Emissions Trading Obligations

The owners of facilities affected by Emission Trading Rights must:

• Comply with the obligations relating to the monitoring and reporting of greenhouse gas emissions imposed by Directive (EU) 2003/87/EC of the European Parliament and of the Council, in accordance with the principles established in Articles 5 to 9 of the Regulation of Implementation (EU) 2018/2066.

• Have GHG Emissions Authorization.

• Monitor greenhouse gas emissions based on a Monitoring Plan approved by the competent authority and in accordance with the provisions of article 12 of Implementing Regulation (EU) 2018/2066.

• Report on their annual emissions, having to submit to the Competent Body of each Autonomous Community, Annual Emissions Notification, verified by an accredited verification company, before February 28 of the year following the year of notification.

• Submit significant modifications to the Monitoring Plan to the competent regional body, in accordance with the provisions of article 15 of the Implementing Regulation (EU) 2018/2066.

Non-compliance with Emissions Trading

Article 29 of Law 1/2005 establishes the possible infractions that fixed installations may commit and in article 30 the consequences of this non-compliance (sanctions):

• Very serious administrative infractions, for example: carrying out the activity without the required greenhouse gas emission authorization, not submitting the verified annual emissions report, etc.

• Possible sanctions applicable to very serious administrative infractions: fine from 15,001 to 2 million euros, temporary closure (total or partial) of the facilities for a maximum period of two years, termination or suspension of the authorization for a minimum period of one year and maximum of two, fine of 100 euros for each ton issued in excess and not delivered.

• Serious administrative infractions, for example: failure to comply with the obligation to report changes in the identity or address of the owner, failure to comply with the emissions monitoring conditions established in the authorization when such failure results in alterations in the emissions data, etc.

• Possible sanctions applicable to serious administrative infractions: fine from 5,001 to 15,000 euros, suspension of authorization for a maximum period of one year.

• Minor administrative infractions, for example: failure to comply with the emissions monitoring conditions established in the authorization when such non-compliance does not result in alterations in the emissions data, failure to comply with the regulatory standards of the verified annual reports on emissions as long as it does not imply alteration of emissions data, etc.

• Possible sanction applicable to minor administrative infractions: fine of up to 5,000 euros.