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NORTH EAST LAW REVIEW 179 (...) the total amount should be allocated.’133 In that case, the chosen allocation method would infringe the provision. However, excluding electricity from free allocation was one of the leitmotifs of the 2009 amendment;134 in that context, it is in line with accepted methods of legal interpretation to apply a restrictive approach towards any exception from that rule, and hence to subtract the hypothetical emissions from an equivalent amount of reference fuel. The result, however, is that operators of installations generating industrial waste heat will never obtain full allocation: They can either refrain from energy recovery and receive allowances for type (b) process emissions amounting to 72.75% of the actual emissions only (green line); or they can recover energy and become eligible for type (c) process emission allowances, but then have to accept the reduction of their eligible activity levels to 91.14%. 5.1.4 Correction Factor ŋ Treating conventional electricity and the equivalent part of waste gas / heat electricity equally has another paradoxical consequence: The more efficient energy recovery from the off-stream is, the lower is the historical activity calculated according to the formula. The chemical energy of natural gas can be transformed into electricity much more efficiently than the chemical or thermal energy content of off-gases. Hence, equivalent energy contents do not correspond to equivalent amounts of electricity; therefore, equivalent amounts of conventional electricity and waste gas/heat electricity should not be denied equal amounts of free allocation. As a consequence, the DG CLIMA introduced correction factor ŋ to reduce the amount of subtracted reference emissions; the factor ‘accounts for the difference in efficiencies between the use of waste gas and the use of the reference fuel natural gas’.135 The default value of this factor was negotiated to be 0.667, which means that waste gas/heat electricity is considered to be generated one third less efficiently than electricity from natural gas. If, however, ‘the uses of waste gas and efficiencies related to these uses are known’,136 the factor can be adjusted. It follows that energy recovery with a comparative efficiency deficit of less than one third would have to be assigned a higher correction factor, which would increase the amount of reference emissions and reduce the historical activity level eligible for free allocation. The logic applied is that with increased efficiency, the facility is more similar to a regular power producer, and, thus, fewer emissions are occurring due to the fact that waste gas instead of natural gas is burnt. In practice, however, it is unlikely 133 Ecofys, Fraunhofer Institute for Systems and Innovation Research and Öko-Institut, ‘Methodology for the free allocation of emission allowances in the EU ETS post 2012’ (2009) 62. 134 Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community [2009] OJ L140/63, rec (19). 135 DG-CLIMA, Guidance Document 8 (2011) 13. 136 DG-CLIMA, Guidance Document 8 (2011) 13.PDF Image | ELECTRICITY PRODUCTION FROM INDUSTRIAL WASTE HEAT
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