These regulations reflect the expanded EU Emissions Trading Scheme (EU ETS). EU ETS permit, monitoring and allowance surrender requirements are extended to further sectors.

EU ETS duties now include municipal waste incinerators, shipping companies and organisations that release fuels for combustion in the buildings, road transport, energy industry, manufacturing or construction sectors. The revised rules also reflect the EU Carbon Border Adjustment Mechanism (CBAM).

The European Communities (Greenhouse Gas Emissions Trading) Regulations 2024 revoked and replaced the European Communities (Greenhouse Gas Emissions Trading) Regulations 2012 on 19 September 2024.

This legislation applies in the Republic of Ireland only.

What has changed?

The 2024 regulations implement the current version of the European Union Emissions Trading Scheme (EU ETS) Directive 2003/87/EC, as amended and current associated supporting legislation. This includes amendments made by the EU ETS II Directive (EU) 2023/959, which expands the scope of the scheme.

Changes to rules concerning Installations

Installations undertaking activities under Schedule 1 are obligated under the EU ETS.

The list of installations in Schedule 1 has been expanded to include installations incinerating municipal waste with a total rated thermal input exceeding 20MWth. These installations are obligated from the 2024 calendar year and must obtain and greenhouse gas emissions permit and comply with monitoring, reporting and allowance surrender requirements.

Captured and permanently-bound emissions from EU ETS installations are exempted from surrender obligations.

Installations subject to energy audits and certified energy management systems: Potential for allocation reduction

Where an energy audit or certified energy management system is required for an installation under the European Union (Energy Efficiency) Regulations 2014, free allocations of allowances may be reduced by 20% if the recommendations of the audit report or management system are not implemented. This reduction will not apply where pay-back time exceeds three years, the costs of investments are disproportionate or alternative measures have been implemented, leading to equivalent emissions reductions.

Additionally, a 20% free allocation reduction will be applied to operators of installations whose greenhouse gas emissions levels are higher than the 80th percentile of emission levels for the relevant product benchmark if a climate-neutrality plan has not been established by 1 May 2024. Operators are required to discharge targets and milestones under these plans to retain the full free allocation.

Expanded scope: Buildings, road transport and additional sectors

From 1 January 2025, greenhouse gas emissions permits must be obtained for organisations that ‘release for consumption of fuels which are used for combustion in the sectors of buildings and road transport and additional sectors.’.

‘Buildings and road transport sectors’ correspond to the following sources of emissions:

1. Road transport, excluding the use of agricultural vehicles on paved roads;
2. Commercial / institutional;
3. Residential;
4. Combined Heat and Power Plant producing heat for activities under 2. and 3. above.

‘Additional sectors’ correspond to the following sources of emissions:

1. Energy industries (excluding CHP as defined above); and
2. Manufacturing industries and construction.

Certain fuel supplies are excluded from the EU ETS: supplies where emissions are captured for geological storage, those with a zero emissions factor or where hazardous or municipal waste is released for use as fuel.  

Buildings, road transport and additional sectors: Monitoring, measuring, reporting and surrendering allowances

Organisations in the buildings, road transport and additional sectors will be required to monitor, measure and report verified emissions for each calendar year from 2024 in each subsequent year.

These sectors will not be required to surrender allowances until after the 2027 calendar year, although this may be deferred until after 2028 in the event of exceptionally high energy prices. An allowance price cap of €45 will apply until 2030.

The volume of allowances under the scheme will be reduced on a linear year-on-year basis, as with the wider EU ETS.

Expanded scope: Maritime transport

Regulation (EU) 2015/757 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport requires shipping companies in scope to monitor and report emissions data. The EU ETS II Directive (EU) 2023/959 expanded these duties to phase-in allowance surrender obligations from the 2024 calendar year onwards.

Obligated shipping companies will need to prepare annual emissions reports for each calendar year from 2024, which must be verified by an approved verifier. These reports must be submitted to the competent authority by 31 March in the following year in accordance with Regulation (EU) 2015/757. The required number of allowances must be surrendered by 30 September in the following year.

Allowance surrender obligations are being phased in. For the 2024 calendar year allowance surrenders must cover 40% of verified emissions, rising to 70% for the 2025 calendar year and 100% from 2026 onwards.

Maritime emissions obligations will initially only concern carbon dioxide, but this will be expanded to include methane and nitrous oxide from 1 January 2026.

Where obligated, allowance surrender obligations apply to:

• 50% of emissions from voyages starting within an EU Member State's jurisdiction and ending outside it;
• 50% of emissions from voyages starting outside an EU Member State's jurisdiction and ending within it;
• 100% of emissions from voyages starting and ending within an EU Member State's jurisdiction; and
• 100% of emissions from ships while within a Member State's port of call.

Exemptions from emission surrenders apply to passenger ships (excluding cruises) and ro-pax ships within mainland and island ports within an EU Member State. Permanently captured emissions are also exempt. Ice-class ships are subject to a 5% reduction in surrender obligations.

Installations within the scope of the Carbon Border Adjustment Mechanism (CBAM)

The 2024 regulations revise measures to address carbon leakage risks. Where equivalent measures under the Carbon Border Adjustment Mechanism (CBAM) are in place, installations in these sectors will not receive free allocations of allowances.

Free allocations of allowances to installations producing goods within the scope of CBAM (cement, iron and steel, aluminium, fertilisers, electricity and hydrogen) will be reduced over time. This will reduce from a 100% free allocation in the 2025 calendar year to 0% from 2034.

Where installations are in sectors outside the CBAM but still deemed at risk of carbon leakage, enhanced free allocations are expected to continue.

Certified Emission Reduction units (CERs) and Emission Reduction Units (ERUs)

Rules concerning the recognition of CERs and ERUs in the EU ETS have been updated to reflect current EU legislation.

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