http://www.legislation.gov.uk/id/uksi/2020/1265

Allowances18.

(1)

The UK ETS authority may F1create allowances in the registry for the purposes of the UK ETS.

(2)

An allowance is an allowance to emit 1 tonne of carbon dioxide equivalent.

F2(3)

Allowances may be held only in accounts in the registry.

Cap for trading period19.

The number of allowances created in the trading period may not exceed the sum of—

(a)

736,013,432 multiplied by the 2021-2025 hospital and small emitter reduction factor; and

(b)

630,152,247 multiplied by the 2026-2030 hospital and small emitter reduction factor.

Cap for scheme years20.

F3(1)

The number of allowances created in a scheme year may not exceed the sum of—

(a)

the base for the scheme year multiplied by—

(i)

if the scheme year is in the 2021-2025 allocation period, the 2021-2025 hospital and small emitter reduction factor;

(ii)

if the scheme year is in the 2026-2030 allocation period, the 2026-2030 hospital and small emitter reduction factor; and

(b)

the balance of allowances in the new entrants' reserve on 1st January in the scheme year (see article 34G for the new entrants' reserve).

(2)

Paragraph (1) is subject to any direction given by the UK ETS authority for the creation of allowances for allocation under regulations made by the Treasury under the Finance Act 2020 M1 F4or for the creation of up to 40,984,970 allowances in the trading period for the purpose of free allocation in respect of installations.

(3)

But such a direction may not override article 19.

Cap: hospital and small emitter reduction factors21.

(1)

This article applies for the purposes of articles 19 and 20.

(2)

The 2021-2025 hospital and small emitter reduction factor is (RE₁– SI₁)/RE₁, where—

RE₁is the total reportable emissions (within the meaning of GGETSR 2012) in 2016, 2017 and 2018 of all installations (within the meaning of GGETSR 2012) and all UK aircraft operators (within the meaning of GGETSR 2012);
SI₁is the total reportable emissions (within the meaning of GGETSR 2012) in 2016, 2017 and 2018 of all installations included in the hospital and small emitter list for 2021-2025.

(3)

The 2026-2030 hospital and small emitter reduction factor is (RE₂- SI₂)/RE₂, where—

RE₂is the total reportable emissions and the total aviation emissions, expressed in tonnes, in the 2021, 2022 and 2023 scheme years of all installations and all aircraft operators;
SI₂is the total reportable emissions in the 2021, 2022 and 2023 scheme years of all installations included in the hospital and small emitter list for 2026-2030.

(4)

In this article, a reference to reportable emissions or aviation emissions is a reference to reportable emissions or aviation emissions—

(a)

verified F5as satisfactory in accordance with the Verification Regulation 2012 or the Verification Regulation 2018;

F6(aa)

determined under regulation 44 of GGETSR 2012 or article 45 of this Order;

(b)

where relevant, set out in an emissions report accompanied by the notice or declaration referred to in paragraph 3(8)(b)(ii) of Schedule 5 to GGETSR 2012 or paragraph 11(2)(b)(ii) of Schedule 7 to this Order; or

(c)

where relevant, considered to be verified under regulation 35(7) of GGETSR 2012 or article 33(2) of this Order.

Cap: base for scheme years22.

For the purposes of article 20, the base 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	Base
2021	155,671,581
2022	151,437,134
2023	147,202,686
2024	142,968,239
2025	138,733,792
2026	134,499,344
2027	130,264,897
2028	126,030,449
2029	121,796,002
2030	117,561,555

Trading in allowances23.

Allowances may be traded, except where prohibited by other legislation.

PART 2Basic elements of the UK ETS

CHAPTER 2Allowances and caps