The Greenhouse Gas Emissions Trading Scheme Regulations 2012 No. 3038

Regulation 16(3)

SCHEDULE 6 U.K. Allocation and adjustment of allowances

Interpretation U.K.

1.—(1) In this Schedule—

(a) “the allocation table” has the meaning given by regulation 79(2);

(b) “new entrant reserve” means the reserve of allowances provided for under Article 10a(7) of the Directive;

[F1 (ba) “partial cessation” means a reduction in activity levels at a sub-installation of an installation, as described in paragraph 8(2);]

(c) “preliminary total annual amount of allowances” is that amount as calculated in accordance with Article 19(3) of the Free Allocation Decision;

(d) “verified” means verified as satisfactory in accordance with Article 8 of the Free Allocation Decision (except that the reference to Decision 2007/589/EC in Article 8(3) is to be read as a reference to the Verification Regulation);

(e) “year” means a scheme year in the trading period 2013 to 2020.

(2) In this Schedule, the following expressions have the meanings given to them in Article 3 of the Free Allocation Decision—

• “added capacity” (see Article 3(l));

• “incumbent installation” (see Article 3(a));

• “reduced capacity” (see Article 3(m));

• “significant capacity extension” (see Article 3(i));

• “significant capacity reduction” (see Article 3(j));

• “start of changed operation” (see Article 3(o));

• “start of normal operation” (see Article 3(n)).

F2 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Sch. 6 para. 1(1)(ba) inserted (4.12.2015) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2015 (S.I. 2015/1849), regs. 1(1), 13(2)

F2 Sch. 6 para. 1(3) omitted (4.12.2015) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2015 (S.I. 2015/1849), regs. 1(1), 13(3)

[F3 Application U.K.

1A.— (1) Subject to sub-paragraph (2), this Schedule does not apply—

(a) to an installation that, by virtue of Article 10a(3) of the Directive, is not eligible for an allocation;

(b) where—

(i) a significant capacity extension;

(ii) a significant capacity reduction; or

(iii) a partial cessation,

occurs while the installation is an excluded installation;

(c) where an installation permanently ceases the carrying out of regulated activities by virtue of meeting the conditions in paragraph 7(1)(a),(b) or (c) while the installation is an excluded installation; or

(d) where an installation permanently ceases the carrying out of regulated activities by virtue of meeting the condition in paragraph 7(1)(d), but only where the suspension of regulated activities occurs when the installation is an excluded installation.

(2) Paragraph 8(8) applies where—

(a) the allocation of allowances to an operator of an installation which used to be an excluded installation is reduced in accordance with paragraph 9 of Schedule 6A; and

(b) after the installation ceases to be an excluded installation, the activity of the sub-installation reaches more than the levels in paragraph 8(7)(a) or 8(7)(b) of this Schedule.]

Textual Amendments

F3 Sch. 6 para. 1A inserted (4.12.2015) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2015 (S.I. 2015/1849), regs. 1(1), 13(4)

Application for an allocation from the new entrant reserve: new entrants U.K.

2.—(1) Subject to sub-paragraph (2), where—

(a) the permit for an installation was granted on or after 30th June 2011, or

(b) the permit was granted before 30th June 2011, but the start of normal operation was on or after that date,

the operator of the installation may apply to the regulator for an allocation of allowances in respect of that installation from the new entrant reserve.

(2) [F4 Subject to paragraph 8(6) of Schedule 6A, such] an application may not be made where—

(a) the start of normal operation was before 30th June 2011; or

(b) the installation has already been included in the list referred to regulation 16(2).

(3) Any application under sub-paragraph (1) must be made—

(a) before the end of the period of twelve months beginning with the start of normal operation of the installation, or

(b) if that period expired before 1st February 2013, by that date.

(4) The application must contain—

(a) all relevant information regarding each parameter listed in Annex 5 to the Free Allocation Decision for each separate sub-installation;

(b) the initial installed capacity for each sub-installation calculated by the operator in accordance with Article 17(4) of the Free Allocation Decision; and

(c) subject to paragraph (5), a statement that the data referred to in paragraphs (a) and (b) have been verified.

(5) If the date for the submission of the application in accordance with sub-paragraph (3) falls before 30th May 2013, the statement may be submitted separately from the application and by the latter date.

(6) If the regulator approves the calculations of initial installed capacity the regulator must calculate—

(a) the activity levels of the installation in accordance with Article 18(1) and (2) of the Free Allocation Decision;

(b) the preliminary annual number of allowances to be allocated as from the start of normal operation of the installation for each sub-installation in accordance with Article 19(1) to (3) of the Free Allocation Decision; and

(c) the preliminary total annual amount of allowances to be allocated to the installation.

(7) The result of any calculation under sub-paragraph (6) must be included in the notice of the determination of an application under sub-paragraph (1).

Textual Amendments

F4 Words in Sch. 6 para. 2(2) substituted (4.12.2015) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2015 (S.I. 2015/1849), regs. 1(1), 13(5)

Application for an allocation from the new entrant reserve: significant capacity extensions U.K.

3.—(1) Where an installation had a significant capacity extension—

(a) after 30th June 2011, or

(b) on or before that date, but where the added capacity was capable of determination only after 30th September 2011,

the operator of the installation may (subject to sub-paragraph (2)) apply to the regulator for an allocation of allowances from the new entrant reserve.

(2) Any application under sub-paragraph (1) must be made—

(a) before the end of the period of twelve months beginning with—

(i) the start of changed operation of the installation, or

(ii) in the case mentioned in paragraph (1)(b), the date of determination of added capacity; or

(b) if that period expired before 1st February 2013, by that date.

(3) The application must contain—

(a) all relevant information regarding each parameter listed in Annex 5 to the Free Allocation Decision for each separate sub-installation;

(b) the installed capacity, and a calculation of the added capacity, for each such sub-installation;

(c) any other evidence necessary to demonstrate that the criteria for a significant capacity extension have been met; and

(d) subject to sub-paragraph (4), a statement that the data referred to in paragraphs (a) to (c) have been verified.

(4) If the date for the submission of the application in accordance with sub-paragraph (2) falls before 30th May 2013, the statement may be submitted separately from the application and by the latter date.

(5) If the regulator approves the calculation of added capacity the regulator must calculate—

(a) the activity levels (for the added capacity only) of the sub-installations to which the significant capacity extension applies in accordance with Article 18(1) and (2) of the Free Allocation Decision;

(b) the preliminary number of allowances to be allocated for each sub-installation insofar as the extension is concerned in accordance with Articles 19(1) to (3) and 20 of the Free Allocation Decision; and

(c) the preliminary total annual amount of allowances to be allocated to the installation insofar as the extension is concerned.

(6) The result of any calculation under sub-paragraph (5) must be included in the notice of the determination of an application under sub-paragraph (1).

Notification of preliminary annual number of allowances: new entrants and significant capacity extensions U.K.

4.—(1) The regulator must, within 28 days after the date of the notice referred to in [F5 paragraph 2(7) or 3(6)] notify the preliminary total annual amount calculated under [F6 2(6)(c) or 3(5)(c)] to—

(a) the authority;

(b) the Secretary of State (where the Secretary of State is not the authority); and

(c) the European Commission, pursuant to Article 19(4) of the Free Allocation Decision.

(2) Where the European Commission notifies the regulator that the preliminary total annual amount is rejected the regulator must, as soon as is reasonably practicable, notify the operator giving the reasons for rejection provided by the European Commission.

Textual Amendments

F5 Words in Sch. 6 para. 4(1) substituted (4.12.2015) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2015 (S.I. 2015/1849), regs. 1(1), 13(6)(a)

F6 Words in Sch. 6 para. 4(1) substituted (4.12.2015) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2015 (S.I. 2015/1849), regs. 1(1), 13(6)(b)

Calculation of final total annual amount of allowances allocated free of charge: new entrants and significant capacity extensions U.K.

5.—(1) Where the European Commission approves the preliminary total annual amount notified under paragraph 4(1), the regulator must calculate the final total annual amount of allowances allocated to the installation concerned.

(2) The regulator must, as soon as is reasonably practicable, notify the final total annual amount to—

(a) the operator;

(b) the authority;

(c) the registry administrator; and

(d) the Secretary of State (where the Secretary of State is not the authority).

(3) For the purpose of this paragraph, the final total annual amount is the preliminary total annual amount, adjusted annually by the linear reduction factor referred to in Article 10a(7) of the Directive (using the preliminary total annual amount for 2013 as a reference).

Adjustment of allocation: significant capacity reductions U.K.

6.—(1) This sub-paragraph applies where a sub-installation has had a significant capacity reduction—

(a) after 30th June 2011, or

(b) on or before that date, but the extent of the reduction could not be determined before 30th September 2011.

(2) Where sub-paragraph (1) applies the operator of the installation must, by the relevant date, submit to the regulator a notice containing—

(a) a statement of the reduced capacity, and of the installed capacity of the sub-installation after taking into account the capacity reduction; and

(b) a statement that the data submitted under paragraph (a) have been verified.

(3) For that purpose—

(a) the relevant date is the later of—

(i) the last day of the period of 7 months following the date of the change of capacity;

(ii) 31st December in the year in which that change occurred; or

(iii) 1st February 2013; but

(b) where the relevant date falls before 30th May 2013, the statement referred to in sub-paragraph (2)(b) need only be submitted by the latter date.

(4) Once the operator has submitted the information required by sub-paragraph (2) the regulator must—

(a) in accordance with Article 18 of the Free Allocation Decision, calculate the activity levels for the reduced capacity of the sub-installation to which the significant capacity reduction relates in accordance with Article 18(3) of the Free Allocation Decision;

(b) in accordance with Article 21(2) of the Free Allocation Decision, reduce the preliminary annual number of allowances allocated to each sub-installation by the preliminary annual number of allowances allocated to the sub-installation concerned calculated in accordance with Article 19(1) of the Free Allocation Decision insofar as the significant capacity reduction is concerned; and

(c) in accordance with Article 21(2) of the Free Allocation Decision, revise the preliminary total annual amount for the installation concerned in accordance with the methodology applied to determine the preliminary total annual amount prior to the significant capacity reduction.

(5) The regulator must request the registry administrator to withhold the allocation of allowances to the operator of an installation for as long as any of the following circumstances obtains—

(a) the regulator is investigating whether or not there has been a significant capacity reduction in relation to the installation;

(b) the information required under sub-paragraph (2)—

(i) has not been submitted in accordance with that sub-paragraph; or

(ii) has been submitted but is insufficient;

(c) the operator has submitted a notice under sub-paragraph (2)(a), but has not yet submitted the statement under sub-paragraph (2)(b);

(d) the regulator is carrying out functions under sub-paragraph (4);

(e) a notification has been given to the European Commission pursuant to paragraph 9(3)(d) and the notified amount of allowances has not yet been approved by the European Commission; or

(f) a notification has been made to the registry administrator under regulation 80(11) but the necessary changes to the national allocation table have not yet been made.

(6) The registry administrator must comply with a request made under sub-paragraph (5).

(7) Where the regulator makes a request under sub-paragraph (5) the regulator—

(a) must notify the operator of the decision to do so as soon as is reasonably practicable; and

(b) may, if the regulator considers it appropriate to do so, subsequently notify the operator that—

(i) the allocation of allowances will be permanently reduced; or

(ii) the allowances (or a proportion of them) will be issued.

(8) Where the European Commission approves the preliminary total annual amount of allowances notified under paragraph 9(1), the regulator must treat the installed capacity of the sub-installation after having had a significant capacity reduction as the sub-installation's initial installed capacity when assessing any subsequent significant capacity change.

Adjustment of allocation to an installation: permanent cessations of regulated activities U.K.

7.—(1) For the purposes of this paragraph, an installation permanently ceases the carrying out of regulated activities where any of the following conditions are met—

(a) the permit or a licence for the installation has been surrendered or revoked, or otherwise ceased to have effect;

(b) the operation of regulated activities at the installation is technically impossible;

(c) the installation was, but is no longer, carrying out regulated activities and it is technically impossible for it to resume doing so;

(d) subject to sub-paragraphs (2) and (3), the operator—

(i) has suspended the carrying out of regulated activities at the installation, and

(ii) the carrying out of regulated activities has not recommenced within the period of 6 months following the date of the suspension.

(2) The operator may apply to the regulator for the period of 6 months mentioned in sub-paragraph (1)(d) to be extended to a period not exceeding 18 months, on the ground that the carrying out of regulated activities at the installation cannot be recommenced within that period of 6 months due to exceptional and unforeseeable circumstances that could not have been avoided even if all due care had been exercised, and were beyond the control of the operator.

(3) Sub-paragraph (1)(d) does not apply to an installation if it is kept in reserve or on standby, or is operated on a seasonal basis, provided that—

(a) the operator holds a permit and a licence for the installation;

(b) it is technically possible to commence the carrying out of regulated activities without making physical changes to the installation; and

(c) regular maintenance of the installation is carried out.

(4) Subject to sub-paragraph (5), no allocation of allowances to an installation may be made for any year following the year in which the installation has permanently ceased the carrying out of regulated activities.

[F7 (4A) For the purpose of sub-paragraph (4), where an installation permanently ceases the carrying out of regulated activities by virtue of meeting the condition in sub-paragraph (1)(d), the date of the permanent cessation is deemed to be the date on which the operator suspends the carrying out of regulated activities at the installation.]

(5) Notwithstanding the provisions of paragraph 2(2)(b), where regulated activities at the installation recommence after the expiry of the period of 6 months following the date of suspension or any longer period allowed pursuant to sub-paragraph (2) (“the relevant period”), the operator may apply for an allocation of allowances under paragraph 2.

(6) This sub-paragraph applies where the operator—

(a) has suspended the carrying out of regulated activities at the installation; and

(b) intends to recommence regulated activities before the expiry of relevant period.

(7) Where sub-paragraph (6) applies, the operator may within a period of one month beginning with the date of suspension apply to the regulator for the suspension to be treated as temporary; and if the application is granted—

(a) allowances may be issued to the installation notwithstanding that the relevant period has not expired; but

(b) such an issue of allowances is without prejudice to sub-paragraph (4) and [F8 paragraph 11(1)(c) and (2)].

(8) An application under sub-paragraph (7) must provide evidence that the carrying out of regulated activities will recommence within the relevant period.

(9) The regulator must request the registry administrator to withhold the allocation of allowances to the operator of an installation for as long as any of the following circumstances obtains—

(a) the regulator is investigating whether or not the installation has permanently ceased the carrying out of regulated activities;

(b) an application under sub-paragraph (7) has been made but the application—

(i) has not yet been determined, or

(ii) has been refused and the relevant period has not yet expired;

(c) an application under regulation [F9 13(1)] has been made but has not yet been determined;

(d) a notice of surrender or revocation notice has been given but has not yet taken effect;

(e) an appeal against such a notice has been made but has not been determined or withdrawn;

(f) a notification has been made to the registry administrator under regulation 80(11) but the necessary changes to the allocation table have not yet been made.

(10) The registry administrator must comply with a request made under sub-paragraph (9).

(11) Where the regulator makes a request under sub-paragraph (9) the regulator—

(a) must notify the operator of the decision to do so as soon as is reasonably practicable; and

(b) may, if the regulator considers it appropriate to do so, subsequently notify the operator that—

(i) the allocation of allowances will be permanently reduced; or

(ii) the allowances (or a proportion of them) will be issued.

(12) In this paragraph—

(a) a “licence” for an installation is a permit in force issued in relation to that installation in accordance with—

(i) Directive 2008/1/EC of the European Parliament and of the Council concerning integrated pollution prevention and control F10 , as amended for time to time; or

(ii) Directive 2010/75/EU of the European Parliament and of the Council on industrial emissions (integrated pollution prevention and control) F11 , as amended for time to time;

(b) “relevant period” has the meaning given in sub-paragraph (5).

Textual Amendments

F7 Sch. 6 para. 7(4A) inserted (4.12.2015) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2015 (S.I. 2015/1849), regs. 1(1), 13(7)

F8 Words in Sch. 6 para. 7(7)(b) substituted (31.1.2014) by The Greenhouse Gas Emissions Trading Scheme and National Emissions Inventory (Amendment) Regulations 2013 (S.I. 2013/3135), regs. 1, 6(4)(a)

F9 Word in Sch. 6 para. 7(9)(c) substituted (31.1.2014) by The Greenhouse Gas Emissions Trading Scheme and National Emissions Inventory (Amendment) Regulations 2013 (S.I. 2013/3135), regs. 1, 6(4)(b)

F10 OJ No L 24, 29.1.2008, p 8.

F11 OJ No L 334, 17.12.2010, p 17.

Adjustment of allocation to an installation: partial cessation of regulated activities U.K.

8.—(1) For the purposes of this paragraph, an installation partially ceases regulated activities where sub-paragraph (2) applies in relation to that installation.

(2) This sub-paragraph applies where one sub-installation of the installation which contributes to—

(a) at least 30% of the final annual amount of allowances allocated to the installation, or

(b) the allocation of more than 50,000 allowances,

reduces its activity level in a given year by at least 50% compared to the activity level originally used for calculating the sub-installation's allocation (“initial activity level”).

(3) However, following a partial transfer, sub-paragraph (2) applies as follows—

(a) the amount of allowances transferred to the transferred units, in accordance with paragraph 3(2) of Schedule 4, is to be treated as the final annual amount of allowances allocated to the installation for the purposes of this paragraph; and

(b) the activity level calculated in accordance with paragraph 3(2)(b)(i) of Schedule 4 is to be treated as the initial activity level for the purposes of this paragraph.

(4) Where an installation partially ceases regulated activities—

(a) the operator must notify the regulator that such a reduction in activity level has occurred, stating the amount of that reduction and the sub-installation to which it applies—

(i) by 31st December in the year in which the reduction occurred, or

(ii) within one month after the date on which it occurred, if later; and

(b) the regulator must—

(i) adjust the allocation of allowances in accordance with sub-paragraph (6),

(ii) revise the preliminary annual number of allowances allocated to each sub-installation; and

(iii) revise the preliminary total annual amount of allowances to be allocated, commencing with the year following the year in which the reduction in activity level occurred.

(5) Where a sub-installation of an installation that contributes as described in sub-paragraph (2)(a) or (b) reduced its activity level in 2012 by at least 50% compared to the initial activity level—

(a) the operator must by 1st February 2013 notify the regulator that such a reduction in activity level has occurred, stating the amount of that reduction and the sub-installation to which it applies; and

(b) the regulator must take the action described in sub-paragraph (4)(b).

(6) Where the activity level of a sub-installation is reduced—

(a) by 50% or more but less than 75% compared to the initial activity level, the operator is entitled to receive a quantity of allowances representing half of the final annual amount of allocated allowances in respect of that sub-installation, commencing with the year following the year during which the reduction took place;

(b) by 75% or more but less than 90% compared to the initial activity level, the operator is entitled to receive a quantity of allowances representing 25% of the final annual amount of allocated allowances in respect of that sub-installation, commencing with the year following the year during which the reduction took place;

(c) by 90% or more, the operator is entitled to no allowances in respect of that sub-installation, commencing with the year following the year during which the reduction took place.

(7) Where, following such reduction, the activity level of a sub-installation subsequently reaches more than—

(a) 50% compared to the initial activity level, the operator is entitled to receive a quantity of allowances equal to the full quantity of the final annual amount of allowances allocated in respect of that sub-installation, commencing with the year following the year during which the activity level exceeded 50%;

(b) 25% compared to the initial activity level, the operator is entitled to receive a quantity of allowances equal to half of the final annual amount of allowances allocated in respect of that sub-installation, commencing with the year following the year during which the activity level exceeded 25%.

(8) Where sub-paragraph (7) applies—

(a) the operator must take the action described in sub-paragraph (4)(a) in relation to the subsequent change; and

(b) the regulator must—

(i) adjust the allocation of allowances in accordance with sub-paragraph (7);

(ii) revise the preliminary annual number of allowances allocated to each sub-installation; and

(iii) revise the preliminary total annual amount of allowances to be allocated, commencing with the year following the year in which the subsequent change occurred.

(9) The regulator must request the registry administrator to withhold the allocation of allowances to the operator of an installation for as long as any of the following circumstances obtains—

(a) the regulator is investigating whether or not the installation has partially ceased regulated activities;

(b) the information required under sub-paragraph (4)—

(i) has not been submitted in accordance with that sub-paragraph; or

(ii) has been submitted but is insufficient;

(c) the regulator is carrying out functions under sub-paragraph (4)(b);

(d) a notification has been given to the European Commission pursuant to paragraph 9(3)(d) and the notified amount of allowances has not yet been approved by it;

(e) a notification has been made to the registry administrator under regulation 80(11) but the necessary changes to the allocation table have not yet been made.

(10) The registry administrator must comply with a request made under sub-paragraph (9).

(11) Where the regulator has made a request under sub-paragraph (9) the regulator—

(a) must notify the operator of the decision to do so as soon as is reasonably practicable; and

(b) may, if the regulator considers it appropriate to do so, subsequently notify the operator that—

(i) the allocation of allowances will be permanently reduced; or

(ii) the allowances (or a proportion of them) will be issued.

(12) In this paragraph “activity level” means (subject to sub-paragraph (3)(b)) the activity level used for calculating the sub-installation's allocation in accordance with Article 9 of the Free Allocation Decision (or, where applicable, Article 18).

Notification of preliminary annual number of allowances: significant capacity reductions and partial cessation of regulated activities U.K.

9.—(1) The regulator must, within 28 days after the date of making a calculation under—

(a) paragraph 6(4)(c) (significant capacity reductions); or

(b) paragraph 8(4)(b) or (8)(b) (partial cessation of regulated activities),

notify the revised preliminary total annual amount of allowances to the persons mentioned in sub-paragraph (3).

(2) A notice given to the operator under paragraph (1) may specify a period within which a fee for making the calculation must be paid.

(3) Those persons are—

(a) the operator;

(b) the authority;

(c) the Secretary of State (where the Secretary of State is not the authority); and

(d) the European Commission, pursuant to Article 24(2) of the Free Allocation Decision.

(4) Where the European Commission notifies the regulator that the revised preliminary total annual amount of allowances is rejected the regulator must, as soon as is reasonably practicable, notify the operator giving the reasons for rejection provided by the European Commission.

Calculation of final total annual amount of allowances: significant capacity reductions and partial cessation of regulated activities U.K.

10.—(1) Where the European Commission approves the revised preliminary total annual amount of allowances notified under paragraph 9(1), the regulator must calculate the revised final total annual amount of allowances allocated to the installation concerned.

(2) For the purposes of sub-paragraph (1) the final total annual amount is—

(a) the revised preliminary total annual amount notified under paragraph 9(1), but

(b) in the case of a significant capacity reduction, that amount as adjusted by multiplying that number of allowances by the cross-sectoral correction factor under Article 10(9) of the Free Allocation Decision.

(3) The regulator must, as soon as is reasonably practicable, notify the final total annual amount to—

(a) the operator;

(b) the registry administrator;

(c) the authority; and

(d) the Secretary of State (where the Secretary of State is not the authority).

Recovery of allowances U.K.

11.—(1) This sub-paragraph applies where an operator (“P”) has been issued allowances to which P is not entitled as a result, in particular, of—

(a) a failure to notify the regulator of any change to an installation's capacity, activity level or operation;

(b) the installation's allocation not being adjusted in sufficient time to prevent such an over-allocation of allowances;

(c) the installation having permanently ceased the carrying out of regulated activities despite allowances having been issued under paragraph 7(7); or

(d) an error of the regulator or registry administrator.

(2) Where sub-paragraph (1) applies, the regulator must give a notice to P instructing P to return a sum of allowances equal to those to which P is not entitled.

(3) The notice under [F12 sub-paragraph (2)] must specify—

(a) the number of allowances to which the operator is not entitled;

(b) the reasons why the operator is not entitled to those allowances;

(c) the process by which those allowances must be returned; and

(d) the date by which those allowances must be returned.

(4) An operator must comply with a notice given under sub-paragraph (2).

Textual Amendments

F12 Words in Sch. 6 para. 11(3) substituted (31.1.2014) by The Greenhouse Gas Emissions Trading Scheme and National Emissions Inventory (Amendment) Regulations 2013 (S.I. 2013/3135), regs. 1, 6(4)(c)