.9.2002, p. 1. (6) OJ L 33, 7.2.1994, p. 11. (7) OJ L 130, 15.5.2002, p. 1. (8) OJ L 167, 9.7.1993, p. 31. Decision as amended by Decision 1999/296/EC (OJ L 117, 5.5.1999, p. 35). (9) OJ L 41, 14.2.2003, p. 26. (10) OJ L 377, 31.12.1991, p. 48. (11) OJ L 257, 10.10.1996, p. 26. (12) OJ L 184, 17.7.1999, p. 23. ANNEX I CATEGORIES OF ACTIVITIES REFERRED TO IN ARTICLES 2(1), 3, 4, 14(1), 28 AND 30 1. Installations or parts of installations used for research, development and testing of new products and processes are not covered by this Directive. 2. The threshold values given below generally refer to production capacities or outputs. Where one operator carries out several activities falling under the same subheading in the same installation or on the same site, the capacities of such activities are added together. Activities Greenhouse gases Energy activities Combustion installations with a rated thermal input exceeding 20 MW (except hazardous or municipal waste installations) Carbon dioxide Mineral oil refineries Carbon dioxide Coke ovens Carbon dioxide Production and processing of ferrous metals Metal ore (including sulphide ore) roasting or sintering installations Carbon dioxide Installations for the production of pig iron or steel (primary or secondary fusion) including continuous casting, with a capacity exceeding 2,5 tonnes per hour Carbon dioxide Mineral industry Installations for the production of cement clinker in rotary kilns with a production capacity exceeding 500 tonnes per day or lime in rotary kilns with a production capacity exceeding 50 tonnes per day or in other furnaces with a production capacity exceeding 50 tonnes per day Carbon dioxide Installations for the manufacture of glass including glass fibre with a melting capacity exceeding 20 tonnes per day Carbon dioxide Installations for the manufacture of ceramic products by firing, in particular roofing tiles, bricks, refractory bricks, tiles, stoneware or porcelain, with a production capacity exceeding 75 tonnes per day, and/or with a kiln capacity exceeding 4 m3 and with a setting density per kiln exceeding 300 kg/m3 Carbon dioxide Other activities Industrial plants for the production of (a) pulp from timber or other fibrous materials Carbon dioxide (b) paper and board with a production capacity exceeding 20 tonnes per day Carbon dioxide ANNEX II GREENHOUSE GASES REFERRED TO IN ARTICLES 3 AND 30 Carbon dioxide (CO2) Methane (CH4) Nitrous Oxide (N2O) Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) Sulphur Hexafluoride (SF6) ANNEX III CRITERIA FOR NATIONAL ALLOCATION PLANS REFERRED TO IN ARTICLES 9, 22 AND 30 1. The total quantity of allowances to be allocated for the relevant period shall be consistent with the Member State's obligation to limit its emissions pursuant to Decision 2002/358/EC and the Kyoto Protocol, taking into account, on the one hand, the proportion of overall emissions that these allowances represent in comparison with emissions from sources not covered by this Directive and, on the other hand, national energy policies, and should be consistent with the national climate change programme. The total quantity of allowances to be allocated shall not be more than is likely to be needed for the strict application of the criteria of this Annex. Prior to 2008, the quantity shall be consistent with a path towards achieving or over-achieving each Member State's target under Decision 2002/358/EC and the Kyoto Protocol. 2. The total quantity of allowances to be allocated shall be consistent with assessments of actual and projected progress towards fulfilling the Member States' contributions to the Community's commitments made pursuant to Decision 93/389/EEC. 3. Quantities of allowances to be allocated shall be consistent with the potential, including the technological potential, of activities covered by this scheme to reduce emissions. Member States may base their distribution of allowances on average emissions of greenhouse gases by product in each activity and achievable progress in each activity. 4. The plan shall be consistent with other Community legislative and policy instruments. Account should be taken of unavoidable increases in emissions resulting from new legislative requirements. 5. The plan shall not discriminate between companies or sectors in such a way as to unduly favour certain undertakings or activities in accordance with the requirements of the Treaty, in particular Articles 87 and 88 thereof. 6. The plan shall contain information on the manner in which new entrants will be able to begin participating in the Community scheme in the Member State concerned. 7. The plan may accommodate early action and shall contain information on the manner in which early action is taken into account. Benchmarks derived from reference documents concerning the best available technologies may be employed by Member States in developing their National Allocation Plans, and these benchmarks can incorporate an element of accommodating early action. 8. The plan shall contain information on the manner in which clean technology, including energy efficient technologies, are taken into account. 9. The plan shall include provisions for comments to be expressed by the public, and contain information on the arrangements by which due account will be taken of these comments before a decision on the allocation of allowances is taken. 10. The plan shall contain a list of the installations covered by this Directive with the quantities of allowances intended to be allocated to each. 11. The plan may contain information on the manner in which the existence of competition from countries or entities outside the Union will be taken into account. ANNEX IV PRINCIPLES FOR MONITORING AND REPORTING REFERRED TO IN ARTICLE 14(1) Monitoring of carbon dioxide emissions Emissions shall be monitored either by calculation or on the basis of measurement. Calculation Calculations of emissions shall be performed using the formula: Activity data × Emission factor × Oxidation factor Activity data (fuel used, production rate etc.) shall be monitored on the basis of supply data or measurement. Accepted emission factors shall be used. Activity-specific emission factors are acceptable for all fuels. Default factors are acceptable for all fuels except non-commercial ones (waste fuels such as tyres and industrial process gases). Seam-specific defaults for coal, and EU-specific or producer country-specific defaults for natural gas shall be further elaborated. IPCC default values are acceptable for refinery products. The emission factor for biomass shall be zero. If the emission factor does not take account of the fact that some of the carbon is not oxidised, then an additional oxidation factor shall be used. If activity-specific emission factors have been calculated and already take oxidation into account, then an oxidation factor need not be applied. Default oxidation factors developed pursuant to Directive 96/61/EC shall be used, unless the operator can demonstrate that activity-specific factors are more accurate. A separate calculation shall be made for each activity, installation and for each fuel. Measurement Measurement of emissions shall use standardised or accepted methods, and shall be corroborated by a supporting calculation of emissions. Monitoring of emissions of other greenhouse gases Standardised or accepted methods shall be used, developed by the Commission in collaboration with all relevant stakeholders and adopted in accordance with the procedure referred to in Article 23(2). Reporting of emissions Each operator shall include the following information in the report for an installation: A. Data identifying the installation, including: — Name of the installation; — Its address, including postcode and country; — Type and number of Annex I activities carried out in the installation; — Address, telephone, fax and email details for a contact person; and — Name of the owner of the installation, and of any parent company. B. For each Annex I activity carried out on the site for which emissions are calculated: — Activity data; — Emission factors; — Oxidation factors; — Total emissions; and — Uncertainty. C. For each Annex I activity carried out on the site for which emissions are measured: — Total emissions; — Information on the reliability of measurement methods; and — Uncertainty. D. For emissions from combustion, the report shall also include the oxidation factor, unless oxidation has already been taken into account in the development of an activity-specific emission factor. Member States shall take measures to coordinate reporting requirements with any existing reporting requirements in order to minimise the reporting burden on businesses. ANNEX V CRITERIA FOR VERIFICATION REFERRED TO IN ARTICLE 15 General Principles 1. Emissions from each activity listed in Annex I shall be subject to verification. 2. The verification process shall include consideration of the report pursuant to Article 14(3) and of monitoring during the preceding year. It shall address the reliability, credibility and accuracy of monitoring systems and the reported data and information relating to emissions, in particular: (a) the reported activity data and related measurements and calculations; (b) the choice and the employment of emission factors; (c) the calculations leading to the determination of the overall emissions; and (d) if measurement is used, the appropriateness of the choice and the employment of measuring methods. 3. Reported emissions may only be validated if reliable and credible data and information allow the emissions to be determined with a high degree of certainty. A high degree of certainty requires the operator to show that: (a) the reported data is free of inconsistencies; (b) the collection of the data has been carried out in accordance with the applicable scientific standards; and (c) the relevant records of the installation are complete and consistent. 4. The verifier shall be given access to all sites and information in relation to the subject of the verification. 5. The verifier shall take into account whether the installation is registered under the Community eco-management and audit scheme (EMAS). Methodology Strategic analysis 6. The verification shall be based on a strategic analysis of all the activities carried out in the installation. This requires the verifier to have an overview of all the activities and their significance for emissions. Process analysis 7. The verification of the information submitted shall, where appropriate, be carried out on the site of the installation. The verifier shall use spot-checks to determine the reliability of the reported data and information. Risk analysis 8. The verifier shall submit all the sources of emissions in the installation to an evaluation with regard to the reliability of the data of each source contributing to the overall emissions of the installation. 9. On the basis of this analysis the verifier shall explicitly identify those sources with a high risk of error and other aspects of the monitoring and reporting procedure which are likely to contribute to errors in the determination of the overall emissions. This especially involves the choice of the emission factors and the calculations necessary to determine the level of the emissions from individual sources. Particular attention shall be given to those sources with a high risk of error and the abovementioned aspects of the monitoring procedure. 10. The verifier shall take into consideration any effective risk control methods applied by the operator with a view to minimising the degree of uncertainty. Report 11. The verifier shall prepare a report on the validation process stating whether the report pursuant to Article 14(3) is satisfactory. This report shall specify all issues relevant to the work carried out. A statement that the report pursuant to Article 14(3) is satisfactory may be made if, in the opinion of the verifier, the total emissions are not materially misstated. Minimum competency requirements for the verifier 12. The verifier shall be independent of the operator, carry out his activities in a sound and objective professional manner, and understand: (a) the provisions of this Directive, as well as relevant standards and guidance adopted by the Commission pursuant to Article 14(1); (b) the legislative, regulatory, and administrative requirements relevant to the activities being verified; and (c) the generation of all information related to each source of emissions in the installation, in particular, relating to the collection, measurement, calculation and reporting of data.

Summary: Greenhouse gas emission allowance trading system Greenhouse gas emission allowance trading system SUMMARY OF: Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the EU WHAT IS THE AIM OF THE DIRECTIVE? It establishes the EU emissions trading system (ETS)*. This is the cornerstone of the EU’s policy to tackle climate change by reducing greenhouse gas (GHG) emissions in a cost-effective and economically efficient way. It is based on the ‘cap and trade’ principle*. EU countries have amended the original legislation several times as the system has evolved. The most recent changes were agreed in March 2018. KEY POINTS The current (third) phase of the EU ETS runs from 2013 to 2020. The system applies to: power plants; a wide range of energy-intensive industrial sectors; aircraft flying between airports in the EU, Norway and Iceland; emissions of: carbon dioxide (CO2)nitrous oxideperfluorocarbonsmethanehydrofluorocarbons andsulphur hexafluoride. Since 1 January 2005, operators of all activities covered by the legislation must surrender an appropriate number of emission allowances to cover their GHG emissions. The total number of allowances issued in the EU is reduced annually: by 1.74% between 2013-2020 and by 2.2% from 2021. Aircraft flying to airports in the EU, Iceland or Norway from elsewhere in the world are exempt from the EU ETS until 31 December 2023. Allowances: may be transferred between installations, airlines and market participants in the EU and to non-EU countries where they are recognised (none so far); are valid indefinitely if issued from 1 January 2013 onwards; issued from 1 January 2021 onwards cannot be used for phase 3 (2013-2020) compliance. From 2021, 57% of allowances are to be auctioned. At least half of the EU countries’ proceeds must be used for climate-related purposes. Two new low carbon funding mechanisms will be established: the Modernisation Fund will support modernising investment projects in the power sector and wider energy systems in EU countries whose gross domestic product (GDP) per head at market prices in 2013 was below 60% of the EU average; it will comprise 2% of the total number of allowances in 2021-2030; the Innovation Fund will support the demonstration of innovative technologies and breakthrough innovation in sectors covered by the EU ETS, including innovative renewables, carbon capture and utilisation, and energy storage; the resources available will correspond to the market value of at least 450 million allowances at the time of their auctioning. EU countries: issue the allowances; ensure recipients of allowances monitor and report their emissions annually; auction, from 2019 onwards, all allowances not allocated free of charge or placed in a market stability reserve; determine how to use income from the auctions. Possibilities include measures to: develop renewable energy and energy efficiencyavoid deforestationcapture and store CO2 safelypromote low emission public transportimprove district heating systemsfinance activities to tackle climate change in developing countries; submit to the Commission by 30 September 2019 a list and details of the installations covered by the legislation for the 5 years beginning 1 January 2021. This must be repeated at 5-yearly intervals; issue annually, by 28 February, the number of allowances to be allocated that year; provide the Commission with an annual report on the application of the legislation; ensure that allowances can be transferred between installations in the EU and to non-EU countries where the allowances are recognised; determine effective penalties for any breaches of the law. Operators without enough allowances to cover their emissions are fined €100 for each tonne of CO2 emitted. All of these steps are fulfilled on the basis of rules harmonised at EU level. The European Commission: presents an annual report to the Council and the European Parliament on the implementation of the EU ETS and accompanying climate and energy policies; has the power to define the technical rules necessary to implement basic legislation; maintains an independent registry and a transaction log that record the ownership, issuing, transfer and cancellation of allowances. FROM WHEN DOES THE DIRECTIVE APPLY? It has applied since 25 October 2003 and had to become law in EU countries by 31 December 2003. BACKGROUND Under the Kyoto Protocol on climate change, agreed in December 1997, the EU pledged to reduce GHG emissions between 2008 and 2012 by 8% compared to 1990 levels. In the second Kyoto period (2013-2020), this commitment was increased to 20% of 1990 levels by 2020. During the fourth phase of the EU ETS (2021-2030), the EU is aiming to cut its emissions by at least 40% by 2030, in line with the 2015 Paris Agreement on climate change. To meet these targets, the EU established a GHG allowance trading system. Each allowance covers the emission of 1 tonne of CO2 or CO2 equivalent over a specific period. For more information, see: EU Emissions Trading System (EU ETS) (European Commission). KEY TERMS EU Emissions Trading System (EU ETS): the first — and still by far the largest — international system for trading GHG emission allowances, it covers nearly 11,000 power stations and manufacturing plants in the 28 EU countries (1), Iceland, Norway and Liechtenstein, as well as aviation activities. Cap and trade principle: the EU ETS works on the basis of this principle. A ‘cap’, or limit, is set on the total amount of certain GHGs that can be emitted by the factories, power plants and other installations in the system. The cap is reduced over time so that total emissions fall. The system allows trading of emission allowances so that the total emissions of the installations and aircraft operators stays within the cap and the least-cost measures can be taken up to reduce emissions. MAIN DOCUMENT Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, pp. 32-46) Successive amendments to Directive 2003/87/EC have been incorporated in the original text. This consolidated version is of documentary value only. RELATED DOCUMENTS Decision (EU) 2018/853 of the European Parliament and of the Council of 30 May 2018 amending Regulation (EU) No 1257/2013 and Directives 94/63/EC and 2009/31/EC of the European Parliament and of the Council and Council Directives 86/278/EEC and 87/217/EEC as regards procedural rules in the field of environmental reporting and repealing Council Directive 91/692/EEC (OJ L 150, 14.6.2018, pp. 155-161) Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ L 264, 9.10.2015, pp. 1-5) See consolidated version. last update 03.10.2018(1) The United Kingdom withdraws from the European Union and becomes a third country (non-EU country) as of 1 February 2020.