The Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021

PART 3 U.K. Auction Calendar

Calendar for individual auctions U.K.

8.—(1) The auctioneer must determine the auction calendar, including the bidding windows, individual volumes, auction dates as well as the auctioned product, payment and delivery dates of the allowances to be auctioned in individual auctions each calendar year, and provide the auction calendar to the appointed auction platform.

(2) The appointed auction platform must publish the auction calendar for a year by 15 July of the preceding year or as soon as practicable after that date.

Commencement Information

I1 Reg. 8 in force at 22.4.2021, see reg. 1(2)

Annual volumes of allowances U.K.

9.—(1)  [F1 Except as otherwise provided in these Regulations, the volume] of allowances to be auctioned in any calendar year must be AC – [F2 (AFA + IC + RFS + NER + BF)][F3 + T], where—

[F4 (a) AC for the calendar year is the base for that year determined in accordance with paragraph (10)(a) multiplied by—

(i) in the case of a calendar year up to and including 2025, the 2021-2025 hospital and small emitter reduction factor calculated in accordance with article 21(2) of the Trading Scheme Order;

(ii) in the case of a calendar year from 2026 up to and including 2030, the 2026-2030 hospital and small emitter reduction factor calculated in accordance with article 21(3) of the Trading Scheme Order;]

(b) [F5 in relation to a calendar year corresponding to a scheme year in the 2021-2025 allocation period,] “AFA” is—

(i) total number of allowances to be allocated free of charge under article 34K of the Trading Scheme Order (the aviation free allocation) in the scheme year, or

(ii) if the number in paragraph (i) is not known, the notional number of allowances to be allocated in the scheme year in question as part of the aviation free allocation, determined in accordance with paragraph (9),

[F6 (ba) in relation to any other calendar year, AFA is zero;]

[F7 (c) IC for the calendar year is the number of allowances determined in accordance with paragraph (10)(b);

(d) RFS for the calendar year is the number of allowances determined in accordance with paragraph (10)(c);

(e) NER for the calendar year is the number of allowances determined in accordance with paragraph (10)(d);]

[F8 (f) BF means—

(i) if part of the volume of allowances to be auctioned in the calendar year has been brought forward to increase the volume of allowances auctioned in a previous calendar year in accordance with measures authorised under regulation 12(1)(b)(i), the volume of allowances brought forward;

(ii) in any other case, zero.]

[F9 (g) T for the calendar year is the number of allowances determined in accordance with paragraph (10)(e).]

(2) Where AFA as determined during the calendar year under paragraph (1)(b)(i) (“AFA1”) is greater that the notional number of allowances determined under paragraph (1)(b)(ii) (“AFA2”), a number of allowances equal to AFA1 minus AFA2 is to be removed from the total number of allowances to be auctioned in that calendar year, and the auctioneer must adjust the number of allowances to be auctioned at the auctions to be held during the year after AFA1 has been established as the auctioneer considers appropriate.

(3) When AFA1 is less than AFA2, a number of allowances equal to AFA2 minus AFA1 is to be added to the total number of allowances to be auctioned in that calendar year, divided between the auctions which are to be held during that year after AFA1 has been established as the auctioneer considers appropriate.

F10 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) Any volume of allowances that may not be auctioned in a given calendar year due to the rounding required by regulation 5(1) must be accounted for in the volume of allowances to be auctioned in the subsequent calendar year.

(8) Where the volume of allowances to be auctioned in a calendar year is increased under paragraph (3), the UK ETS authority may F11 ... create additional allowances for auction in that year.

(9) For the purposes of paragraph (1)(b)(ii), the notional number of allowances to be allocated as part of the aviation free allocation in the scheme year is set out in the following table.

Scheme year	Notional aviation free allocation
2021	5,181,021
2022	5,064,474
2023	4,947,928
2024	4,831,381
2025	4,714,835
F12 . . .	F12 . . .
F12 . . .	F12 . . .
F12 . . .	F12 . . .
F12 . . .	F12 . . .
F12 . . .	F12 . . .

[F13 (10) For the purposes of paragraph (1), for a calendar year referred to in column 1 of the following table—

(a) the base is the number of allowances set out in the corresponding entry in column 2;

(b) IC is the number of allowances set out in the corresponding entry in column 3;

(c) RFS is the number of allowances set out in the corresponding entry in column 4;

(d) NER is the number of allowances set out in the corresponding entry in column 5;

(e) T is the number of allowances set out in the corresponding entry in column 6.

Column 1 Calendar or scheme year	Column 2 Base	Column 3 IC	Column 4 RFS	Column 5 NER	Column 6 T
2021	155,671,581	57,856,572	4,098,497	3,024,907	0
2022	151,437,134	56,273,432	4,098,497	3,024,907	0
2023	147,202,686	54,690,292	4,098,497	3,024,907	0
2024	92,062,882	36,825,153	2,255,107	1,664,388	23,316,495
2025	86,742,014	34,696,806	2,255,107	1,664,387	13,323,712
2026	79,059,690	31,623,876	2,255,107	1,664,387	9,992,784
2027	70,127,996	28,051,198	2,255,107	1,664,387	6,661,856
2028	53,498,502	21,399,401	2,255,106	1,664,387	0
2029	50,918,572	20,367,429	2,255,106	1,664,387	0
2030	49,320,164	19,728,066	2,255,106	1,664,387	0]

Textual Amendments

F1 Words in reg. 9(1) substituted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 4(2)(a)(i)

F2 Words in reg. 9(1) substituted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 4(2)(a)(ii)

F3 Words in reg. 9(1) inserted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(2)(a)

F4 Reg. 9(1)(a) substituted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(2)(b)

F5 Words in reg. 9(1)(b) inserted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(2)(c)

F6 Reg. 9(1)(ba) inserted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(2)(d)

F7 Reg. 9(1)(c)-(e) substituted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(2)(e)

F8 Reg. 9(1)(f) inserted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 4(2)(d)

F9 Reg. 9(1)(g) inserted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(2)(f)

F10 Reg. 9(4)-(6) omitted (25.8.2021) by virtue of The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 4(3)

F11 Words in reg. 9(8) omitted (19.5.2021) by virtue of The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2021 (S.I. 2021/561), regs. 1(2), 2(4)

F12 Words in reg. 9(9) Table omitted (4.10.2023) by virtue of The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(3)

F13 Reg. 9(10) substituted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 3(4)

Commencement Information

I2 Reg. 9 in force at 22.4.2021, see reg. 1(2)

Adjustments of the auction calendar U.K.

10.—(1) The determinations and publications of the annual volumes to be auctioned and of the bidding windows, volumes, dates, auctioned product, payment and delivery dates in connection with individual auctions pursuant to regulations 8 and 9 may not be modified except for adjustments due to any of the following—

(a) failure to sell all allowances at a preceding auction;

[F14 (aa) the calculation of the annual volume of allowances in accordance with regulation 9;]

(b) [F15 the cancellation, or a change to the date or time of the opening or close of the bidding window, of an auction] pursuant to regulation 11;

(c) any settlement failure referred to in regulation 28(5);

(d) allowances remaining in the new entrants reserve provided for in article 34G of the Trading Scheme Order;

(e) any measures authorised under regulation 12;

(f) any withholding of allowances where it is not possible to hold an auction pursuant to regulation 20(5);

(g) the necessity for an auction platform to avoid conducting an auction in breach of these Regulations or the Trading Scheme Order.

(2) Where the manner in which a modification is to be implemented is not provided for in these Regulations, the auction platform concerned may not implement that modification until it has consulted the FCA and auctioneer.

Textual Amendments

F14 Reg. 10(1)(aa) inserted (19.5.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2021 (S.I. 2021/561), regs. 1(2), 2(5)

F15 Words in reg. 10(1)(b) substituted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 5(2)

Commencement Information

I3 Reg. 10 in force at 22.4.2021, see reg. 1(2)

Circumstances preventing the conduct of auctions U.K.

11.—(1) Where appropriate, the appointed auction platform may [F16 cancel, or change the date or time of the opening or close of the bidding window of, an auction] where the proper conduct of that auction is disrupted or is likely to be disrupted.

(2) Where an auction is cancelled under paragraph (1), the volume of allowances of the cancelled auction must—

(a) be added to the next four auctions to be held by the appointed auction platform, evenly distributed, so that a quarter of the allowances which would have been sold at the cancelled auction is added at each subsequent auction; or

(b) if doing so would increase the volume of any of the next four auction to more than 125% of the volume first proposed for that auction (“the 125% volume”), any allowances in excess of the 125% volume at that auction must—

(i) be added to any other of the four auctions for which that would not be the case, or

(ii) if all the next four auctions would be increased to more than 125% of their first proposed volume, be added to the market stability mechanism account held by the UK ETS Authority.

Textual Amendments

F16 Words in reg. 11(1) substituted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 6(2)

Commencement Information

I4 Reg. 11 in force at 22.4.2021, see reg. 1(2)

[F17 Cost containment mechanism U.K.

12.— (1) Where paragraph (3) applies, the Treasury may authorise one or more of the following measures—

(a) changing the distribution of allowances to be auctioned at auctions within a calendar year;

(b) increasing the volume of allowances to be auctioned in a calendar year—

(i) by bringing forward part of the volume of allowances to be auctioned in a subsequent calendar year;

(ii) by the release for auction of up to 25% of the allowances held in the new entrants’ reserve provided for in article 34G of the Trading Scheme Order;

(iii) by the release for auction of allowances from the market stability mechanism account held by the UK ETS authority.

[F18 (iv) [F19 if, for a scheme year referred to in column 1 of the table in regulation 9(10), the number of allowances set out in the corresponding entry in column 3] exceeds the actual allocation for the scheme year (determined in accordance with paragraph (1A)), by the release for auction of allowances not exceeding the difference;

(v) by the release for auction of up to [F20 28,081,237 allowances].]

[F21 (1A) The actual allocation for a scheme year is A–B, where—

(a) A is the final annual number of allowances to be allocated for the scheme year in respect of all installations approved under Article 16b of the Free Allocation Regulation (final allocation at installation level for incumbent installations);

(b) B is the total of any of that number that, although approved as mentioned in sub-paragraph (a), were not in fact so allocated (or, if allocated, were subsequently returned) by reason of a reduction in the allocation for the scheme year in consequence of any approval of the UK ETS authority under a provision referred to in article 34C(1)(b), (c), (e) [F22 and (f)] [F22 , (f) and (j)] of the Trading Scheme Order (activity level changes, renunciation, cessation [F23 and errors] [F23 , errors and electricity generators that state they will not produce electricity for sale for consumption outside the installation but subsequently do so]).

(1B) In paragraph (1A), a reference to the final annual number of allowances approved under Article 16b of the Free Allocation Regulation to be allocated in respect of all installations includes the number that would have been so approved but for any error in an application for free allocation made under that Regulation or of the regulator or the UK ETS authority in the exercise of functions under that Regulation in consequence of which the UK ETS authority approves, under article 34H(6) of the Trading Scheme Order, an increase to the final annual number of allowances originally approved under Article 16b.

(1C) In paragraphs (1A) and (1B), “installation” does not include an installation referred to—

(a) if the scheme year is in the 2021-2025 allocation period, in article 34A(4)(b) and (c) of the Trading Scheme Order (installations that ceased operation, or whose permit was revoked, on or before 31st December 2020);

(b) if the scheme year is in the 2026-2030 allocation period, in article 34A(7)(b) and (c) of the Trading Scheme Order (installations that ceased operation, or whose permit was revoked, on or before 31st December 2025).]

[F24 (1D) For the purposes of paragraph (1)(b)(iv)—

(a) the references in paragraphs (1A) and (1B) to the final annual number of allowances approved under Article 16b of the Free Allocation Regulation must be read as including, in relation to allowances to be allocated for the 2024 and 2025 scheme years, a reference to any increase added to the amount included in column A of the allocation table under article 34B(3A) of the Trading Scheme Order (free allocation for 2024 and 2025 scheme years: lime and malt extract);

(b) the reference in paragraph (1B) to an error in an application for free allocation under the Free Allocation Regulation must be read as including a reference to an error in any information provided under article 20(4) of the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2023;

(c) the reference in paragraph (1B) to the exercise of functions under the Free Allocation Regulation must be read as including a reference to the exercise of functions under article 20 of the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2023.]

(2) Where the Treasury authorises increasing the volume of allowances to be auctioned in a calendar year under paragraph (1)(b), the UK ETS authority may create additional allowances for auction in that year.

(3) This paragraph applies where the monthly average carbon price is more than—

(a) 2 x the 2-year average carbon price for 3 consecutive months, if the last consecutive month is in 2021;

(b) 2.5 x the 2-year average carbon price for 3 consecutive months, if the last consecutive month is in 2022; or

(c) 3 x the 2-year average carbon price for 6 consecutive months, if the last consecutive month is in 2023 or any subsequent year.

(4) For the purposes of paragraph (3)—

(a) the “monthly average carbon price” for any month must be calculated—

(i) by dividing the sum of the end of day settlement prices of the relevant December futures contract as traded on the relevant carbon market exchange for each relevant day in the month by the number of relevant days in the month, or

(ii) if the relevant December futures contract was not traded on the relevant carbon market exchange in the month, by dividing the sum of the end of day settlement prices of the relevant December futures contract as traded on the largest carbon market exchange (as determined by volume of sales of relevant December futures contracts during the month) for each relevant day in the month by the number of relevant days in the month;

(b) the “2-year average carbon price” must be calculated by dividing the sum of the end of day settlement prices of the relevant December futures contract as traded on the relevant carbon market exchange for each relevant day in the 24 months ending with the last month before the first month of the period of 3 or, as the case may be, 6 months referred to in paragraph (3) by the number of relevant days in the 24-month period.

(5) In this regulation—

“end of day settlement price”, in relation to the relevant December futures contract, means the end of day settlement price per tonne of carbon dioxide equivalent published by the carbon market exchange on which the relevant December futures contract is traded expressed in pounds sterling or, where expressed in Euros, converted to pounds sterling by reference to the Bank of England daily spot exchange rate for that day;

“[F25 EU allowance]” means an allowance to emit 1 tonne of carbon dioxide equivalent during a specified period that is valid for the purposes of meeting the requirements of Directive 2003/87/EC of the European Parliament and of the Council of 13th October 2003 establishing a system for greenhouse gas emission allowance trading within the Union and is transferable in accordance with the provisions of that directive;

“relevant carbon market exchange”—

(a)

in relation to the trading of the relevant December futures contract on a day in 2019, 2020 or 2021 means the carbon market exchange operated by ICE Futures Europe (company no. 01528617);

(b)

in relation to the trading of the relevant December futures contract on a day in any subsequent year (the “relevant year”), the largest carbon market exchange as determined by volume of sales of relevant December futures contract during the calendar year preceding the relevant year;

“relevant day” means a day for which an end of day settlement price is published;

“relevant December futures contract”, in relation to a day in the month referred to in paragraph (4)(a) or the 24-month period referred to in paragraph (4)(b), means—

(a)

if the day falls in January to November of 2019 or 2020, a futures contract for EU allowances deliverable in December of the year in which the day falls;

(b)

if the day falls in December of 2019 or 2020, a futures contract for EU allowances deliverable in December of the year after the year in which the day falls;

(c)

if the day falls in January to November of 2021 or a subsequent year, a futures contract for allowances deliverable in December of the year in which the day falls;

(d)

if the day falls in December of 2021 or a subsequent year, a futures contract for allowances deliverable in December of the year after the year in which the day falls.]

Textual Amendments

F17 Reg. 12 substituted (19.5.2021) by The Recognised Auction Platforms and Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2021 (S.I. 2021/513), regs. 1(2), 9

F18 Reg. 12(1)(b)(iv)(v) inserted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 7(2)

F19 Words in reg. 12(1)(b)(iv) substituted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 4(2)(a)

F20 Words in reg. 12(1)(b)(v) substituted (4.10.2023) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(2), 4(2)(b)

F21 Reg. 12(1A)-(1C) inserted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 7(3)

F22 Words in reg. 12(1A)(b) substituted (E.W.S.) (1.1.2024 immediately after S.I. 2023/850 comes into force) by The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2023 (S.I. 2023/1387), arts. 2(1), 23(2)(a)

F23 Words in reg. 12(1A)(b) substituted (E.W.S.) (1.1.2024 immediately after S.I. 2023/850 comes into force) by The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2023 (S.I. 2023/1387), arts. 2(1), 23(2)(b)

F24 Reg. 12(1D) inserted (1.1.2024) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) Regulations 2023 (S.I. 2023/994), regs. 1(3), 4(3)

F25 Words in reg. 12(5) substituted (25.8.2021) by The Greenhouse Gas Emissions Trading Scheme Auctioning (Amendment) (No. 2) Regulations 2021 (S.I. 2021/917), regs. 1(2), 7(4)

Commencement Information

I5 Reg. 12 in force at 22.4.2021, see reg. 1(2)