Potential changes in the EU ETS scheme for Norwegian mills in 2026-2030

26 Nov 2024 08:00 CET

The Norwegian Environment Agency (In Norway: Miljødirektoratet) has given prior
notice of a potential decision to exclude Norske Skog Skogn and Norske Skog
Saugbrugs from participation in the European Union Emission Trading System (EU
ETS) in the period from 2026 to 2030, with the effect that the mills do not
receive free allocation of European Union Allowances (EUAs) in the period.

- This is a significant setback for sustainable industry and very disappointing
for everyone that has invested and prioritised a transition from fossil fuels to
renewable energy. Implementation of the revised biomass qualification criterion
will incentivise installations to continue or even increase their use of fossil
fuels. Together with industry partners and stakeholders, we will work towards
biomass being treated on equal basis to other decarbonisation measures. On the
positive side, we see positive political development for CO2 compensation being
reintroduced in Austria, which would neutralize the effects of exclusion from
free allocation of EUAs in Norway, says CEO Geir Drangsland.

The basis for exclusion is the implementation of a revised qualification
criterion in the EU ETS scheme for 2026 to 2030. The criterion results in the
exclusion of installations, in which the qualification period between 2019 and
2023 on average, have more than 95% of greenhouse gas (GHG) emissions coming
from sustainable biomass, as defined under the Renewable Energy Directive II
(RED II), instead of fossil fuels. Thus, installations that have successfully
reduced their fossil carbon footprint will no longer be rewarded for being
sustainability leaders in their industries. Installations that are excluded from
the EU ETS scheme will not be required to surrender EUAs for their GHG
emissions.

If the decision to exclude Norske Skog Skogn and Norske Skog Saugbrugs is made,
the mills will neither receive free allocation of EUAs nor be obligated to
surrender any EUAs to cover GHG emissions from 1 January 2026 to 31 December
2030. The new qualification criterion does not affect Norske Skog Golbey or
Norske Skog Bruck, nor the relevant CO2 compensation schemes in Norway.

For 2025, Norske Skog Saugbrugs and Norske Skog Skogn expect to sell about 150
000 EUAs net.



For further information:
Norske Skog media:
Vice President Communication and Public Affairs
Carsten Dybevig
Email: carsten.dybevig@norskeskog.com
Mob: +47 917 63 117

Norske Skog financial markets:
Vice President Corporate Finance
Even Lund
Email: even.lund@norskeskog.com
Mob: +47 906 12 919

More information:
Access the news on Oslo Bors NewsWeb site

633148_241126 - Norske Skog - CO2 allowances.pdf