Double burden through nEHS and EU-ETS
nEHS and EU ETS obligated parties must communicate
The introduction of the German national emissions trading system (nEHS) has resulted in a second emissions trading system existing in parallel to the established European emissions trading system (EU-ETS). Since 2005, the EU ETS has covered the CO2 emissions of all energy and industrial plants with a rated thermal input of ≥ 20 MW. The parallel existence of the EU ETS and the NEETS means that operators subject to the EU ETS who use fuels in their plants that are also subject to the BEHG now face the risk of a double burden. They must now purchase the fuels at higher prices and also buy certificates as usual within the framework of European emissions trading in order to meet their obligations under the Greenhouse Gas Emissions Trading Act (TEHG). This problem has also been recognised by the legislator and as a result a "deduction procedure" has been implemented.
According to Section 11 EBeV 2022, the distributor is entitled to deduct emissions from fuels delivered to EU ETS installations. For these emissions, there is no need to purchase allowances and thus to pass on allowance costs to the EU ETS installation operator.
If a double burden for the EU ETS installation cannot be avoided by not applying the deduction procedure in the first step, the EU ETS installation operator still has the option of subsequent financial compensation under Section 11 (2) BEHG. What form this compensation regulation, which will be governed by an ordinance, will take, is still open.
Communication is needed
In order to ensure that the EU ETS system operator is not charged twice and that the distributor retains the relief, comprehensive evidence must be provided to DEHSt in the form of a confirmation of use by the EU ETS system operator.
While the EU ETS system operator must provide the distributor with evidence of the amount of fuel used in accordance with Section 5 TEHG, its stocks and the tax-free fuel quantities supplied, both parties must in turn inform DEHSt of the composition of the deductible quantity and its supply with exemption from nEHS costs as part of a joint declaration of intent to use.
The distributor must submit the EU ETS system operator's confirmation of use to DEHSt by 31 July of a calendar year together with the nEHS emissions report.
In any case, one thing is certain: an exchange of information on possible operational changes between the distributor and the fuel purchaser, such as the abolition of the tax warehouse or a new obligation to trade emissions pursuant to the TEHG, appears essential for a smooth business relationship in the future.
What exactly is the problem?
A prerequisite for the implementation of the deduction procedure is, of course, that the BEHG manager knows which of its customers are participants in the EU ETS.
In the next step, bilateral supplementary agreements under civil law to the existing supply contract must be concluded with each of these customers pursuant to Section 11 EBeV 2022. DEHSt does not provide a template for this type of agreement. In this supplementary agreement, it is important for you to specify the delivery quantity from which the deductible emission quantity results. Issues such as differential quantities, forwarding of quantities to other (EU ETS) installations, tax-exempt quantities play a role here. On the other hand, it must be clearly defined to what extent changes in the originally forecast deduction quantity lead to a transfer of allowance costs and, if so, at what price.
We help you!
To ensure that your business relationships with your customers participating in the EU ETS continue to run smoothly in the future, it is essential to deal with the issue of double charging of fuel emissions in the context of the nEHS.
We help you to examine the structure of your fuel customers with regard to the issue of double charging and show you concrete steps on how to proceed in order to keep the additional administrative work as low as possible on the one hand and to ensure on the other hand that additional contractual agreements are not to your disadvantage.
Our offer to you!
Would you like to create a solid basis for the topic of double burdening in your company or would you like to completely hand over the tasks involved to an external service provider?
Do not hesitate to contact us, we will work out an individual offer for you.
If you are considering outsourcing your administrative duties in the nEHS permanently and completely to an external service provider, we would be happy to offer you our support within the scope of the BEHG package we offer.