# Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (Text with EEA relevance), Division 4.2: Unreasonable costs

Extent: E+W+S+N.I.

Where an operator claims that applying a specific determination methodology incurs unreasonable costs, the regulator shall assess the unreasonable nature of the costs, taking into account the operator's justification.
The regulator shall consider costs unreasonable where the operator's cost estimation exceeds the benefit of a specific determination methodology. To that end, the benefit shall be calculated by multiplying an improvement factor with a reference price of £20 per allowance and costs shall include an appropriate depreciation period based on the economic lifetime of the equipment, where applicable.
The improvement factor shall be 1 % of the most recently determined sub-installation's annual allocation free of charge. By way of derogation from this calculation method, the regulator may allow operators to determine the improvement factor as 1 % of the affected CO2 equivalent. The affected CO2 equivalent shall be one the following, depending on the parameter for which the improvement of methodology is considered:
(a)In the case of a fuel or material containing carbon, including waste gases, the emissions that would result if the carbon contained in the annual quantity of the fuel or material were converted into CO2;
(b)In the case of emissions monitored by a measurement-based methodology, the annual emissions of the respective emission source;
(c)In the case of measurable heat, the respective annual amount of measurable heat multiplied by the heat benchmark;
(d)In the case of non-measurable heat, the respective annual amount of non-measurable heat multiplied by the fuel benchmark;
(e)In the case of electricity, the respective annual amount of electricity multiplied by the factor specified in Article 22(3);
(f)In the case of the quantity of a product for which a product benchmark applies, the sub-installation's preliminary annual number of emission allowances allocated free of charge determined in accordance with Article 16(2) for the first year of the respective allocation period. Where the relevant benchmark for the 2027-2030 allocation period is not set out in Annex 8, the benchmark for the 2021-2025 allocation period shall be used.
Measures relating to the improvement of an installation's monitoring methodology shall not be deemed to incur unreasonable costs up to an accumulated amount of £2,000 per year. For installations with low emissions in accordance with Article 47 of the Monitoring and Reporting Regulation 2018 that threshold shall be £500 per year.

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Source: https://www.legislation.gov.uk/eur/2019/331/annex/VII/division/4/division/4.2 (the official version)
Page: https://openlegislation.uk/eu-regulation-2019-331/annex-VII/division-4/division-4.2
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.