Regarding compliance with the requirements of the EU ETS Directive from 1st of January 2023

In response to our customer inquiries regarding the requirements that will come into force, according to the EU ETS Directive 2003/87/EC and RED II (EU) 2018/2001 Directive to use certified biomass from the 1^st of January 2023, we hereby inform our exchange participants of the applicable measures we are implementing to ensure compliance with the requirements of the aforesaid directives:

• By 31 December 2022, the amendments to the rules for the centralised trading in biomass will be approved by the Ministry of Energy of Lithuania. Following these amendments, the evaluation principles to determine which forms of biomass are considered sustainable will be established by 1 January 2023. Among other things, these principles provide that:

1. Biomass supplied according to the transactions entered into before 31 December 2022 is automatically considered sustainable.
2. Data on the biomass compliance with the sustainability requirements, for the participants who will choose a national sustainability scheme, will be collected through Baltpool after 1 January 2023.

• From 1 January 2023, a new type of contract – “Sustainable Biomass” – will be introduced by Baltpool for international biomass exchanges. Under this contract, the biomass suppliers will be obliged to provide Baltpool with information about the country of origin of the biomass supplied, and the type of raw material, among other data.
• Baltpool will take care of the collection of the required information about the supplied biomass received from the suppliers and will apply the required measures to ensure the data’s reliability and its compliance with the EU ETS and RED II Directives.
• At the end of 2023, Baltpool will provide a confirmation to each buyer, based on the data provided by the suppliers, detailing the quantity of biomass received by each biomass buyer, according to the “Sustainable Biomass” transactions entered into on the energy exchange, that has met the sustainability requirements.
• This quantity will be considered the biomass that meets the sustainability requirements under both the EU ETS and RED II Directives.

What steps should be taken by buyers covered by the EU ETS and/or RED II Directive in order to meet the sustainability requirements in force from 1 January 2023:

• From 1 January 2023, only enter into transactions on the exchange which bear the “Sustainable Biomass” tag.
• Baltpool will take care of the collection of all the required information about the sustainability of the biomass from the suppliers.

What steps should be taken by sellers aiming to sell sustainable biomass from 1 January 2023:

• Include the “Sustainable Biomass” tag when placing orders on the exchange.
• During the transaction execution period, provide Baltpool with the specified information about the origin of the supplied biomass and the type of raw material (information about the form in which this information must be provided will be announced in the near future).

It should also be noted that the participants who are planning to use the voluntary biomass certification system, in order to meet the sustainability requirements of RED II, can also use these schemes in order to meet the requirements of the ETS Directive from 1 January 2023.

For customers from Latvia and Estonia: We are open for discussions and cooperation with the relevant national authorities in Latvia and Estonia, in order to align our information collection and verification principles with the local legal requirements. If the local authorities recognise that the principles we apply meet their requirements, the Latvian and Estonian participants will be able to use the “Sustainable Biomass” transactions to demonstrate their compliance with the requirements of the EU ETS and RED II Directives from 1 January 2023.

If you have any questions, please contact us.