The purpose of this Act is to limit emissions of greenhouse gases in a cost-effective manner by means of a system involving the duty to surrender greenhouse gas emission allowances and freely transferable emission allowances.

§ 2. (geographical scope of the Act)

This Act applies to greenhouse gas emissions within the realm and to emissions from activities on the Norwegian part of the continental shelf, subject to any restrictions deriving from international law.

The King may issue regulations containing further provisions on the geographical scope of the Act, including its application in Svalbard.

§ 3. (emissions to which this Act applies)

This Act applies to CO2 emissions in connection with:
a) energy production,
b) refining of mineral oil,
c) coke production,
d) production and processing of iron and steel, including roasting and sintering of iron ore,
e) production of cement, lime, glass, glass fibre and ceramic products,
f) production of paper, board and pulp from timber or other fibrous materials.

Nevertheless, the Act does not apply to emissions from the combustion of biomass or from energy production such as is mentioned in the first paragraph, litra a, based on the incineration of hazardous waste or waste that is subject to the tax on final waste disposal.

The King may by regulations prescribe that this Act applies to CO2 emissions from activities that are not mentioned in the first paragraph and to emissions of greenhouse gases other than CO2 from specified types of activities, including rules other than those provided by sections 7 and 8 for the allocation of allowances free of charge for the period 2008–2012 for activities and sectors that are incorporated into the emission trading system pursuant to this paragraph.

§ 4. (duty to surrender emission allowances)

Any person engaged in any of the activities mentioned in section 3 (hereinafter referred to as the operator) is required under this Act to surrender allowances corresponding to any emissions to which the duty to surrender allowances applies, in accordance with the provisions of section 13. In addition, a discharge permit pursuant to section 11 of the Pollution Control Act is required.

§ 5. (applications for discharge permits and emission allowances)

Any operator who is subject to the duty to surrender allowances pursuant to this Act, and who does not already hold a separate discharge permit pursuant to section 11 of the Pollution Control Act, must apply for such a permit within a time limit laid down by the King for the application to be processed by 1 January 2008. Applications for installations that are entitled to allowances free of charge for the period 2008–2012 pursuant to the provisions of the first paragraph of section 7 must be submitted within the same time limit to be taken into consideration when allowances are allocated free of charge. Applications must include any information necessary for an evaluation of the number of allowances to be allocated pursuant to section 8. The pollution control authorities may in the individual case determine which information or studies the applicant must supply or provide for.

Chapter 2. Determination of the total number of allowances and allocation of allowances

§ 6. (determination of the total number of allowances)

The King will determine the total number of allowances to be allocated for the period 1 January 2008 to 31 December 2012.

The King may lay down further provisions on the sale of allowances to which this section applies and how this is to be organised.

§ 7. (allocation of allowances free of charge for the period 2008–2012)

For the period 1 January 2008 to 31 December 2012, allowances shall be allocated free of charge according to the following principles:

Operators of land-based installations shall be allocated allowances free of charge pursuant to section 8, second paragraph, corresponding to 100% of their process emissions and 87% of their emissions from energy use. In the allocation process, installations which use surplus gas from land-based industry that is not regulated through the emission trading system or subject to an emission tax may be given special consideration.

Operators of other installations who are subject to the duty to surrender allowances shall not be allocated allowances free of charge for the period 2008–2012.

A reserve of allowances is to be set aside for new gas-fired power plants that are based on carbon capture and storage technology and for licensed high-efficiency combined heat and power plants. The King will lay down further provisions on the size of this reserve, which operators may apply for allowances from the reserve, and other criteria that are to be used as a basis for allocation pursuant to this paragraph.

§ 8. (allocation of allowances free of charge)

The pollution control authorities will decide the number of allowances to be allocated to each operator for the period 1 January 2008 to 31 December 2012.

Allowances shall be allocated free of charge pursuant to section 7, on the basis of the installation’s average emissions in the base years 1998–2001.

A decision to allocate allowances shall be conditional on the following: at the time of the annual issue of allowances pursuant to section 9, the pollution control authorities must not, find that the installation has been closed down, and the operator must hold a discharge permit pursuant to section 11, second paragraph, of the Pollution Control Act.

§ 9. (issue of allowances)

Each year, the pollution control authorities will issue each operator with the number of allowances to which he is entitled according to a decision made pursuant to section 8. The procedure for issuing allowances is for the pollution control authorities to inform the Norwegian Emissions Trading Registry by 1 March each year that a specified number of allowances is to be transferred to the operator’s account in the registry.

If an operator has received a larger number of allowances than he is entitled to in accordance with a decision to allocate allowances pursuant to section 8, the pollution control authorities shall inform the Norwegian Emissions Trading Registry that the excess allowances in the operator’s account are to be cancelled. Before the pollution control authorities inform the Norwegian Emissions Trading Registry that allowances are to be cancelled, the operator shall be notified and given the opportunity to express an opinion within a specified time limit, unless the operator in question has already been given a reasonable opportunity to express an opinion in some other way, notification is considered obviously unnecessary, or there is reason to believe that this will complicate the cancellation of allowances.

§ 10. (duty to provide notification)

The operator shall notify the pollution control authorities if there has been or is expected to be a lengthy stoppage of operations or if a decision has been taken to close the installation down.

Chapter 3. Norwegian Emissions Trading Registry. Surrender of allowances

§ 11. (Norwegian Emissions Trading Registry)

The Norwegian Emissions Trading Registry shall contain information on the allocation, issue, holding, transfer, surrender and cancellation of allowances.

The King will appoint a competent authority to establish and maintain the registry. The King may by regulations lay down further provisions on the organisation and operation of the registry, including provisions on the types of accounts and the information the registry shall contain, the types of information to which the public shall have access, and cooperation with other registries.

Public authorities are entitled to access to information from the Norwegian Emissions Trading Registry in so far as this is necessary to facilitate their tasks as set out in or pursuant to legislation.

§ 12. (opening accounts, transferring and cancelling allowances)

Any physical or legal person is entitled to open an account in the Norwegian Emissions Trading Registry.

An account holder is entitled to transfer his own allowances to other account-holders. The King may by regulations lay down provisions limiting the right to transfer allowances pursuant to this provision if this is necessary according to the provisions of the 1997 Kyoto Protocol to the 1992 UN Framework Convention on Climate Change.

An account holder may require the cancellation of allowances registered in his own account.

The King may by regulations lay down provisions on the payment of fees for opening and operating accounts, issuing allowances allocated by the state and transferring allowances within, to or from the registry.

§ 13. (duty to surrender allowances)

An operator shall by 1 May each year transfer a number of allowances corresponding to the volume of emissions for which reporting is mandatory generated by the installation in the previous calendar year to a specified retirement account in the registry.

If, by the time limit set out in the first paragraph, the operator has not surrendered a sufficient number of allowances to the retirement account, he shall, by 1 May the year after the allowances should have been surrendered pursuant to the first paragraph, transfer allowances to the appropriate retirement account corresponding to the deficit from the preceding year. In addition, an excess emissions fine shall be imposed pursuant to section 21.

§ 14. (recognition of allowances not issued in the Norwegian Emissions Trading Registry)

The King may by regulations issue further provisions on which types of allowances other than those specified in section 6 may be recognised when allowances are surrendered in accordance with the rules of this scheme, and the procedures to be followed.

§ 15. (issue of allowances on the basis of projects to reduce emissions in sectors in Norway that are not subject to the duty to surrender allowances)

The King may by regulations lay down further provisions on the issue of allowances on the basis of projects to reduce emissions in sectors in Norway that are not subject to the duty to surrender allowances.

Chapter 4. Reporting and control

§ 16. (reporting)

An operator shall by 1 March each year report to the pollution control authorities on greenhouse gas emissions during the previous calendar year to which the duty to surrender allowances applies.

The King may by regulations or in individual cases lay down further provisions on reporting, including the information to be provided and how emissions are to be calculated or measured.

§ 17. (control by the pollution control authorities)

The pollution control authorities will control and verify the reports on greenhouse gas emissions submitted by each operator pursuant to section 16. Verification of an emissions report is an individual decision pursuant to the Public Administration Act.

The King may by regulations or an individual decision decide that the emissions report from an operator shall be verified by an independent third party before it is submitted. The King may by regulations lay down further provisions on requirements relating to and accreditation of verification bodies, including how verification reports are to be drawn up and their contents.

The King may by regulations prescribe that the costs incurred by the pollution control authorities in verifying emissions reports pursuant to this section are to be met by the operators.

§ 18. (requirement to provide information or make investigations)

The pollution control authority may require operators to provide information or carry out or pay for investigations or other measures it is reasonable to require to determine whether it is necessary to alter the provisions on reporting laid down pursuant to section 16.

Chapter 5. Penal measures

§ 19. (suspension of the right to transfer allowances)

If, by 1 April in any year, an operator has not reported his emissions pursuant to the provisions of section 16 or provisions laid down pursuant thereto, the pollution control authorities shall suspend the right of the said operator to transfer allowances within the registry of allowances until a satisfactory report on emissions has been provided.

§ 20. (coercive fines)

In the event of contravention of the duty to report on emissions pursuant to section 16, the pollution control authorities may impose a coercive fine to the state. The coercive fine becomes effective if the operator fails to meet the deadline for remedying the matter set by the pollution control authorities. The coercive fine shall continue to be effective for as long as the unlawful situation persists.

A coercive fine shall be imposed on the operator pursuant to section 4. An order to pay a coercive fine is enforceable by execution proceedings. The pollution control authorities may waive a coercive fine that has been imposed.

§ 21. (excess emissions fine)

If an operator has not complied with his duties pursuant to section 13, first paragraph, the pollution control authorities shall impose an excess emissions fine payable to the public treasury. The excess emissions fine shall correspond to EUR 100 on the due date for each tonne of greenhouse gases for which reporting is mandatory and for which no allowances have been surrendered to the appropriate account in accordance with section 13, first paragraph. The fine becomes due for payment 14 days after the demand for payment. Should a fine not be paid within the time stipulated, interest is to be paid according to the provisions of the Act of 17 December 1976 No. 100 relating to interest on overdue payments. An order to pay an excess emissions fine is enforceable by execution proceedings. The King may by regulations alter the amount of the excess emissions fine.

The names of operators on whom excess emissions fines are imposed and the volumes of emissions for which no allowances have been surrendered shall be open to the public.

§ 22. (penal measures)

Any person who wilfully or through negligence contravenes the provisions on the duty to provide notification set out in section 10 or provisions on the duty to report emissions laid down in or pursuant to section 16 of this Act is liable to fines or to a term of imprisonment not exceeding three months or both.

Chapter 6. Final provisions

§ 23. (amendments to other acts)

The Act of 13 March 1981 No. 6 relating to protection against pollution and to waste shall be amended as follows:

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§ 24. (entry into force)

This Act enters into force on 1 January 2005.