In compliance with the EU Directive on emissions trading scheduled to take effect in January 2005, Member States are required to draft a National Allocation Plan (NAP) that details the initial allocation of allowances to installations covered by the EU’s Directive. The NAP must be submitted to the European Commission for approval by 1 March 2004 and will be evaluated according to state aid rules and other criteria to be developed by the Commission.

At a workshop held in London on 10 September 2003, NERA Senior Vice President Dr. David Harrison and Associate Director Dan Radov presented the results of this consultation document prepared for the UK Department for Environment, Food and Rural Affairs (DEFRA). The workshop, attended by approximately 300 representatives of affected industries and sectors and other interested parties, discussed issues related to the UK NAP.

NERA has assembled a multi-disciplinary Project Team that includes AEA Technology and Mr. Steven Sorrell of SPRU (Science & Technology Policy, University of Sussex). Combining extensive real world experience in emissions trading with a thorough understanding of relevant data, market conditions, and EU policies, NERA’s Project Team developed specific allocation methodologies to help DEFRA choose among the large number of potential approaches. The team has also developed a user-friendly spreadsheet model that calculates specific initial allocations.