Explanatory Memorandum to COM(2020)271 - EU position in the Joint Committee with Switzerland on the linking of their greenhouse gas emissions trading systems, on standards and technical issues - Main contents
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| dossier | COM(2020)271 - EU position in the Joint Committee with Switzerland on the linking of their greenhouse gas emissions trading systems, on ... |
|---|---|
| source | COM(2020)271  |
| date | 30-06-2020 |
1. Subject matter of the proposal
This proposal concerns the decision establishing the position to be taken on the Union's behalf in the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems in connection with the envisaged adoption of a decision regarding amending Annexes I and II to the Agreement and the adoption of Linking Technical Standards
2. Context of the proposal
2.1.The Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems
The Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems (‘the Agreement’) aims to connect the EU Emissions Trading System (EU ETS) with the Swiss one by allowing that allowances issued in one system can be traded and used for compliance in the other one, thus expanding the opportunities for climate change mitigation. The Agreement entered into force on 1 January 2020.
2.2.The Joint Committee
The Joint Committee, established by Article 12 of the Agreement, is responsible for administering the Agreement and ensuring its implementation. It can decide to adopt new annexes to the Agreement or amend existing ones. It can also discuss amendments to the Articles of the Agreement, facilitate the exchange of views on the Parties' legislation and conduct reviews of the Agreement.
The Joint Committee is a bilateral body composed of representatives of the Parties (the EU and Switzerland). Decisions taken by the Joint Committee shall be agreed by both Parties.
Pursuant to Article 3(7) of the Agreement, the Swiss registry administrator and the Union central administrator shall develop Linking Technical Standards (LTS) based on the principles set out in Annex II of the Agreement. The LTS shall describe the detailed requirements for establishing a robust and secure connection between the Swiss Supplementary Transaction Lot (SSTL) and the European Union Transaction Log (EUTL). The LTS will take effect, when adopted by decision of the Joint Committee.
2.3.The envisaged act of the Joint Committee
During its third meeting, which will be held in 2020, the Joint Committee is to adopt a decision pursuant to Article 3(7) of the Agreement regarding the adoption of Linking Technical Standards and will amend Annex I and II to the Agreement in accordance with Article 13(2) of the Agreement (‘the envisaged act’).
The purpose of the envisaged act is to describe, based on the principles set out in Annex II of the Agreement, the detailed requirements for establishing a robust and secure connection between the SSTL and the EUTL. To this end, it outlines the baseline for the technical specifications in terms or architectural, service and security requirements. With a view to minimising the risk of fraud, misuse or criminal activities involving the registries and to protecting the integrity of the link, details of the necessary procedures as well as their underlying considerations and agreements, should be treated confidentially. Therefore, the envisaged act addresses the necessary elements at a rather high level without revealing standards related to the security and safety of the link. Those should be laid down in further technical guidelines to be developed by a working group in accordance with Article 12(5) of the Agreement. The working group should at least include the Swiss registry administrator and the Union central administrator, both of which should ensure the continued, effective and efficient operation of the link as well as its adaptation to technical progress and new requirements relating to the safety and security of the link. Due to both the technical and sensitive nature of such guidelines and the need to adapt them to maintain an appropriate level of safety and security of the link, representatives of the Union in the Joint Committee should be informed and, where appropriate, able to agree such guidelines without a further decision of the Council.
The amendment to Annex I allows taking into account the progress made on establishing the registry link, when it comes to transferring the accounts of aircraft operators from the Union registry to the Swiss registry in accordance with Point 17 of Part B of Annex I to the Agreement. This way, a smooth transition of those accounts from the Union registry to the Swiss registry is ensured.
The amendment to Annex II to the Agreement also became necessary in the light of recent developments to ensure that the link can be made operational within an appropriate time frame. To this end, the amendment provides for an increased level of flexibility rendering a broader, but equivalent set of technologies compatible with the requirements of Annex II.
The envisaged act will become binding on the parties in accordance with Article 3(7) of the Agreement, which provides that the LTS and the amendments to Annexes I and II will take effect when adopted by decision of the Joint Committee. In accordance with Article 12(3) of the Agreement, decisions taken by the Joint Committee in the cases provided for in this Agreement will, upon their entry into force, be binding on the Parties.
3. Position to be taken on the Union's behalf
The Council Decision based on this proposal from the Commission determines the position of the European Union concerning the Decision of the Joint Committee to be taken on the adoption of Linking Technical Standards (LTS) and amendments to Annexes I and II for the operation of the link between the EU ETS and the ETS of Switzerland.
Article 3(7) of the Linking Agreement requires the development of Linking Technical Standards that will take effect following their adoption by the Joint Committee. The LTS are based on the principles laid down in Annex II of the Agreement and describe the detailed requirements for establishing a robust and secure connection between the transaction logs of the EU ETS and the ETS of Switzerland, with which both sides have to comply to make the link between the EU ETS and the ETS of Switzerland operational. For this reason, they are necessary for the link to work.
In accordance with Decision No 2/2019 of the Joint Committee 1 of 5 December 2019 2 , the LTS relate to a provisional solution for the link between the EU ETS and the ETS of Switzerland. The provisional solution should be available as from May 2020 or as soon as possible thereafter.
In the light of recent developments, making the provisional solution available as from May 2020 or as soon as possible thereafter requires an increased level of flexibility in order not to make the implementation of the link depending on the operationalisation of a specific technology, as long as equivalent options are feasible.
Against this background and in order to ensure practically uninterrupted market access of certain aircraft operators, the transfer of their accounts from the Union registry to the registry of Switzerland should be undertaken with full regard to when it is possible to transfer allowances from one system to the other.
The development of a well-functioning international carbon market through bottom-up linking of emissions trading systems is a long-term policy goal of the EU and the international community, notably as a means to achieve the climate objectives of the Paris Agreement. In this respect, Article 25 of the Directive establishing the EU's Emissions Trading System (EU ETS) allows for the EU ETS to be linked with other emissions trading systems provided they are mandatory, have an absolute cap on emissions and are compatible, as it is the case with the Swiss system. Following the entry into force of the Agreement on 1 January 2020, the LTS taking effect represent an important step towards the implementation of the Agreement.
4. Legal basis
4.1.Procedural legal basis
Contents
Article 218(9) of the Treaty on the Functioning of the European Union (TFEU) provides for decisions establishing ‘the positions to be adopted on the Union’s behalf in a body set up by an agreement, when that body is called upon to adopt acts having legal effects, with the exception of acts supplementing or amending the institutional framework of the agreement.’
The concept of ‘acts having legal effects’ includes acts that have legal effects by virtue of the rules of international law governing the body in question. It also includes instruments that do not have a binding effect under international law, but that are ‘capable of decisively influencing the content of the legislation adopted by the EU legislature’ 3 .
The Joint Committee is a body set up pursuant to Article 12 of the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems.
The act which the Joint Committee is called upon to adopt constitutes an act having legal effects. The envisaged act will be binding under international law in accordance with Article 12(3) of the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems.
The envisaged act does not supplement or amend the institutional framework of the Agreement.
Therefore, the procedural legal basis for the proposed decision is Article 218(9) TFEU.
4.2.Substantive legal basis
The substantive legal basis for a decision under Article 218(9) TFEU depends primarily on the objective and content of the envisaged act in respect of which a position is taken on the Union's behalf. If the envisaged act pursues two aims or has two components and if one of those aims or components is identifiable as the main one, whereas the other is merely incidental, the decision under Article 218(9) TFEU must be founded on a single substantive legal basis, namely that required by the main or predominant aim or component.
The main objective and content of the envisaged act relate to environment.
Therefore, the substantive legal basis of the proposed decision is Article 192(1) TFEU.
4.3.Conclusion
The legal basis of the proposed decision should be Article 192(1) TFEU, in conjunction with Article 218(9) TFEU.