On 24 August 2011 the federal cabinet adopted the regulation governing the allocation of allowances for greenhouse gas emissions in the 2013 to 2020 trading period (Allocation Ordinance 2020). This legal basis makes it possible for the federal government to allocate emission allowances free of charge to almost 2000 facilities which will take part in emissions trading in Germany in the trading period between 2013 and 2020. The Allocation Ordinance fully transposes EU provisions into German law.
In the first eight years of EU emissions trading the member states had some leeway in establishing their own rules for the free allocation of emission allowances. Germany, for example, had a separate allocation law governing the rules for allocation. After 2013 there will be a noticeable harmonisation in emissions trading across Europe. This also extends to the allocation rules adopted by the Commission in April 2011. The number of free allocations will be much lower after 2013 compared to the two previous trading periods. This can be attributed to the intended and targeted restriction of available allowances and to the fact that the entire electricity sector is excluded from the free allocation of allowances. In the past the full monetary value of the certificates allocated to the electricity sector for free was passed on to the clients and addedto their electricity bills as extra costs. In the future it will no longer be possible to reap "profits" of this kind.
As of 2013 most facilities will receive allocations based on product-related emission levels. These so-called "product benchmarks" have been fixed for the whole of Europe and are based on the 10 per cent most efficient European facilities. As a consequence inefficient plants will have to buy an increased number of emission allowances in the future. Facilities from sectors threatened by a carbon leakage risk, i.e. where production may be relocated to other countries, will receive an unrestricted amount of allowances whereas allocations to other facilities will be gradually reduced by 30 per cent between 2013 and 2020.
The Allocation Ordinance require approval by the German Parliament before it enters into force.