{
  "url": "https://openlegislation.uk/greenhouse-gas-emissions-trading-scheme-amendment-no-2-order-2025/article-6",
  "json_url": "https://openlegislation.uk/greenhouse-gas-emissions-trading-scheme-amendment-no-2-order-2025/article-6.json",
  "legislation": "uksi/2025/124",
  "legislation_title": "The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025",
  "legislation_url": "https://openlegislation.uk/greenhouse-gas-emissions-trading-scheme-amendment-no-2-order-2025",
  "path": "article/6",
  "kind": "article",
  "number": "6",
  "heading": "Free allocation in 2026 allocation period: type 1 2026 incumbents",
  "text": "(1) This article applies to an installation that is a type 1 2026 incumbent after the question of whether any adjustment to free allocation under the Activity Level Changes Regulation is required in consequence of the 2025 ALC obligation has been considered.\n(2) The regulator must—\n(a) calculate the preliminary and final annual number of allowances to be allocated in respect of each sub-installation of the installation for the 2026 scheme year;\n(b) where any ALC adjustment results in a recalculation of the final annual number of allowances to be allocated in respect of the sub-installation for the 2025 scheme year, recalculate the final annual number of allowances to be allocated in respect of the sub-installation for the 2026 scheme year calculated under sub-paragraph (a) by making an equivalent adjustment to that number;\n(c) calculate the final annual number of allowances to be allocated in respect of the installation.\n(3) For the purpose of paragraph (2)(a), the preliminary annual number of allowances to be allocated in respect of a sub-installation for the 2026 scheme year is the same as the preliminary annual number of allowances to be allocated in respect of the sub-installation for the 2025 scheme year calculated for the purpose of the UK ETS.\n(4) For the purpose of paragraph (2)(a), the final annual number of allowances to be allocated in respect of a sub-installation for the 2026 scheme year is the same as the final annual number of allowances that was approved for the purpose of the UK ETS to be allocated in respect of the sub-installation for the 2025 scheme year (before any ALC adjustment) or, where relevant, would have been so approved if—\n(a) the reduction factor set out in column 3 of table A in Article 16a(6) of the Free Allocation Regulation (reduction factor for incumbent electricity generators) had been 0.7462 (and not 0.7682);\n(b) the reduction factor set out in column 2 of table B in Article 18a(11) of the Free Allocation Regulation (reduction factor for new entrants) had been 1 (and not 0.912).\n(5) For the purpose of paragraph (2)(c), the final annual number of allowances to be allocated in respect of an installation for the 2026 scheme year is the sum of the final annual number of allowances to be allocated in respect of each sub-installation of the installation for the 2026 scheme year, taking account of any recalculation referred to in paragraph (2)(b).\n(6) The regulator must as soon as reasonably practicable send the calculations and adjustments referred to in paragraph (2) to the UK ETS authority.\n(7) The UK ETS authority must—\n(a) approve the final annual number of allowances to be allocated in respect of the installation for the 2026 scheme year, making any corrections to the preliminary and final annual number of allowances that the UK ETS authority considers appropriate;\n(b) inform the regulator accordingly.\n(8) For the purpose of the calculations referred to in this article, the number of allowances to be allocated in respect of sub-installations and installations must be expressed as the nearest integer, taking 0.5 as nearest to the previous integer.\n(9) In this article—\n“2025 ALC obligation” means the obligation in Article 3 of the Activity Level Changes Regulation to report on 2024 activity levels on or before 31st March 2025;\n“ALC adjustment” means an adjustment to free allocation under the Activity Level Changes Regulation approved by the UK ETS authority under Article 6a of that Regulation in consequence of the obligation in Article 3 of that Regulation to report on activity levels up to and including activity levels in 2024;\n“sub-installation” does not include a sub-installation for which no historical activity level has been determined under the Free Allocation Regulation or the Activity Level Changes Regulation.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "C",
      "label": "C1",
      "text": "Art. 6 applied (31.3.2025) by S.I. 2020/1265, art. 34AA(7)(a) (as inserted by The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 (S.I. 2025/124), arts. 2, 20)"
    },
    {
      "type": "I",
      "label": "I1",
      "text": "Art. 6 in force at 31.3.2025, see art. 2"
    },
    {
      "type": "footnote",
      "label": "f1",
      "text": "EUR 2019/1842, amended by S.I. 2020/1557, 2022/1173, 2023/850, 2023/1387, 2025/100 and this Order. Article 4(1) of S.I. 2020/1265 defines “Activity Level Changes Regulation” as Commission Implementing Regulation (EU) 2019/1842 of 31 October 2019, as it forms part of domestic law."
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/uksi/2025/124/article/6",
    "retrieved_at": "2026-10-28T21:20:49.958171+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}