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Norske Skog's Saugbrugs and Skogn mills threaten to be excluded from EU ETS

28 November 2024

Norske Skog's Skogn and Saugbrugs mills in Norway are threatened with exclusion from the European Union Emissions Trading Scheme (EU ETS) in the period from 2026 to 2030.

Norske Skog says that the Norwegian Environmental Protection Agency (Miljødirektoratet) has announced a possible decision in this regard for the two sites, which would mean that the plants would not receive a free allocation of EU emission allowances (EUAs) for emissions trading in the specified period.

The introduction of a revised qualification criterion in the EU ETS system for 2026 to 2030 means that the two plants no longer qualify for emissions trading, Norske Skog reports. The criterion leads to the exclusion of plants where, on average, more than 95 per cent of greenhouse gas emissions in the qualification period between 2019 and 2023 come from sustainable biomass as defined under the Renewable Energy Directive II (RED II) instead of fossil fuels.

Norske Skog comments on the environmental authority's announcement that such a decision represents a significant setback for the sustainable industry and, on the contrary, creates incentives for plants that continue or even increase their use of fossil fuels. The company will work with industry partners to ensure that biomass is treated equally alongside other decarbonisation measures. The company highlights as positive the political development in Austria to reintroduce CO2 compensation, which would neutralise the effects of the exclusion from the free allocation of EUAs in Norway.

If it were decided to exclude Norske Skog Skogn and Saugbrugs from the emissions trading scheme, the plants would neither receive a free allocation of EUAs nor would they be obliged to surrender EUAs to cover greenhouse gas emissions from 1 January 2026 to 31 December 2023. Norske Skog points out that neither the Golbey and Bruck plants nor the corresponding CO2 compensation schemes in Norway are affected by the new qualification criterion.

For next year, the company expects to sell around 150,000 EUAs at its Skogn and Saugbrugs plants net. 

Source: Euwid