18.—(1) Article 57 is amended as follows.
(2) In paragraph (4)—
(a)for “(RE x CP) – PP” substitute “((RE – FA) x CP) – PP”;
(b)after the definition of “RE” insert—
“FA is—
(a)where—
(i)an application in respect of the installation was made under the Free Allocation Regulation for free allocation in the same allocation period as the penalty year is in; and
(ii)the UK ETS authority informed the regulator under Article 15a(4) of that Regulation that the application was valid,
the number of tonnes of carbon dioxide equivalent(1) represented by the final annual number of allowances that would have been allocated under Part 4A in respect of the installation for the penalty year if the installation had not been a hospital or small emitter for the penalty year, disregarding any adjustment to free allocation that might have been made under the Activity Level Changes Regulation;
(b)in any other case, zero;”.
Section 93(2) of the Climate Change Act 2008 defines “tonnes of carbon dioxide equivalent”.