Zero-rating: Biofuel mandates and the use of Poc
Biofuels reported in a national biofuel mandate can be zero-rated in the EU ETS and ETS2. Poc can be used to document zero-rating for 2024 and 2025.
Operators of installations, aircraft operators, shipping companies and regulated entities (hereafter "operators") in the EU Emissions Trading System (EU ETS) and ETS2 can zero-rate emissions from the combustion of biofuels if the sustainability and greenhouse gas emissions saving criteria (hereafter referred to as "the sustainability criteria") in the revised Renewable Energy Directive (EU) 2018/2001) are met.
Zero-rating emissions means that the operators do not need to surrender allowances for the emissions.
Biofuels reported in a biofuel mandate can also be zero-rated in the EU ETS or ETS2
It follows from the EU ETS legislative framework that zero-rating of the same volume of biofuels cannot be double counted by operators in the EU ETS and ETS2. Nevertheless, the Norwegian Environment Agency's assessment is that there is no legal barrier to a batch of biofuel that meets the sustainability criteria in the revised Renewable Energy Directive ((EU) 2018/2001), being used to both fulfill a biofuel mandate and to be zero-rated in the EU ETS and ETS2.
We emphasize that both the delimitation of the biofuel mandate and the documentation requirements for fulfilling the sustainability criteria, may change with a possible implementation of the revised Renewable Energy Directive into Norwegian law. Further details will be provided by the Norwegian Environment Agency on this matter if it occurs.
Please do note that for the biofuel mandate, the sustainability criteria in the EU's first Renewable Energy Directive (Directive (EU) 2009/28), implemented in the Product Regulation Chapter 3, does apply. Since the sustainability criteria in the revised Renewable Energy Directive (EU) 2018/2001) apply to operators in the EU ETS and ETS2, the operators cannot assume that the requirements for zero-rating in the EU ETS and ETS2 are met, even if a fuel is used for fulfillment of a biofuel mandate.
Operators in the EU ETS and ETS2 can use Poc for the emission years 2024 and 2025.
Proof of Sustainability (Pos) in accordance with a voluntary scheme approved by the European Commission, can be used as documentation for fulfilling the requirements for zero-rating in the EU ETS and ETS2.
The International Sustainability and Carbon Certification (ISCC) is a voluntary scheme that has established a system with Proof of Compliance (Poc). The system enables the continuation of sustainability information in the supply chain, even if a Pos is used to document fulfillment of sustainability criteria under a national mandate earlier in the supply chain. A Poc contains the same information as a Pos. To issue a valid Poc, the certified economic operator must have additional approval from ISCC (Poc Trader scope).
As understood by the Norwegian Environment Agency, ISCC's Poc system is currently not part of the ISCC EU scheme approved by the European Commission. Therefore, the operators must themselves ensure that all relevant requirements in the MR and MRV regulations ((EU) 2018/2066 and 2015/757) and the revised Renewable Energy Directive are met.
The Norwegian Environment Agency will accept Poc as documentation for fulfilling the requirements for zero-rating emissions for the reporting years of 2024 and 2025. We reserve the right to modify the documentation requirements in the future, including in response to a potential assessment by the European Commission on the use of Poc as a documentation method, or the possible implementation of the revised Renewable Energy Directive in Norway.