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1 PR\ in diversityENEuropean Parliament2019-2024 Committee on the Environment, Public Health and Food Safety2021/0211(COD) **IDRAFT REPORTon the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and Regulation (EU) 2015/757(COM(2021)0551 C9-0318/2021 2021/0211(COD))Committee on the Environment, Public Health and Food SafetyRapporteur: Peter LieseRapporteurs for the opinion (*):Jos Manuel Fernandes and Val rie Hayer, Committee on Budgets, Mauri Pekkarinen, Committee on Industry, Research and Energy(*)Associated committees Rule 57 of the Rules of \ for procedures*Consultation procedure**Consent procedure**IOrdinary legislative procedure (first reading)**IIOrdinary legislative procedure (second reading)**IIIO rdinary legislative procedure (third reading)(The type of procedure depends on the legal basis proposed by the draft act.)

2 Amendments to a draft actAmendments by Parliament set out in two columnsDeletions are indicated in bold italics in the left-hand column. Replacements are indicated in bold italics in both columns. New text is indicated in bold italics in the right-hand first and second lines of the header of each amendment identify the relevant part of the draft act under consideration. If an amendment pertains to an existing act that the draft act is seeking to amend, the amendment heading includes a third line identifying the existing act and a fourth line identifying the provision in that act that Parliament wishes to by Parliament in the form of a consolidated textNew text is highlighted in bold italics.

3 Deletions are indicated using either the symbol or strikeout. Replacements are indicated by highlighting the new text in bold italics and by deleting or striking out the text that has been replaced. By way of exception, purely technical changes made by the drafting departments in preparing the final text are not \ EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION ..5 EXPLANATORY STATEMENT ..106 ANNEX: LIST OF ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT .. \ \ EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTIONon the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and Regulation (EU) 2015/757(COM(2021)0551 C9-0318/2021 2021/0211(COD))(Ordinary legislative procedure.)

4 First reading)The European Parliament, having regard to the Commission proposal to Parliament and the Council (COM(2021)0551), having regard to Article 294(2) and Article 192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C9-0318/2021), having regard to Article 294(3) of the Treaty on the Functioning of the European Union, having regard to the reasoned opinion submitted, within the framework of Protocol No 2 on the application of the principles of subsidiarity and proportionality, by the Czech Senate, asserting that the draft legislative act does not comply with the principle of subsidiarity, having regard to the opinion of the European Economic and Social Committee of 8 December 20211, having regard to the opinion of the Committee of the Regions of.

5 20222, having regard to Rule 59 of its Rules of Procedure, having regard to the opinions of the Committee on Budgets, the Committee on Industry, Research and Energy, the Committee on Development and the Committee on Transport and Tourism, having regard to the report of the Committee on the Environment, Public Health and Food Safety (A9-0000/2022), its position at first reading hereinafter set out; on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;1 [OJ C 0, , p. 0. / Not yet published in the Official Journal].2 [OJ C 0, , p. 0. / Not yet published in the Official Journal]. \ its President to forward its position to the Council, the Commission and the national 1 Proposal for a directiveRecital 13 Text proposed by the CommissionAmendment(13)Greenhouse gases that are not directly released into the atmosphere should be considered emissions under the EU ETS and allowances should be surrendered for those emissions unless they are stored in a storage site in accordance with Directive 2009/31/EC of the European Parliament and of the Council46 , or they are permanently chemically bound in a product so that they do not enter the atmosphere under normal use.

6 The Commission should be empowered to adopt implementing acts specifying the conditions where greenhouse gases are to be considered as permanently chemically bound in a product so that they do not enter the atmosphere under normal use, including obtaining a carbon removal certificate, where appropriate, in view of regulatory developments with regard to the certification of carbon removals.(13)Greenhouse gases that are not directly released into the atmosphere should be considered emissions under the EU ETS and allowances should be surrendered for those emissions unless they are stored in a storage site in accordance with Directive 2009/31/EC of the European Parliament and of the Council46 , or they are permanently chemically bound in a product so that they do not enter the atmosphere under normal use.

7 The Commission should be empowered to adopt delegated acts specifying the conditions where greenhouse gases are to be considered as permanently chemically bound in a product so that they do not enter the atmosphere under normal use, including obtaining a carbon removal certificate, where appropriate, in view of regulatory developments with regard to the certification of carbon Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (OJ L 140, , p.)

8 114).46 Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (OJ L 140, , p. 114).Or. enPR\ is an important priority for the Parliament to work with delegated acts whenever possible because it is easier to intervene for the democratically elected body of 2 Proposal for a directiveRecital 13 a (new)Text proposed by the CommissionAmendment(13a) All greenhouse gas emissions captured and transferred for utilisation through CCU processes should ideally be accounted for at the point of release into the atmosphere.

9 However, in the short term, in the absence of all economy-wide greenhouse gas emissions, in particular emissions from waste incineration installations, being covered by carbon pricing mechanisms, reliance on calculations at the point of release into the atmosphere would result in emissions being undercounted. Therefore, for a temporary period, the extent of the obligation to surrender allowances in respect of emissions of greenhouse gases which are considered to have been captured and utilised to become chemically bound in a product should be proportionally reduced taking into account a life-cycle assessment of the product. By 31 December 2029, the Commission should present a report to the European Parliament and to the Council in which it examines the progress made towards the coverage of economy-wide greenhouse gas emissions by carbon pricing mechanisms.

10 If sufficient progress has been made, in particular on the inclusion of greenhouse gas emissions from waste incineration installations, the Commission should, where appropriate, present a legislative proposal to amend this Directive so that the obligation to surrender allowances in respect of \ of greenhouse gases which are considered to have been captured and utilised arises only at the point of release into the enJustificationIn addition to the existing exemption for CCS and the proposed exemption for CCU which is permanently chemically bound in a product, the Rapporteur proposes an intermediate category for partial reductions for CCU based on an overall life-cycle assessment of the process and product.