Introduction

The EU greenhouse gas emission trading scheme constitutes a path-breaking new chapter in EU environmental law and policy. It is the first continent-wide cap-and-trade scheme that has been put in place and several aspects of the implementation of the scheme created a formidable challenge for authorities at European and national level. Never before has an EU environmental policy created an economic asset whose annual value runs into the tens of billions of Euros and has set up a process of shared tasks among the European and national levels to organise the distribution of these valuable assets to private economic actors.

In this chapter we look at the first allocation round from the European perspective. We do this by outlining the allocation process and rules (Section 2), discussing the challenges faced in developing the first allocation plans (Section 3), describing the role of Commission guidance (Section 4) and reviewing the Commission's assessment of plans (Section 5). In Section 6 we describe the key factors that influenced and shaped the first round allocation process, followed by conclusions in the final section.

The allocation process and rules in Directive 2003/87/EC

Allocation is governed by Articles 9 to 11 and Annex III of Directive 2003/87/EC (European Community 2003).

Article 9(1) provides that each Member State has to draw up a National Allocation Plan in advance of each trading period. This provision implies a wide delegation of tasks to fix the details of allocation arrangements to the national level.