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NORTH EAST LAW REVIEW 171 avoided in the industrial process,93 installations combusting these waste gases for electricity or heat production receive allowances for free. The carbon dioxide occurring as a result of that combustion is, however, by definition a type (c) process emission; the greenhouse gases stemming from processes generating industrial waste heat, on the contrary, are type (b) process emissions. Hence, the utilization of that heat for the production of electricity does, in principle, not increase the amount of allowances allocated to the installation for free. However, the steel industry was able to negotiate an interpretation that treats emissions used for waste heat electricity like emissions used for waste gas electricity, making the occurring CO2 eligible for free allocation of type (c) process emissions. An Explanatory Note issued by the DG CLIMA states: In this context, it is important to underline that all kinds of energy recovery would lead to the treatment of the respective amount of CO2 emissions as type (c) process emissions sub-installation. This includes the recovery of heat from the off-gas stream of the furnace.94 It follows that the type (c) rules on free allocation for waste gas electricity apply analogously to waste heat electricity, too, although the emissions used for the latter were originally regarded type (b) emissions. However, not all emissions occurring in the combustion of waste gas are eligible for free allocation, as the ETS-Directive provides only for a limited exception from the rule that ‘[n]o free allocation shall be made in respect of any electricity production, except for (...) electricity produced from waste gases.’95 Therefore, emissions are allocated only as far as they occur from the combustion of waste gas instead of from the combustion of (more efficient) natural gas; emissions stemming from the hypothetical combustion of an energy-equivalent amount of natural gas have to be subtracted. Guidance Document 8 provides for a formula to calculate the historical activity level (HAL): The subtracted reference emissions are modified by correction factor ŋ to prevent market distortion at the expense of waste gas/heat electricity producers: It ‘accounts for the difference in efficiencies between the use of waste gas and the use of the reference fuel natural gas’96, as ‘most waste gases have a higher emission intensity and can 93 ETS-Directive (n 2), art 10a(1)(3). 94 DG-CLIMA, 'Explanatory note on the definition of process emissions sub-installations' (Explanatory Note Process Emissions) (2011). 95 ETS-Directive (n 2), art 10a(1)(3). 96 DG-CLIMA, Guidance Document 8 (2011) 13. Historical emissions (in t CO2e) = Amount of waste gas (in tonnes) x Net calorific value of the waste gas (in TJ/t) x Emission factor of the waste gas (in t CO2/TJ) – Emission factor of natural gas (in t CO2/TJ) x Correction ŋPDF Image | ELECTRICITY PRODUCTION FROM INDUSTRIAL WASTE HEAT
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