Commission Delegated Regulation (EU) 2019/331Dangos y teitl llawn

CHAPTER I U.K. General provisions

Article 1 U.K. Scope

This Regulation shall apply to the free allocation of [F1 allowances to installations under the UK ETS].

Textual Amendments

F1 Words in Art. 1 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 3(2)

Article 2 U.K. Definitions

[F2 1.] For the purposes of this Regulation, the following definitions apply:

(1)

[F3 ‘incumbent installation’ means an installation in respect of which a deemed application for free allocation in the 2021-2025 allocation period or an application for free allocation in the 2026-2030 allocation period under Article 4 is made;]

(2)

‘product benchmark sub-installation’ means inputs, outputs and corresponding emissions relating to the production of a product for which a benchmark has been set in Annex I;

(3)

‘heat benchmark sub-installation’ means inputs, outputs and corresponding emissions not covered by a product benchmark sub-installation relating to the production other than produced from electricity, the import from an installation covered by the EU ETS [F4 or UK ETS], or both, of measurable heat which is:

(a)

consumed within the installation's boundaries for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, or

(b)

exported to an installation or other entity not covered by the EU ETS [F4 or UK ETS] other than district heating with the exception of the export for the production of electricity;

(4)

‘district heating’ means the distribution of measurable heat for the purpose of heating or cooling of space or of production of domestic hot water, through a network, to buildings or sites not covered by EU ETS [F5 or UK ETS] with the exception of measurable heat used for the production of products and related activities or the production of electricity;

(5)

‘district heating sub-installation’ means inputs, outputs and corresponding emissions not covered by a product benchmark sub-installation relating to the production, the import from an installation covered by the EU ETS [F6 or UK ETS], or both, of measurable heat which is exported for the purposes of district heating;

(6)

‘fuel benchmark sub-installation’ means inputs, outputs and corresponding emissions not covered by a product benchmark sub-installation relating to the production of non-measurable heat by fuel combustion consumed for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, including safety flaring;

(7)

‘measurable heat’ means a net heat flow transported through identifiable pipelines or ducts using a heat transfer medium, such as, in particular, steam, hot air, water, oil, liquid metals and salts, for which a heat meter is or could be installed;

(8)

‘heat meter’ means a thermal energy meter (MI-004) within the meaning of Annex VI to Directive 2014/32/EU of the European Parliament and of the Council(1) or any other device to measure and record the amount of thermal energy produced based upon flow volumes and temperatures;

(9)

‘non-measurable heat’ means all heat other than measurable heat;

(10)

‘process emissions sub-installation’ means [F7 emissions of greenhouse gases set out in column 2 of table C in Schedule 2 to the UK ETS Order] other than carbon dioxide, which occur outside the system boundaries of a product benchmark listed in Annex I to this Regulation, or carbon dioxide emissions, which occur outside the system boundaries of a product benchmark listed in Annex I to this Regulation, as a direct and immediate result of any of the following processes and emissions stemming from the combustion of waste gases for the purpose of the production of measurable heat, non-measurable heat or electricity, provided that emissions that would have occurred from the combustion of an amount of natural gas, equivalent to the technically usable energy content of the combusted incompletely oxidised carbon, are subtracted:

(a)

the chemical, electrolytic or pyrometallurgical reduction of metal compounds in ores, concentrates and secondary materials for a primary purpose other than the generation of heat;

(b)

the removal of impurities from metals and metal compounds for a primary purpose other than the generation of heat;

(c)

the decomposition of carbonates, excluding those for flue gas scrubbing for a primary purpose other than the generation of heat;

(d)

chemical syntheses of products and intermediate products where the carbon bearing material participates in the reaction, for a primary purpose other than the generation of heat;

(e)

the use of carbon containing additives or raw materials for a primary purpose other than the generation of heat;

(f)

the chemical or electrolytic reduction of metalloid oxides or non-metal oxides such as silicon oxides and phosphates for a primary purpose other than the generation of heat;

(11)

‘waste gas’ means a gas containing incompletely oxidised carbon in a gaseous state under standard conditions which is a result of any of the processes listed in point (10), where ‘standard conditions’ means temperature of 273,15 K and pressure conditions of 101 325 Pa defining normal cubic metres (Nm³) according to [F8 Article 3(52) of the Monitoring and Reporting Regulation 2018];

(12)

‘start of normal operation’ means the first day of operations;

(13)

‘safety flaring’ means the combustion of pilot fuels and highly fluctuating amounts of process or residual gases in a unit open to atmospheric disturbances which is explicitly required for safety reasons by relevant permits for the installation;

(14)

[F9 ‘baseline period’ means:

(a)

in relation to a deemed application for free allocation in the 2021-2025 allocation period or an incumbent installation in respect of which such an application is made, the 5-year period beginning on 1 January 2014;

(b)

in relation to an application for free allocation in the 2026-2030 allocation period under Article 4 or an incumbent installation in respect of which such an application is made, the 5-year period beginning on 1 January 2019;]

(15)

F10 ...

(16)

‘uncertainty’ means a parameter, associated with the result of the determination of a quantity, that characterises the dispersion of the values that could reasonably be attributed to the particular quantity, including the effects of systematic as well as of random factors, expressed in per cent, and describes a confidence interval around the mean value comprising 95 % of inferred values taking into account any asymmetry of the distribution of values;

(17)

‘merger’ means a fusion of two or more installations already holding greenhouse gas permits provided that they are technically connected, operate on the same site and the resulting installation is covered by one greenhouse gas permit;

(18)

‘split’ means a division of an installation into two or more installations that are covered by separate greenhouse gas permits and are run by different operators.

(19)

[F11 ‘deemed application for free allocation in the 2021-2025 allocation period’ must be construed in accordance with Article 3a;

(20)

‘electricity generator’ means an installation:

(a)

that, on or after 1 January 2005, produced electricity for sale to third parties; and

(b)

at which no regulated activity other than the regulated activity referred to in column 1 of the first entry in table C in Schedule 2 to the UK ETS Order (combustion of fuels) is carried out;

(21)

‘emission allowance’ means an allowance (as defined in the UK ETS Order);

(22)

‘new entrant’ means an installation in respect of which an application for free allocation under Article 5 is made;

(23)

‘UK ETS Order’ means the Greenhouse Gas Emissions Trading Scheme Order 2020. ]

[F12 2. Expressions used in this Regulation that are defined for the purposes of the Climate Change Act 2008 or the UK ETS Order have the meanings given in that Act or Order

3. A reference in this Regulation to a “non-ETS” entity, installation or process is a reference to an entity, installation or process that is not covered by either the EU ETS or the UK ETS.]

Textual Amendments

F2 Art. 2 renumbered as Art. 2(1) (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(2)

F3 Art. 2(1)(1) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(a)

F4 Words in Art. 2(1)(3) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(b)

F5 Words in Art. 2(1)(4) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(c)

F6 Words in Art. 2(1)(5) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(d)

F7 Words in Art. 2(1)(10) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(e)

F8 Words in Art. 2(1)(11) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(f)

F9 Art. 2(1)(14) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(g)

F10 Art. 2(1)(15) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(h)

F11 Arts. 2(1)(19)-(23) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(3)(i)

F12 Art. 2(2)(3) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 4(4)

[F13 Article 2a U.K. Eligibility for free allocation

(1)

An application for free allocation of allowances may not be made under this Regulation in respect of:

(a)

an installation used for any of the following:

(i)

the capture of greenhouse gases from other installations for the purpose of transport and geological storage in a storage site;

(ii)

the transport of greenhouse gases by pipelines for geological storage in a storage site;

(iii)

the geological storage of greenhouse gases in a storage site;

(b)

an electricity generator, except in relation to measurable heat:

(i)

produced by an electricity generator that produced measurable heat by means of high-efficiency cogeneration (as defined in Article 2(34) of Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012) in the relevant period, calculated over the relevant period as a whole; or

(ii)

exported for the purposes of district heating.

(2)

For the purposes of paragraph 1(b)(i):

(a)

the “relevant period” is:

(i)

in the case of a deemed application for free allocation in the 2021-2025 allocation period or an application for free allocation in the 2026-2030 allocation period under Article 4, the baseline period;

(ii)

in the case of an application for free allocation under Article 5, the period from the start of normal operation until the end of the year before the year in which the application is made;

(b)

Directive 2012/27/EU has effect as if in Annex 2 in point (a) in the first indent after “heat and electricity” there were inserted “ ; and for the purposes of this indent, cogeneration production from cogeneration units certified under the standard applying from time to time for the purposes of the Combined Heat and Power Quality Assurance Programme that provides primary energy savings during the period of certification must be treated as providing primary energy savings of at least 10% during that period ”.]

Textual Amendments

F13 Art. 2a inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 5

F14 Article 3 U.K. National administrative arrangements

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F14 Art. 3 omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 6

[F15 Article 3a U.K. Applications for free allocation under EU ETS to be treated as applications for free allocation in 2021-2025 allocation period by operators of incumbent installations

(1)

This Article applies where before 1 January 2021, the operator of an installation made an application (an “EU ETS application”) under Article 4 for free allocation of emission allowances under the EU ETS in respect of the allocation period in the EU ETS beginning on 1 January 2021

(2)

For the purposes of this Regulation:

(a)

the EU ETS application must be treated as an application (a “deemed application for free allocation in the 2021-2025 allocation period”) by the operator of the installation for free allocation of allowances under the UK ETS in the 2021-2025 allocation period;

(b)

the determination of historical activity levels under Article 15, and anything else done in connection with the EU ETS application under this Regulation, before IP completion day must be treated as done in connection with the deemed application for free allocation in the 2021-2025 allocation period.

(3)

Without limiting paragraph 2, in this Regulation—

(a)

a reference to a monitoring methodology plan includes a monitoring methodology plan approved for the purposes of the EU ETS application;

(b)

a reference to a baseline data report or a verification report includes a baseline data report or a verification report submitted for the purposes of the EU ETS application.]

Textual Amendments

F15 Art. 3a inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 7

CHAPTER II U.K. Application, data reporting and monitoring rules

Article 4 U.K. Application for free allocation [F16 in 2026-2030 allocation period] by operators of incumbent installations

[F17 1. The operator of any of the following installations may apply to the regulator for free allocation in the 2026-2030 allocation period:

(a) an installation for which a permit is issued on or before 30 June 2024;

(b) an installation that is an ultra-small emitter for the 2024 scheme year;

(c) an installation for which an application for a permit has been made but not yet determined.

1A. An application:

(a) may not be made before 1 April 2024;

(b) must be made on or before 30 June 2024.]

2. An application for free allocation submitted pursuant to paragraph 1 shall be accompanied by the following particulars:

(a) a baseline data report [F18 verified in accordance with the Verification Regulation 2018] containing data for the installation, and its sub-installations as specified in Article 10 and Annexes I and II to this Regulation, taking into account, for the calculation of historical activity levels for specific product benchmarks, Annex III to this Regulation, containing each parameter listed in Annex IV to this Regulation and covering the baseline period F19 ...;

(b) [F20 except where a monitoring methodology plan has already been approved in relation to the installation under Article 8,] the monitoring methodology plan which formed the basis for the baseline data report and the verification report, in accordance with [F21 Article 8 and] Annex VI;

[F22 (c) the verification report on the baseline data report, which (unless the monitoring methodology plan has already been approved by the regulator) must contain the confirmation relating to the plan referred to in Article 27(3)(f) of the Verification Regulation 2018.]

[F23 3. Where an application is made in respect of an installation referred to in paragraph 1(c), the application must be treated as never having been made unless the permit is issued on or before 30 June 2024.

4. An application may be made under this Article and under either of the following at the same time:

(a) paragraph 5 of Schedule 7 to the UK ETS Order (obtaining hospital or small emitter status for 2026-2030 allocation period);

(b) paragraph 3 of Schedule 8 to that Order (obtaining ultra-small emitter status for 2026-2030 allocation period).]

Textual Amendments

F16 Words in Art. 4 heading inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(2)

F17 Art. 4(1)(1A) substituted for Art. 4(1) (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(3)

F18 Words in Art. 4(2)(a) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(4)(a)(i)

F19 Words in Art. 4(2)(a) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(4)(a)(ii)

F20 Words in Art. 4(2)(b) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(4)(b)(i)

F21 Words in Art. 4(2)(b) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(4)(b)(ii)

F22 Art. 4(2)(c) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(4)(c)

F23 Art. 4(3)(4) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 8(5)

[F24 Article 5 U.K. Application for free allocation by new entrants

1. The operator of an installation at which a regulated activity is carried out and for which a greenhouse gas emissions permit (including a greenhouse gas emissions permit within the meaning of GGETSR 2012) issued for the first time is in force may apply to the regulator:

(a) for free allocation in the 2021-2025 allocation period, if the permit is issued in the period beginning on 1 July 2019 and ending on 30 June 2024;

(b) for free allocation in the 2026-2030 allocation period, if the permit is issued in the period beginning on 1 July 2024 and ending on 30 June 2029.

2. An application may be made at any time after the end of the year in which the start of normal operation occurs.

3. But where an installation has not been operating for a full calendar year after the start of normal operation, an application may not be made unless:

(a) in the case of an application under paragraph 1(a), the start of normal operation is on or after 1 January 2021;

(b) in the case of an application under paragraph 1(b), the start of normal operation is on or after 1 January 2026.

4. For the purposes of the application, the operator must divide the installation into sub-installations in accordance with Article 10.

5. The application must set out the start of normal operation and be accompanied by:

(a) a new entrant data report, verified in accordance with the Verification Regulation 2018, containing each parameter set out in sections 1 and 2 of Annex 4 for each sub-installation separately from the start of normal operation until the end of the year before the year in which the application is made;

(b) a monitoring methodology plan in accordance with Article 8 and Annex 6;

(c) the verification report on the new entrant data report, which must contain the confirmation relating to the monitoring methodology plan referred to in Article 27(3)(f) of the Verification Regulation 2018.

6. The regulator:

(a) must assess the new entrant data report and the verification report to ensure conformity with the requirements of this Regulation;

(b) where appropriate, may request corrections by the operator of any non-conformity or error that impacts on the determination of activity levels;

(c) must not determine historical activity levels under Article 17, activity levels for the purpose of Article 18(2) or calculate the preliminary or final annual number of allowances under Article 18 or 18a unless:

(i) the regulator considers that the date set out in the application as the start of normal operation, or such other date proposed by the operator, is accurate;

(ii) the data relating to the installation has been verified as satisfactory or, where it has not been verified as satisfactory, the regulator considers that any data gaps referred to in the verifier's opinion are due to exceptional and unforeseeable circumstances that could not have been avoided even if all due care had been exercised; and

(iii) any corrections requested under point (b) have been made.]

Textual Amendments

F24 Art. 5 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 9

Article 6 U.K. General obligation to monitor

The operator of an installation, applying for or receiving free allocation F25 ... shall monitor the data to be submitted as listed in Annex IV to this Regulation, based on a monitoring methodology plan approved by the [F26 regulator] [F27 under Article 8].

Textual Amendments

F25 Words in Art. 6 omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 10(2)

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

F27 Words in Art. 6 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 10(3)

Article 7 U.K. Monitoring principles

1. Operators shall determine complete and consistent data and ensure that there are no overlaps between sub-installations and no double counting. Operators shall apply the determination methods laid down in Annex VII, exercise due diligence and use data sources representing highest achievable accuracy pursuant to section 4 of Annex VII.

2. By way of derogation from paragraph 1, the operator may use other data sources in accordance with sections 4.4 to 4.6 of Annex VII, if any of the following conditions is met:

(a) the use of most accurate data sources pursuant to section 4 of Annex VII is technically not feasible;

(b) the use of most accurate data sources pursuant to section 4 of Annex VII would incur unreasonable costs;

(c) based on a simplified uncertainty assessment identifying major sources of uncertainty and estimating their associated levels of uncertainty, the operator demonstrates to the satisfaction of the [F26 regulator] that the associated level of accuracy of the data source proposed by the operator is equivalent to or better than the level of accuracy of most accurate data sources pursuant to section 4 of Annex VII.

3. Operators shall keep complete and transparent records of all data listed in Annex IV, and supporting documents, for at least 10 years from the date of the submission of the application for free allocation [F28 (including a deemed application for free allocation in the 2021-2025 allocation period)]. The operator shall, upon request, make those data and documents available to the [F26 regulator] and to the verifier.

Textual Amendments

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

F28 Words in Art. 7(3) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 11(2)

Article 8 U.K. Content and submission of the monitoring methodology plan

1. The operator of an installation applying for free allocation pursuant to [F29 Article 4 or 5 must, except where a monitoring methodology plan has already been approved in relation to the installation under this Article, draw up] a monitoring methodology plan containing, in particular, a description of the installation and its sub-installations, the production processes and a detailed description of monitoring methodologies and data sources. The monitoring methodology plan shall comprise a detailed, complete and transparent documentation of all relevant data collection steps, and shall contain at least the elements laid down in Annex VI.

2. For each parameter listed in Annex IV, the operator shall select a monitoring method based on the principles laid down in Article 7 and on the methodological requirements laid down in Annex VII. Based on the risk assessment in accordance with Article 11(1) and control procedures referred to in Article 11(2), when selecting monitoring methods, the operator shall give preference to monitoring methods that give most reliable results, minimise the risk of data gaps, and are least prone to inherent risks, including control risks. The selected method shall be documented in the monitoring methodology plan.

3. Where Annex VI makes a reference to a procedure, F30 ... the operator shall establish, document, implement and maintain such a procedure separately from the monitoring methodology plan. The operator shall make any written documentation of the procedures available to the [F26 regulator] upon request.

F31 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F33 6. Where the operator has submitted a monitoring methodology plan to the regulator, the regulator must, by notice to the operator:

(a) if the plan is in accordance with this Regulation, approve it; or

(b) reject it.

7. A notice under paragraph 6 must be given:

(a) where the monitoring methodology plan is submitted with an application for free allocation in the 2026-2030 allocation period under Article 4, on or before 31 December 2025;

(b) where the monitoring methodology plan is submitted with an application for free allocation under Article 5, as soon as reasonably practicable after the application is made.]

Textual Amendments

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

F29 Words in Art. 8(1) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 12(2)

F30 Words in Art. 8(3) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 12(3)

F31 Art. 8(4) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 12(4)

F32 Art. 8(5) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 12(4)

F33 Art. 8(6)(7) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 12(5)

Article 9 U.K. Changes to the monitoring methodology plan

1. The operator shall regularly check whether the monitoring methodology plan reflects the nature and functioning of the installation and whether it can be improved. To this end, the operator shall take account of any recommendations for improvements included in the relevant verification report.

2. The operator shall modify the monitoring methodology plan in any of the following situations:

(a) new emissions or activity levels occur due to new activities carried out or due to the use of new fuels or materials not yet contained in the monitoring methodology plan;

(b) the use of new measuring instrument types, new sampling or analysis methods or new data sources, or other factors, lead to higher accuracy in the determination of reported data;

(c) data resulting from the previously applied monitoring methodology has been found incorrect;

(d) the monitoring methodology plan is not, or no longer, in conformity with the requirements of this Regulation;

(e) it is necessary to implement recommendations for improvement of the monitoring methodology plan contained in a verification report.

[F34 3. The operator must notify the regulator of:

(a) any significant modification (within the meaning of paragraph 5) of the monitoring methodology plan at least 14 days before making the modification or, where this is not possible, as soon as reasonably practicable; and

(b) any other modification on or before 31 December in the year in which the modification is made.]

4. Any significant modification of the monitoring methodology plan within the meaning of paragraph 5 shall be subject to approval by the [F26 regulator]. Where the [F26 regulator] considers that a modification that has been notified by the operator as significant is not significant, it shall inform the operator thereof.

5. The following modifications of the monitoring methodology plan of an installation shall be considered significant:

(a) modifications resulting from changes to the installation, in particular new sub-installations, changes to the boundaries of existing sub-installations or closures of sub-installations;

(b) a switch from a monitoring methodology laid down in sections 4.4 to 4.6 of Annex VII to another methodology laid down in those sections;

(c) the change of a default value or estimation method laid down in the monitoring methodology plan;

(d) changes requested by the [F26 regulator] to ensure conformity of the monitoring methodology plan with the requirements of this Regulation.

6. The operator shall keep records of all modifications of the monitoring methodology plan. In each record, the following shall be specified:

(a) a transparent description of the modification;

(b) a justification for the modification;

(c) the date of notification of the intended modification to the [F26 regulator];

(d) the date of acknowledgement, by the [F26 regulator], of the receipt of the notification referred to paragraph 3, where available, and the date of the approval or provision of information referred to in paragraph 4;

(e) the starting date of implementation of the modified monitoring methodology plan.

Textual Amendments

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

F34 Art. 9(3) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 13(2)

Article 10 U.K. Division into sub-installations

1. For the purposes of data reporting and of monitoring [F35 under this Regulation and the Activity Level Changes Regulation], the operator shall divide each installation F36 ... into sub-installations. For this purpose, the installation's inputs, outputs and emissions shall be assigned to one or more sub-installations by establishing, where relevant, a method for quantifying specific fractions of relevant inputs, outputs or emissions to be assigned to individual sub-installations.

2. For attributing the installation's inputs, outputs and emissions to sub-installations, the operator shall carry out the following steps in the descending order:

(a) if any of the products as specified for product benchmarks listed in Annex I are produced in the installation, the operator shall attribute the related inputs, outputs and emissions to the product benchmark sub-installations, as applicable, applying rules set out in Annex VII;

(b) if inputs, outputs and emissions qualifying for heat benchmark or district heating sub-installations are relevant at the installation, and do not qualify for any of the sub-installations referred to in point (a), the operator shall attribute them to heat benchmark sub-installations or to district heating sub-installation, as applicable, applying the rules set out in Annex VII;

(c) if inputs, outputs and emissions qualifying for fuel benchmark sub-installations are relevant at the installation, and do not qualify for any of the sub-installations referred to in points (a) or (b), the operator shall attribute them to fuel benchmark sub-installations, as applicable, applying the rules set out in Annex VII;

(d) if inputs, outputs and emissions qualifying for process emissions sub-installations are relevant at the installation, and do not qualify for any of the sub-installations referred to in points (a), (b) or (c), the operator shall attribute them to process emissions sub-installations, as applicable, applying the rules set out in Annex VII.

3. For heat benchmark sub-installations, fuel benchmark sub-installations and process emissions sub-installations, the operator shall clearly distinguish on the basis of NACE and PRODCOM codes whether or not the relevant process serves a sector or subsector [F37 set out in the Annex to Commission Delegated Decision (EU) 2019/708]. In addition, the operator shall distinguish the amount of measurable heat which is exported for the purposes of district heating from the measurable heat which does not serve a sector or subsector deemed to be exposed to a significant risk of carbon leakage as determined in accordance with Article 10b(5) of Directive 2003/87/EC.

Where at least 95 % of the activity level of the heat benchmark sub-installations, of the fuel benchmark sub-installations or of the process emissions sub-installations, serve sectors or subsectors [F38 set out in the Annex to Commission Delegated Decision (EU) 2019/708 ] or where at least 95 % of the activity level of the heat benchmark sub-installations, of the fuel benchmark sub-installations or of the process emissions sub-installations serve sectors or subsectors [F39 other than those set out in the Annex to Commission Delegated Decision (EU) 2019/708], the operator is exempted from providing data allowing for the distinction in terms of carbon leakage exposure.

Where at least 95 % of the activity level of the district heating sub-installations or the heat benchmark sub-installations are attributable to one of these sub-installations, the operator may attribute the total activity level of these sub-installations to the one with the highest activity level.

4. Where an [F40 installation] has produced and exported measurable heat to an installation or other entity not included in the EU ETS [F41 or the UK ETS], the operator shall consider that the relevant process of the heat benchmark sub-installation for this heat does not serve a sector or subsector [F42 set out in the Annex to Commission Delegated Decision (EU) 2019/708], unless the operator provides evidence to the satisfaction of the [F26 regulator] that the consumer of the measurable heat belongs to a sector or subsector [F42 set out in the Annex to Commission Delegated Decision (EU) 2019/708].

For distinguishing measurable heat attributable to the district heating sub-installation, the operator shall provide evidence to the satisfaction of the [F26 regulator] that the measurable heat is exported to district heating.

5. By carrying out the division in accordance with paragraphs 1 and 2, the operator shall ensure all of the following:

(a) each of the installation's physical products is attributed to one sub-installation without any omission or double counting;

(b) 100 % of the quantity of all the installation's source streams and emissions as listed in the installation's monitoring plan approved in accordance with Regulation (EU) No 601/2012 [F43 or the Monitoring and Reporting Regulation 2018] are attributed to sub-installations without any omission or double counting, unless they relate to any process non-eligible for free allocation such as the production of electricity in the installation, flaring other than safety flaring which is not covered by a product benchmark sub-installation, or the production of measurable heat exported to other EU ETS [F44 or UK ETS] installations;

(c) 100 % of the quantity of net measurable heat eligible for free allocation produced within the installation, or imported or exported by the installation, as well as quantities transferred between sub-installations, are attributed to sub-installations without any omission or double counting;

(d) for all measurable heat produced, imported or exported by sub-installations, it is documented whether the measurable heat was produced in a combustion process within an EU ETS [F45 or UK ETS] installation, imported from other heat producing processes or imported from [F46 non-ETS] entities;

(e) where electricity is produced within the installation, the quantities produced within product benchmark sub-installations are attributed to these sub-installations without any omission or double counting;

(f) for each product benchmark sub-installation where exchangeability of fuel and electricity is relevant in accordance with section 2 of Annex I, the relevant amount of electricity consumed is separately identified and attributed;

(g) where a sub-installation has outputs of carbon containing materials in the form of exported fuels, products, by-products, feedstocks for other sub-installations or installations, or waste gases, those outputs are attributed to sub-installations without any omission or double counting, if not covered by point (b);

(h) CO₂ emissions occurring outside the system boundaries of a product benchmark sub-installation resulting from processes listed in points (a) to (f) of Article 2(10) are assigned to a process emissions sub-installation to the extent that it can be demonstrated to the satisfaction of the [F26 regulator] that these emissions are direct and immediate results of any of the processes listed in Article 2(10) and that they do not result from the subsequent oxidation of incompletely oxidised carbon in a gaseous state under standard conditions;

(i) where CO₂ emissions from the combustion of waste gas not serving the purpose of the production of measurable heat, non-measurable heat or electricity occur outside the system boundaries of a product benchmark sub-installation as a result of the processes listed in points (a) to (f) of Article 2(10), 75 % of the quantity of the carbon content of the waste gas shall be considered as converted to CO₂, and assigned to a process emissions sub-installation;

(j) for avoiding any double counting, products of a production process returned into the same production process are deducted from annual activity levels, as appropriate in line with product definitions laid down in Annex I;

(k) where measurable heat is recovered from processes covered by a fuel benchmark sub-installation, for avoiding double counting, the relevant amount of net measurable heat divided by a reference efficiency of 90 % is subtracted from the fuel input. The recovery of heat from processes covered by a process emissions sub-installation is treated the same way.

Textual Amendments

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

F35 Words in Art. 10(1) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(2)(a)

F36 Words in Art. 10(1) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(2)(b)

F37 Words in Art. 10(3) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(3)(a)

F38 Words in Art. 10(3) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(3)(b)(i)

F39 Words in Art. 10(3) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(3)(b)(ii)

F40 Word in Art. 10(4) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(4)(a)

F41 Words in Art. 10(4) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(4)(b)

F42 Words in Art. 10(4) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(4)(c)

F43 Words in Art. 10(5)(b) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(5)(a)(i)

F44 Words in Art. 10(5)(b) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(5)(a)(ii)

F45 Words in Art. 10(5)(d) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(5)(b)(i)

F46 Word in Art. 10(5)(d) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 14(5)(b)(ii)

Article 11 U.K. Control system

1. The operator shall identify sources of risks of errors in the data flow from primary data to final data in the baseline data report and shall establish, document, implement and maintain an effective control system to ensure that the reports resulting from data flow activities do not contain misstatements and are in conformity with the monitoring methodology plan and in compliance with this Regulation.

The operator shall make the risk assessment pursuant to the first subparagraph available to the [F26 regulator] upon request. The operator shall also make it available for the purposes of verification.

2. For the purpose of the first subparagraph of paragraph 1, the operator shall establish, document, implement and maintain written procedures for data flow activities as well as for control activities, and include references to those procedures in the monitoring methodology plan in accordance with Article 8(3).

3. Control activities referred to in paragraph 2 shall include, where applicable:

(a) quality assurance of the relevant measurement equipment;

(b) quality assurance of information technology systems ensuring that the relevant systems are designed, documented, tested, implemented, controlled and maintained in a way that ensures processing reliable, accurate and timely data in accordance with the risks identified in accordance with paragraph 1;

(c) segregation of duties in the data flow activities and control activities, as well as management of necessary competencies;

(d) internal reviews and validation of data;

(e) corrections and corrective action;

(f) control of out-sourced processes;

(g) keeping records and documentation including the management of document versions.

4. For the purposes of paragraph 3(a), the operator shall ensure that all relevant measuring equipment is calibrated, adjusted and checked at regular intervals including prior to use, and checked against measurement standards traceable to international measurement standards, where available, and proportionate to the risks identified.

Where components of the measuring systems cannot be calibrated, the operator shall identify those in the monitoring methodology plan and propose alternative control activities.

When the equipment is found not to comply with required performance, the operator shall promptly take necessary corrective action.

5. For the purposes of paragraph 3(d), the operator shall review and validate data resulting from the data flow activities referred to in paragraph 2.

Such review and validation of the data shall include:

(a) a check as to whether the data are complete;

(b) a comparison of the data that the operator has determined over the preceding baseline period and, in particular, consistency checks based on time series of greenhouse gas efficiency of each sub-installation;

(c) a comparison of data and values resulting from different operational data collection systems, in particular for production protocols, sales figures and stock figures of products to which product benchmarks relate;

(d) comparisons and completeness checks of data at installation and sub-installation level for ensuring that the requirements laid down in Article 10(5) are fulfilled.

6. For the purposes of paragraph 3(e), the operator shall ensure that, where data flow activities or control activities are found not to function effectively, or not to respect the rules set in the documentation of procedures for those activities, corrective action is taken and affected data is corrected without undue delay.

7. For the purposes of paragraph 3(f), where the operator outsources one or more data flow activities or control activities referred to in paragraph 1, the operator shall proceed to all of the following:

(a) check the quality of the outsourced data flow activities and control activities in accordance with this Regulation;

(b) define appropriate requirements for the outputs of the outsourced processes as well as the methods used in those processes;

(c) check the quality of the outputs and methods referred to in point (b) of this paragraph;

(d) ensure that outsourced activities are carried out such that those are responsive to the inherent risks and control risks identified in the risk assessment referred to in paragraph 1.

8. The operator shall monitor the effectiveness of the control system, including by carrying out internal reviews and taking into account the findings of the verifier during the verification of reports for the purposes of Article 4(2).

When the operator finds the control system ineffective or not commensurate with the risks identified, it shall seek to improve the control system and update the monitoring methodology plan or the underlying written procedures for data flow activities, risk assessments and control activities, as appropriate.

Textual Amendments

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

Article 12 U.K. Data gaps

1. Where for technical reasons it is temporarily not feasible to apply the monitoring methodology plan as approved by the [F26 regulator], the operator shall apply a method based on alternative data sources listed in the monitoring methodology plan for the purpose of performing corroborative checks in accordance with Article 10(5), or, if such an alternative is not contained in the monitoring methodology plan, an alternative method which provides the highest achievable accuracy according to the generic data sources and their hierarchy laid down in section 4 of Annex VII, or a conservative estimation approach, until the conditions for application of the approved monitoring methodology plan have been restored.

The operator shall take all necessary measures to achieve a prompt application of the approved monitoring methodology plan.

2. Where data relevant for the baseline data report are missing, for which the monitoring methodology plan does not list alternative monitoring methods or alternative data sources for corroborating data or for closing the data gap, the operator shall use an appropriate estimation method for determining conservative surrogate data for the respective time period and missing parameter, in particular, based on best industry practice, recent scientific and technical knowledge, and shall provide due justification for the data gap and the use of those methods in an annex to the baseline data report.

3. Where a temporary deviation from the approved monitoring methodology plan occurs in accordance with paragraph 1, or where data relevant for the report referred to in Article 4(2)(a) or [F47 Article 5(5)(a)] are found to be missing, the operator shall without undue delay develop a written procedure for avoiding this type of data gap in the future and modify the monitoring methodology plan in accordance with Article 9(3). Furthermore, the operator shall assess whether and how the control activities referred to in Article 11(3) need to be updated and shall modify those control activities and the relevant written procedures, as appropriate.

Textual Amendments

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

F47 Words in Art. 12(3) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 15(2)

F48 Article 13 U.K. Use of electronic templates

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F48 Art. 13 omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 16

CHAPTER III U.K. Allocation rules

F49 Article 14 U.K. National implementation measures

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F49 Art. 14 omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 16

Article 15 U.K. Historical activity level for incumbent installations

1. [F50 The regulator] shall assess the baseline data reports and verification reports submitted in accordance with Article 4(2) to ensure conformity with the requirements of this Regulation. Where appropriate, the [F26 regulator] shall request corrections by the operators of any non-conformities or any errors, which impact on the determination of the historical activity levels. The [F26 regulator] may request operators to submit more data in addition to the information and documents to be provided in accordance with Article 4(2).

2. On the basis of the assessed baseline data reports and verification reports, [F51 the regulator] shall determine historical activity levels of each sub-installation and installation for the relevant baseline period. [F52 But the regulator must not determine historical activity levels for an installation unless:

(a) the data relating to an installation has been verified as satisfactory or, where it has not been verified as satisfactory, the regulator considers that any data gaps referred to in the verifier's opinion are due to exceptional and unforeseeable circumstances that could not have been avoided even if all due care had been exercised; and

(b) any corrections requested under paragraph 1 have been made.]

3. The product-related historical activity level shall, for each product for which a product benchmark has been determined as referred to in Annex I, refer to the arithmetic mean of annual historical production of that product in the installation concerned during the baseline period.

4. The heat-related historical activity level shall refer to the arithmetic mean of annual historical import from an installation covered by the EU ETS [F53 or UK ETS], production, or both, during the baseline period, of net measurable heat consumed within the installation's boundaries for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, or exported to an installation or other entity not covered by the EU ETS [F53 or UK ETS] with the exception of the export for the production of electricity expressed as terajoule per year.

The district heating-related historical activity level shall refer to the arithmetic mean of annual historical import from an installation covered by the EU ETS [F53 or UK ETS], production, or both, during the baseline period, of measurable heat which is exported for the purposes of district heating expressed as terajoule per year.

5. The fuel-related historical activity level shall refer to the arithmetic mean of annual historical consumption of fuels used for the production of non-measurable heat consumed for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, including safety flaring, during the baseline period expressed as terajoule per year.

6. For process emissions, which occurred in relation with the production of products in the installation concerned during the baseline period, the process-related historical activity level shall refer to the arithmetic mean of annual historical process emissions expressed as tonnes of carbon dioxide equivalent.

7. For the purposes of the determination of the arithmetic mean values referred to in paragraphs 3 to 6, only calendar years during which the installation has been operating for at least one day shall be taken into account.

If a sub-installation has been operating for less than two calendar years during the relevant baseline period, the historical activity levels shall be the activity levels of the first calendar year of operation after the start of normal operation of this sub-installation.

If a sub-installation has not been operating for a [F54 full calendar year] after the start of normal operation during the baseline period, the historical activity level shall be determined when the activity level report after the first [F54 full calendar year] of operation is submitted [F55 (see Article 3a of the Activity Level Changes Regulation); and in Articles 16 to 16b:

(a) “sub-installation” does not include such a sub-installation;

(b) a reference to an installation must be treated as a reference to the installation excluding such a sub-installation or, where the installation consists entirely of such sub-installations, as excluding the installation.]

8. By way of derogation from paragraph 3, [F56 the regulator] shall determine the product-related historical activity level for products to which the product benchmarks referred to in Annex III apply on the basis of the arithmetic mean of annual historical production according to the formulas set out in that Annex.

Textual Amendments

F26 Words in Regulation substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 2

F50 Words in Art. 15(1) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 17(2)

F51 Words in Art. 15(2) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 17(3)(a)

F52 Words in Art. 15(2) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 17(3)(b)

F53 Words in Art. 15(4) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 17(4)

F54 Words in Art. 15(7) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 17(5)(a)

F55 Words in Art. 15(7) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 17(5)(b)

F56 Words in Art. 15(8) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 17(6)

[F57 Article 15a U.K. Assessment of applications for free allocation by operators of incumbent installations

1. This Article applies where:

(a) a deemed application for free allocation in the 2021-2025 allocation period has been made by the operator of an incumbent installation; or

(b) an application under Article 4 for free allocation in the 2026-2030 allocation period has been made by the operator of an incumbent installation.

2. The regulator must send the information set out in paragraph 3 to the UK ETS authority:

(a) where paragraph 1(a) applies, as soon as reasonably practicable after IP completion day;

(b) where paragraph 1(b) applies, on or before 30 September 2024.

3. The information is:

(a) details of the installation, including details of any permit in force;

(b) the information contained in the baseline data report submitted with the application;

(c) the historical activity levels (if any) of the installation and each sub-installation determined under Article 15 or, if the regulator has not determined historical activity levels by virtue of Article 15(2), the regulator's explanation.

4. The UK ETS authority must as soon as reasonably practicable:

(a) assess the application for free allocation and, where relevant, the regulator's explanation under paragraph 3(c); and

(b) inform the regulator whether or not the application is valid, making any corrections to the historical activity levels that the UK ETS authority considers appropriate.

5. Where the application is not valid, the regulator must give notice to the operator of the installation of that fact and the reasons for it.

6. For the purposes of this Article, an application for free allocation is valid if:

(a) the application is one that may be made under this Regulation (see Article 2a); and

(b) the application is otherwise in accordance with this Regulation.]

Textual Amendments

F57 Art. 15a inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 18

Article 16 U.K. [F58 Preliminary allocation] at installation level for incumbent installations

[F59 1. Where the UK ETS authority informs the regulator under Article 15a(4)(b) that:

(a) a deemed application for free allocation in the 2021-2025 allocation period is valid, the regulator must calculate the preliminary annual number of allowances to be allocated in respect of the installation for each scheme year in the 2021-2025 allocation period;

(b) an application for free allocation in the 2026-2030 allocation period under Article 4 is valid, the regulator must calculate the preliminary annual number of allowances to be allocated in respect of the installation for each scheme year in the 2026-2030 allocation period.]

2. For the purpose of the calculation referred to in paragraph 1, [F60 the regulator] shall first determine the preliminary annual number of emission allowances allocated free of charge for each sub-installation separately, as follows:

(a) for product benchmark sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of that product benchmark for the relevant allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, multiplied by the relevant product-related historical activity level;

(b) for heat benchmark sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of the heat benchmark for measurable heat for the relevant allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, multiplied by the heat-related historical activity level for the consumption or export to non-ETS installations or other entities of measurable heat other than district heating;

(c) for district heating sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of the heat benchmark for measurable heat for the relevant allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, multiplied by the district heating-related historical activity level;

(d) for fuel benchmark sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of the fuel benchmark for the relevant [F61 allocation] period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, multiplied by the fuel-related historical activity level for the fuel consumed;

(e) for process emissions sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the process-related historical activity level multiplied by 0,97.

F62 ...

3. [F63 The] factors determined in Annex V to this Regulation shall be applied to the preliminary annual number of emission allowances allocated free of charge determined for each sub-installation pursuant to paragraph 2 of this Article for the year concerned where the processes in those sub-installations serve sectors or subsectors [F64 other than those set out in the Annex to Commission Delegated Decision (EU) 2019/708].

By way of derogation from the first subparagraph, for district heating sub-installations, the factor to be applied shall be 0,3.

4. Where the processes in the sub-installations referred to in paragraph 2 serve sectors or subsectors deemed to be exposed to a significant risk of carbon leakage [F65 set out in the Annex to Commission Delegated Decision (EU) 2019/708], the factor to be applied shall be 1.

5. The preliminary annual number of emission allowances allocated free of charge for sub-installations that received measurable heat from sub-installations producing products covered by the nitric acid benchmark shall be reduced by the annual historical consumption of that heat during the relevant baseline periods, multiplied by the value of the heat benchmark for this measurable heat for the relevant allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC.

[F66 In the case of an application for free allocation in the 2026-2030 allocation period under Article 4], the preliminary annual number of emission allowances allocated free of charge for product benchmark sub-installations for the relevant allocation period shall be reduced by the annual historical emissions stemming from waste gases flared, with the exception of safety flaring, and not used for the purpose of the production of measurable heat, non-measurable heat or electricity.

6. The preliminary annual amount of emission allowances allocated free of charge for each installation shall be the sum of all sub-installations' preliminary annual numbers of emission allowances allocated free of charge calculated in accordance with paragraphs 2 to 5.

Where an installation encompasses sub-installations producing pulp (short fibre kraft pulp, long fibre kraft pulp, thermo-mechanical pulp and mechanical pulp, sulphite pulp or other pulp not covered by a product benchmark) exporting measurable heat to other technically connected sub-installations, the preliminary amount of emission allowances allocated free of charge shall, without prejudice to the preliminary annual numbers of emission allowances allocated free of charge for other sub-installations of the installation concerned, only take into account the preliminary annual number of emission allowances allocated free of charge, to the extent that pulp products produced by this sub-installation are placed on the market and not processed into paper in the same or other technically connected installations.

7. When determining the preliminary annual amount of emission allowances allocated free of charge for each installation, [F67 the regulator] shall ensure that emissions or activity levels are not double-counted and that the allocation is not negative. In particular, where an intermediate product that is covered by a product benchmark according to the definition of the respective system boundaries set out in Annex I is imported by an installation, emissions shall not be double-counted when determining the preliminary annual amount of emission allowances allocated free of charge for both installations concerned.

F68 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. For the purpose of the calculations referred to in paragraphs 1 to [F69 7], the number of allowances for sub-installations and installations shall be expressed as the nearest integer [F70 , taking 0.5 as nearest to the previous integer].

[F71 10. The regulator must send the preliminary annual number of allowances calculated in respect of each installation and each sub-installation of each installation to the UK ETS authority as soon as reasonably practicable after the benchmarks for the relevant allocation period referred to in paragraphs 2 and 5 have been adopted.

11. The regulator must make any corrections to the calculation required by the UK ETS authority.

12. In this Article and in Articles 19 to 22, “relevant allocation period” means, in relation to a benchmark adopted in accordance with Article 10a(2) of Directive 2003/87/EC:

(a) in the case of a deemed application for free allocation in the 2021-2025 allocation period or an application for free allocation in the 2021-2025 allocation period under Article 5(1)(a), the allocation period in the EU ETS beginning on 1 January 2021;

(b) in the case of an application for free allocation in the 2026-2030 allocation period under Article 4 or an application for free allocation in the 2026-2030 allocation period under Article 5(1)(b), the allocation period in the EU ETS beginning on 1 January 2026.]

Textual Amendments

F58 Words in Art. 16 heading substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(2)

F59 Art. 16(1) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(3)

F60 Words in Art. 16(2) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(4)(a)(i)

F61 Word in Art. 16(2)(d) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(4)(a)(ii)

F62 Words in Art. 16(2) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(4)(b)

F63 Word in Art. 16(3) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(5)(a)

F64 Words in Art. 16(3) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(5)(b)

F65 Words in Art. 16(4) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(6)

F66 Words in Art. 16(5) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(7)

F67 Words in Art. 16(7) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(8)

F68 Art. 16(8) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(9)

F69 Word in Art. 16(9) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(10)(a)

F70 Words in Art. 16(9) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(10)(b)

F71 Art. 16(10)-(12) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(11)

[F72 Article 16a U.K. Cross-sectoral correction factors

1. This Article applies where, for a scheme year (the “relevant scheme year”) in an allocation period:

(a) the sum (“PFA”) of the preliminary annual number of allowances to be allocated in respect of all installations in the relevant scheme year calculated under Article 16 (including any corrections required under Article 16(11)) is greater than the industry cap (“IC”) for the relevant scheme year; and

(b) the amount by which PFA exceeds IC is greater than the previous unallocated amount.

2. The previous unallocated amount is TIC + FS - TFA, where:

(a) TIC is the sum of the industry cap for each scheme year in the trading period preceding the relevant scheme year;

(b) FS is 40,984,970 allowances (the flexible share);

(c) TFA is the sum of the final allocation for each scheme year in the trading period preceding the relevant scheme year.

3. The final allocation for a scheme year is the sum of—

(a) the total preliminary annual number of allowances calculated under Article 16 to be allocated in the scheme year in respect of all installations other than electricity generators multiplied by the cross-sectoral correction factor (if any) for the scheme year determined under this Article; and

(b) the total preliminary annual number of allowances calculated under Article 16 to be allocated in the scheme year in respect of all electricity generators multiplied by the cross-sectoral correction factor (if any) for the scheme year determined under this Article or, if there is no cross-sectoral correction factor for the scheme year, the reduction factor for the scheme year.

4. The UK ETS authority must determine the cross-sectoral correction factor for the relevant scheme year, that is to say the factor that reduces PFA by such amount that TIC + IC + FS = TFA + the final allocation for the relevant scheme year.

5. The UK ETS authority must, as soon as reasonably practicable, publish for each allocation period:

(a) the cross-sectoral correction factors for scheme years in the allocation period determined under paragraph 4; or

(b) if there is no cross-sectoral correction factor for any scheme year in the allocation period, a statement to that effect.

6. For the purposes of this Article:

(a) the industry cap for a scheme year set out in column 1 of table A is the number of allowances set out in the corresponding entry in column 2;

(b) the reduction factor for a scheme year set out in column 1 of table A is the value set out in the corresponding entry in column 3.

Table A

Column 1	Column 2	Column 3
Scheme year	Industry cap	Reduction factor
2021	57,856,572	0.8562
2022	56,273,432	0.8342
2023	54,690,292	0.8122
2024	53,107,152	0.7902
2025	51,524,012	0.7682
2026	49,940,872	0.7462
2027	48,357,732	0.7242
2028	46,774,592	0.7022
2029	45,191,452	0.6802
2030	43,608,312	0.6582

7. In this Article and Article 16b, “installation” does not include an installation if:

(a) a deemed application for free allocation in the 2021-2025 allocation period was made in respect of the installation and the installation is included in the hospital and small emitter list for 2021-2025 or the ultra-small emitter list for 2021-2025; or

(b) an application for free allocation in the 2026-2030 allocation period is made in respect of the installation under Article 4 and the installation is included in the hospital and small emitter list for 2026-2030 or the ultra-small emitter list for 2026-2030.

8. Accordingly, the matters referred to in paragraph 5 must not, in relation to the 2026-2030 allocation period, be published before the publication of the hospital and small emitter list for 2026-2030 and the ultra-small emitter list for 2026-2030 under the UK ETS Order (see paragraph 5(5) of Schedule 7, and paragraph 3(6) of Schedule 8, to that Order)

Textual Amendments

F72 Arts. 16a, 16b inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 20

Article 16b U.K. Final allocation at installation level for incumbent installations

1. Where the preliminary annual number of allowances to be allocated in respect of an installation has been calculated under Article 16, the regulator must, as soon as reasonably practicable after the publication of the matters referred to in Article 16a(5):

(a) calculate the final annual number of allowances to be allocated in respect of each installation and each sub-installation of each installation:

(i) in the case of a deemed application for free allocation in the 2021-2025 allocation period, for each scheme year in the 2021-2025 allocation period;

(ii) in the case of an application for free allocation in the 2026-2030 allocation period under Article 4, for each scheme year in the 2026-2030 allocation period; and

(b) send the calculation to the UK ETS authority.

2. The final annual number of allowances to be allocated for a scheme year in respect of a sub-installation is the preliminary annual number of allowances calculated under Article 16 (including any corrections required under Article 16(11)) multiplied by:

(a) in the case of sub-installation of an installation other than an electricity generator, the cross-sectoral correction factor for the scheme year (if any) determined under Article 16a;

(b) in the case of a sub-installation of an electricity generator, the cross-sectoral correction factor for the scheme year determined under Article 16a or, if there is no cross-sectoral correction factor for the scheme year, the reduction factor for the scheme year (see Article 16a(6)).

3. The final annual number of allowances to be allocated in respect of an installation for a scheme year is the sum of the final annual number of allowances to be allocated in respect of all sub-installations of the installation.

4. The UK ETS authority must:

(a) approve the final annual number allowances, making any corrections to the calculation that the UK ETS authority considers appropriate;

(b) inform the regulator accordingly.

5. For the purpose of the calculation referred to in paragraphs 2 and 3, the number of allowances for sub-installations and installations must be expressed as the nearest integer, taking 0.5 as nearest to the previous integer.]

Textual Amendments

F72 Arts. 16a, 16b inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 20

Article 17 U.K. Historical activity level for new entrants

[F73 1.] [F74 Where an application for free allocation is made under Article 5, the regulator] shall determine historical activity levels of each new entrant and its sub-installations as follows:

(a)

the product-related historical activity level shall be, for each product for which a product benchmark has been determined as referred to in Annex I to this Regulation F75 ..., the activity level of the first calendar year after the start of normal operation for the production of this product of the sub-installation concerned;

(b)

the heat-related historical activity level shall be the activity level of the first calendar year after the start of normal operation for the import from an installation covered by the EU ETS [F76 or UK ETS], production, or both, of measurable heat consumed within the installation's boundaries for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, or exported to an installation or other entity not covered by the EU ETS [F76 or UK ETS] with the exception of the export for the production of electricity;

(c)

the district heating-related historical activity level shall be the activity level of the first calendar year after the start of normal operation for the import from an installation covered by the EU ETS [F77 or UK ETS], production, or both, of measurable heat which is exported for the purposes of district heating;

(d)

the fuel-related historical activity level shall be the activity level of the first calendar year after the start of normal operation for the consumption of fuels used for the production of non-measurable heat consumed for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, including safety flaring, of the installation concerned;

(e)

the process emissions-related activity level shall be the activity level of the first calendar year after the start of normal operation for the production of process emissions of the process unit;

(f)

By way of derogation from point (a), the product-related historical activity level for products to which the product benchmarks referred to in Annex III apply shall be the activity level of the first calendar year after the start of normal operation for the production of this product of the sub-installation concerned, determined according to the formulas set out in that Annex.

[F78 2. But if a sub-installation has not been operating for a full calendar year after the start of normal operation, the historical activity level must be determined when the activity level report after the first full calendar year of operation is submitted (see Article 3a of the Activity Level Changes Regulation).]

Textual Amendments

F73 Art. 17 renumbered as Art. 17(1) (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 21(2)

F74 Words in Art. 17(1) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 21(3)(a)

F75 Words in Art. 17(1)(a) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 21(3)(b)

F76 Words in Art. 17(1)(b) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 21(3)(c)

F77 Words in Art. 17(1)(c) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 21(3)(d)

F78 Art. 17(2) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 21(4)

Article 18 U.K. [F79 Preliminary allocation] to new entrants

[F80 A1. The regulator must calculate the preliminary annual number of allowances to be allocated free of charge in respect of a new entrant for scheme years in the relevant allocation period in accordance with this Article

A2. Where the start of normal operation of a new entrant is before the date on which the permit (including a permit within the meaning of GGETSR 2012) for the installation comes into force, for the purposes of this Article and Article 18a:

(a) the start of normal operation must be treated as the date on which the permit comes into force; and

(b) the activity level of the year in which the start of normal operation occurs must be treated as the activity level of that year excluding any days before the date on which the permit comes into force.]

1. [F81 Where the historical activity level of a sub-installation of the new entrant has been determined under Article 17, the preliminary annual number of allowances to be allocated free of charge in respect of the sub-installation for the first scheme year in the relevant allocation period after the year in which the start of normal operation occurs and for each subsequent scheme year in the relevant allocation period is] as follows:

(a) for each product benchmark sub-installation, heat benchmark sub-installation and fuel benchmark sub-installation, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of that benchmark for the relevant period multiplied by the relevant historical activity level [F82 ; and in this point “benchmark for the relevant period” means the benchmark for the relevant allocation period (as defined in Article 16(12)) adopted in accordance with Article 10a(2) of Directive 2003/87/EC];

(b) for each process emissions sub-installation, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the process-related historical activity level multiplied by 0,97.

Article 16(3), (4), (5) and (7) shall apply mutatis mutandis to the calculation of the preliminary annual number of emission allowances allocated free of charge [F83 in respect of new entrants under this paragraph and paragraph 2].

2. [F84 Where the start of normal operation of a sub-installation of a new entrant occurs in a scheme year in the relevant allocation period, the preliminary] annual number of emission allowances allocated free of charge for the [F85 scheme year] shall correspond to the value of the applicable benchmark value for each sub-installation multiplied by the activity level of that year.

[F86 2A. Paragraph 2 applies whether or not the historical activity level of the sub-installation has been determined under Article 17.]

3. The preliminary annual amount of emission allowances allocated free of charge for each installation shall be the sum of all sub-installations' preliminary annual numbers of emission allowances allocated free of charge calculated in accordance with paragraphs 1 and 2. The second subparagraph of Article 16(6) shall apply.

F87 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F88 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. For the purpose of the calculations referred to in paragraphs [F89 1 to 3], the number of allowances for sub-installations and installations shall be expressed as the nearest integer [F90 , taking 0.5 as nearest to the previous integer].

[F91 7. In this Article (except as provided in paragraph 1(a)) and Article 18b, “relevant allocation period” means:

(a) in relation to an application for free allocation made under Article 5(1)(a), the 2021-2025 allocation period;

(b) in relation to an application for free allocation made under Article 5(1)(b), the 2026-2030 allocation period.]

Textual Amendments

F79 Words in Art. 18 heading substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(2)

F80 Art. 18(A1)(A2) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(3)

F81 Words in Art. 18(1) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(4)(a)(i)

F82 Words in Art. 18(1)(a) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(4)(a)(ii)

F83 Words in Art. 18(1)(b) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(4)(b)

F84 Words in Art. 18(2) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(5)(a)

F85 Words in Art. 18(2) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(5)(b)

F86 Art. 18(2A) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(6)

F87 Art. 18(4) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(7)

F88 Art. 18(5) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(7)

F89 Words in Art. 18(6) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(8)(a)

F90 Words in Art. 18(6) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(8)(b)

F91 Art. 18(7) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 22(9)

[F92 Article 18a U.K. Assessment of applications and final allocation at installation level for new entrants

1. Where an application for free allocation is made by a new entrant under Article 5, the regulator must send the information set out in paragraph 2 to the UK ETS authority as soon as reasonably practicable.

2. The information is:

(a) details of the installation, including details of the greenhouse gas emissions permit in force;

(b) the information contained in the new entrant data report submitted with the application under Article 5;

(c) the historical activity levels (if any) determined under Article 17;

(d) the preliminary annual number of allowances to be allocated in respect of the installation and of each sub-installation separately, as calculated under Article 18;

(e) where the regulator has not, by virtue of Article 5(6)(c), determined historical activity levels or the preliminary annual number of allowances, the regulator's explanation;

(f) except where point (e) applies, the final annual number of allowances to be allocated in respect of each sub-installation of the installation:

(i) for the scheme year in the relevant allocation period in which the start of normal operation of the sub-installation occurs; and

(ii) where the historical activity level of the sub-installation has been determined under Article 17, for each subsequent scheme year in the relevant allocation period;

(g) except where point (e) applies, the final annual number of allowances to be allocated in respect of the installation for each scheme year in the relevant allocation period;

(h) whether or not a monitoring methodology plan has been approved in relation to the installation under Article 8.

3. The final annual number of allowances to be allocated in respect of a sub-installation for a scheme year is the preliminary annual number of allowances calculated under Article 18 multiplied by the reduction factor for the scheme year.

4. The final annual number of allowances to be allocated in respect of an installation for a scheme year is the sum of the final annual number of allowances to be allocated in respect of all sub-installations of the installation for the scheme year.

5. The UK ETS authority must as soon as reasonably practicable:

(a) assess the application for free allocation and, where relevant, the regulator's explanation under paragraph 2(e); and

(b) inform the regulator whether or not the application is valid.

6. Where the application is valid, the UK ETS authority must also:

(a) approve the final annual number of allowances, making any corrections to the historical activity levels, preliminary annual number of allowances and final annual number of allowances that the UK ETS authority considers appropriate; and

(b) inform the regulator of the matters referred to in point (a).

7. But where a monitoring methodology plan has not been approved in relation to the installation at the date on which the information set out in paragraph 2 is sent to the UK ETS authority, paragraph 6 applies only after the regulator informs the UK ETS authority that the monitoring methodology plan submitted to the regulator for approval has been approved and does not apply if the regulator informs the UK ETS authority that the monitoring methodology plan has been rejected.

8. The regulator must give notice to the operator of the installation of the following:

(a) whether or not the application is valid;

(b) if the application is not valid, the reasons why it is not valid.

9. Where the application is valid, the regulator must also give notice to the operator:

(a) of the final annual number of allowances approved under paragraph 6; or

(b) that a final annual number of allowances has not been approved because the monitoring methodology plan submitted to the regulator for approval has been rejected.

10. For the purpose of the calculations referred to in paragraphs 3 and 4, the number of allowances for sub-installations and installations must be expressed as the nearest integer, taking 0.5 as nearest to the previous integer.

11. For the purposes of this Article, the reduction factor for a scheme year set out in column 1 of table B is the value set out in the corresponding entry in column 2.

Table B

Column 1	Column 2
Scheme year	Reduction factor
2021, 2026	1
2022, 2027	0.978
2023, 2028	0.956
2024, 2029	0.934
2025, 2030	0.912

12. For the purposes of this Article, an application for free allocation is valid if:

(a) the application is one which may be made under this Regulation (see Article 2a); and

(b) the application is otherwise in accordance with this Regulation.]

Textual Amendments

F92 Art. 18a inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 23

Article 19 U.K. Allocation in respect of steam cracking

By way of derogation from Article 16(2)(a) and Article 18(1)(a), the preliminary annual number of emission allowances allocated free of charge for a product benchmark sub-installation relating to the production of high value chemicals (‘HVC’) shall correspond to the value of the steam cracking product benchmark for the relevant allocation period multiplied by the historical activity level determined in accordance with Annex III and multiplied by the quotient of the total direct emissions including emissions from net imported heat over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F93 Article 17(1)(a)], as appropriate, calculated in accordance with Article 22(2) and expressed as tonnes of carbon dioxide equivalent and the sum of these total direct emissions and the relevant indirect emissions over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F93 Article 17(1)(a)], as appropriate, calculated in accordance with Article 22(3). To the result of that calculation, 1,78 tonnes of carbon dioxide per ton of hydrogen times the mean historical production of hydrogen from supplemental feed expressed in tons of hydrogen, 0,24 tonnes of carbon dioxide per ton of ethylene times the mean historical production of ethylene from supplemental feed expressed in tons of ethylene, and 0,16 tonnes of carbon dioxide per ton of HVC times the mean historical production of other high value chemicals than hydrogen and ethylene from supplemental feed expressed in tons of HVC, shall be added.

Textual Amendments

F93 Words in Art. 19 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 24(2)

Article 20 U.K. Allocation in respect of vinyl chloride monomer

By way of derogation from Article 16(2)(a) and Article 18(1)(a), the preliminary annual number of emission allowances allocated free of charge for a sub-installation relating to the production of vinyl chloride monomer (‘VCM’) shall correspond to the value of the VCM benchmark for the relevant allocation period multiplied by the historical activity level for VCM production expressed as tonnes and multiplied by the quotient of the direct emissions for the production of VCM including emissions from net imported heat over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F94 Article 17(1)(a)], as appropriate, calculated in accordance with Article 22(2), expressed as tonnes of carbon dioxide equivalent and the sum of those direct emissions and the hydrogen-related emissions for the production of VCM over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F94 Article 17(1)(a)], as appropriate, expressed as tonnes of carbon dioxide equivalent calculated on the basis of the historical heat consumption stemming from hydrogen combustion expressed as terajoules times the value of the heat benchmark for the relevant allocation period.

Textual Amendments

F94 Words in Art. 20 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 25(2)

Article 21 U.K. Heat flows between installations

Where a product-benchmark sub-installation encompasses measurable heat imported from an installation or other entity not included in the EU ETS [F95 or UK ETS], the preliminary annual number of emission allowances allocated free of charge for the product benchmark sub-installation concerned determined pursuant to Article 16(2)(a) or Article 18(1)(a), as appropriate, shall be reduced by the amount of heat historically imported from an installation or other entity not included in the EU ETS [F95 or UK ETS] in the year concerned multiplied by the value of the heat benchmark for measurable heat for the relevant allocation period.

Textual Amendments

F95 Words in Art. 21 inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 26(2)

Article 22 U.K. Exchangeability of fuel and electricity

1. For each product benchmark sub-installation corresponding to a product benchmark defined in section 2 of Annex I with consideration of exchangeability of fuel and electricity, the preliminary annual number of emission allowances allocated free of charge shall correspond to the value of the relevant product benchmark for the relevant allocation period multiplied by the product-related historical activity level and multiplied by the quotient of the total direct emissions including emissions from net imported heat over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F96 Article 17(1)(a)], as appropriate, calculated in accordance with paragraph 2, expressed as tonnes of carbon dioxide equivalent and the sum of these total direct emissions and the relevant indirect emissions over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F96 Article 17(1)(a)], as appropriate, calculated in accordance with paragraph 3.

2. For the purposes of the calculation of emissions from net imported heat, the amount of measurable heat for the production of the product concerned imported from installations covered by the EU ETS [F97 or UK ETS] during the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F96 Article 17(1)(a)], as appropriate, shall be multiplied by the value of the heat benchmark for the relevant allocation period.

3. For the purposes of the calculation of indirect emissions, the relevant indirect emissions refer to the relevant electricity consumption as specified in the definition of processes and emissions covered in Annex I during the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in [F96 Article 17(1)(a)], as appropriate, expressed in megawatt-hours for the production of the product concerned times 0,376 tonnes of carbon dioxide per megawatt-hour and expressed as tonnes of carbon dioxide.

Textual Amendments

F96 Word in Art. 22 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 27(2)

F97 Words in Art. 22(2) inserted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 27(3)

F98 Article 23 U.K. Changes to the allocation of an installation

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F98 Art. 23 omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 28

[F99 Article 24 U.K. Renunciation of free allocation of allowances

1. Where an installation is an FA installation for the 2021-2025 allocation period, the operator of the installation may by giving notice (a “renunciation notice”) to the regulator renounce free allocation in respect of the remaining scheme years in the 2021-2025 allocation period beginning with the scheme year after the year in which the notice is given.

2. Where an installation is an FA installation for the 2026-2030 allocation period, the operator of the installation may by giving notice (a “renunciation notice”) to the regulator renounce free allocation in respect of the remaining scheme years in the 2026-2030 allocation period beginning with the scheme year after the year in which the notice is given.

3. The renunciation notice must set out:

(a) whether the renunciation is made in respect of:

(i) the installation as a whole; or

(ii) one or more sub-installations of the installation (but not all of them); and

(b) where point (a)(ii) applies, the sub-installation or sub-installations in respect of which the renunciation is made.

4. Where a renunciation notice is given, the regulator must:

(a) recalculate the final annual number of allowances to be allocated in respect of the installation for each of the remaining scheme years of the allocation period, to take account of the renunciation notice;

(b) send the calculation to the UK ETS authority.

5. The UK ETS authority must:

(a) approve the final annual number of allowances to be allocated in respect of the installation, making any corrections that the UK ETS authority considers appropriate; and

(b) inform the regulator accordingly.

6. The regulator must inform the operator of the final annual number of allowances approved.

7. Where an application under paragraph 7 of Schedule 6 to the UK ETS Order for the transfer of a greenhouse gas emissions permit containing a statement by the new operator (as defined in paragraph 7 of that Schedule) that the new operator renounces free allocation in respect of the transferred units (as defined in that paragraph) is granted under paragraph 9 of that Schedule:

(a) for the purposes of this Article, the new operator must be treated as giving a renunciation notice in respect of the transferred units; and

(b) in the case of a transfer other than a partial transfer, for the purposes of article 4A(3)(b) and (5)(b) of the UK ETS Order, the renunciation notice must be treated as having been given by the new operator in respect of the installation as a whole.]

Textual Amendments

F99 Art. 24 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 29

[F100 Article 25 U.K. Mergers and splits

1. This Article applies where an application for the transfer of a greenhouse gas emissions permit of an installation that is an FA installation at the transfer date is granted under paragraph 9 of Schedule 6 to the UK ETS Order.

2. But this Article does not apply if the application contains a statement by the new operator (as defined in paragraph 7 of that Schedule) that the new operator renounces free allocation in respect of the transferred units (as defined in that paragraph).

3. The operators of installations (“new installations”) resulting from a merger or split must submit the following to the regulator:

(a) the relevant report or reports (see paragraphs 4 and 5);

(b) a report on the activity level of each sub-installation of each new installation in the calendar year preceding the transfer date containing the information referred to in Article 3(2) of the Activity Level Changes Regulation, as if the merger or split had taken place at the beginning of that year;

(c) a verification report on the reports referred to in points (a) and (b) in accordance with the Verification Regulation 2018.

4. In the case of a merger, the relevant report is:

(a) if at least one of the installations before the merger was an incumbent installation whose start of normal operation occurred before the end of the baseline period, a report verified in accordance with the Verification Regulation 2018 containing the data referred to in Article 4(2)(a) covering the baseline period for the new installation and its sub-installations, as if the merger had taken place at the beginning of the baseline period;

(b) in any other case, a report verified in accordance with the Verification Regulation 2018 on the activity level of the first calendar year after the start of normal operation of the following installations before the merger and their sub-installations:

(i) the installation with the earliest start of normal operation; and

(ii) any other installation whose start of normal operation occurred in the same year as the installation with the earliest start of normal operation.

5. In the case of a split, the relevant reports are:

(a) if the installation before the split was an incumbent installation whose start of normal operation occurred before the end of the baseline period, a report verified in accordance with the Verification Regulation 2018 containing the data referred to in Article 4(2)(a) covering the baseline period for each new installation and its sub-installations, as if the split had taken place at the beginning of the baseline period;

(b) in any other case, a report verified in accordance with the Verification Regulation 2018 on the activity level of the installation in the first calendar year after the start of normal operation for each new installation and its sub-installations, as if the split had taken place at the beginning of that year.

6. After assessing the reports referred to in paragraph 3, the regulator must:

(a) determine the historical activity level of each sub-installation of each new installation:

(i) where paragraph 4(a) or 5(a) applies, in accordance with Article 15;

(ii) where paragraph 4(b) or 5(b) applies in accordance with Article 17;

(b) based on the historical activity levels, calculate the preliminary and final annual number of allowances to be allocated in respect of each new installation and of each sub-installation of each new installation for each scheme year in the relevant allocation period beginning with the scheme year after the year in which the transfer date occurs:

(i) where paragraph 4(a) or 5(a) applies, in accordance with Articles 16 and 16b;

(ii) where paragraph 4(b) or 5(b) applies, in accordance with Article 18 and 18a;

(c) send the information contained in the relevant report or reports referred to in paragraph 3(a), the determination referred to in point (a) and the calculation referred to in point (b) to the UK ETS authority.

7. For the purposes of paragraph 6:

(a) where a sub-installation of an installation before a split is split into 2 or more sub-installations, the historical activity level and allocation in respect of the sub-installation of the new installation must be based on the historical activity level of the respective stationary technical units of the installation before the split;

(b) the final annual number of allowances to be allocated in respect of the new installation or installations for a scheme year must correspond to the final annual number of allowances to be allocated in respect of the installation or installations before the merger or split for the scheme year.

8. The UK ETS authority must:

(a) approve the final annual number of allowances to be allocated in respect of each new installation for each scheme year in the relevant allocation period beginning with the scheme year after the year in which the transfer date occurs, making any corrections that the UK ETS authority considers appropriate; and

(b) inform the regulator accordingly.

9. The regulator must give notice to the operator of each new installation:

(a) of the final annual number of allowances approved; and

(b) where the final annual number of allowances to be allocated in respect of a new installation for each scheme year in the relevant allocation period after the scheme year in which the transfer date occurs is zero, that the installation is not an FA installation for the relevant allocation period.

10. In this Article:

(a) “relevant allocation period” means:

(i) where any installation before the split or merger is an FA installation for the 2021-2025 allocation period, the 2021-2025 allocation period;

(ii) where any installation before the split or merger is an FA installation for the 2026-2030 allocation period, the 2026-2030 allocation period;

(b) “transfer date”, in relation to the transfer referred to in paragraph 1, has the meaning given in paragraph 9 of Schedule 6 to the UK ETS Order.]

Textual Amendments

F100 Art. 25 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 30

[F101 Article 26 U.K. Cessation of operations of an installation

1. This Article applies where:

(a) an installation that is an FA installation has ceased operation; or

(b) the greenhouse gas emissions permit of such an installation is surrendered under paragraph 11(2) of Schedule 6 to the UK ETS Order or revoked under paragraph 12(3) of that Schedule.

2. No allowances may be allocated in respect of the installation for the scheme year after the year in which the installation ceased operation or, where paragraph 1(b) applies, the surrender or revocation of the permit takes effect and for all subsequent scheme years.

3. The regulator must:

(a) recalculate the final annual number of allowances to be allocated in respect of the installation for those scheme years as zero; and

(b) send the calculation to the UK ETS authority.

4. The UK ETS authority must:

(a) approve the final annual number of allowances to be allocated in respect of the installation; and

(b) inform the regulator accordingly.

5. The regulator must give notice to the operator of the installation of the UK ETS authority's approval.]

Textual Amendments

F101 Art. 26 substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 31

CHAPTER IV U.K. Final provisions

Article 27 U.K. Repeal of Decision 2011/278/EU

Decision 2011/278/EU is repealed with effect from 1 January 2021. However, it shall continue to apply to allocations relating to the period prior to 1 January 2021.

Article 28 U.K. Entry into force

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

F102 ...

Done at Brussels, 19 December 2018.

For the Commission

The President

Jean-Claude Juncker

Textual Amendments

F102 Words in Signature omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 32