# The Greenhouse Gas Emissions Trading Scheme Order 2020, Paragraph 4: Calculation and approval of final allocation


(1) This paragraph applies where—
(a) either—
(i) the installation’s hospital or small emitter permit is converted into a greenhouse gas emissions permit; or
(ii) a greenhouse gas emissions permit is issued for the installation; ...
(b) a monitoring methodology plan is approved in relation to the installation under Article 8 of the Free Allocation Regulation ; and
(c) the operator submits to the regulator either—
(i) a report on every sub-installation referred to in paragraph 3(1)(b) in accordance with that paragraph; or
(ii) a statement that no such report is required.
(2) The regulator must as soon as reasonably practicable—
(za) where relevant, determine the historical activity level of every sub-installation referred to in paragraph 3(1)(b) in accordance with Article 17(1) of the Free Allocation Regulation;
(a) calculate the final annual number of allowances to be allocated in respect of the installation and of each sub-installation of the installation for each eligible scheme year , subject to paragraph 4(9) and (10);
(b) send the determination (if any) and calculation to the UK ETS authority.
(3) The final annual number of allowances to be allocated in respect of a sub-installation for an eligible scheme year is the preliminary annual number of allowances to be allocated for the scheme year multiplied by the reduction factor for the scheme year (as defined in Article 18a(11) of the Free Allocation Regulation), where—
(a) for sub-installations referred to in paragraph 3(1)(b), the preliminary annual number of allowances must be calculated in accordance with Article 18(1) of the Free Allocation Regulation;
(b) for all other sub-installations, the preliminary annual number of allowances is the number previously calculated under Article 16 of the Free Allocation Regulation (including any corrections required under Article 16(11)).
(4) But where the relevant notice is a notice under paragraph 7 of Schedule 8 and the first eligible scheme year is the scheme year referred to in paragraph (b)(ii) of the definition of that term in paragraph 1 of this Schedule, the final annual number of allowances to be allocated in respect of a sub-installation for the first eligible scheme year is the number calculated under sub-paragraph (3) of this paragraph multiplied by D/Y, where—
D is the number of days in the first eligible scheme year after the date on which the installation’s greenhouse gas emissions permit comes into force;
Y is the number of days in the first eligible scheme year.
(5) The final annual number of allowances to be allocated in respect of an installation for an eligible scheme year is the sum of the final annual number of allowances to be allocated in respect of all sub-installations of the installation for the scheme year.
(6) On receipt of the determination (if any) and calculation, the UK ETS authority must as soon as reasonably practicable—
(a) approve the final annual number of allowances to be allocated in respect of the installation, making any corrections to the calculation (including, in the case of a sub-installation referred to in paragraph 3(1)(b), to the historical activity level and preliminary annual number of allowances) that the UK ETS authority considers appropriate;
(b) inform the regulator accordingly.
(7) The regulator must give notice to the operator of the final annual number of allowances approved under sub-paragraph (6).
(8) For the purpose of the calculations referred to in sub-paragraphs (3) to (5), 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.
(9) Where the benchmarks for the 2028, 2029 and 2030 scheme years have not been adopted under Article 16(13)(b)(ii) or 18(9)(b)(ii) of the Free Allocation Regulation on or before 30 September 2026—
(a) the calculation referred to in paragraph 4(2)(a) of the final annual number of allowances to be allocated for any of the 2028, 2029 and 2030 scheme years must be undertaken by the regulator on or after 1st October 2027; and
(b) where the UK ETS authority approved the final number of allowances to be allocated in respect of the installation for the 2027 scheme year and an ALC adjustment applies to a sub-installation of the installation for the 2027 scheme year, the regulator must—
(i) make an equivalent adjustment to the final number of allowances to be allocated in respect of that sub-installation for the 2028, 2029 and 2030 scheme years; and
(ii) reflect this adjustment in the final number of allowances to be allocated in respect of the installation which the sub-installation forms part of.
(10) Where—
(a) the regulator has calculated the final annual number of allowances to be allocated in respect of the installation and each sub-installation for any scheme year in the 2027-2030 allocation period under paragraph 4(2)(a);
(b) the installation has at least one UK CBAM sub-installation within the meaning of Article 2(27) of the Free Allocation Regulation; and
(c) either—
(i) a different factor is provided for under Article 16(14) of the Free Allocation Regulation; or
(ii) the product benchmark or PRODCOM code of the product produced in a sub-installation that is not a UK CBAM sub-installation for the 2027-2030 allocation period is subsequently added to the relevant table in Annex 9 to the Free Allocation Regulation;
the regulator must recalculate the final number of allowances to be allocated in the relevant period in respect of that installation in accordance with paragraph 4(3) or (4), and (5).
(11) Where paragraph 4(10) applies and an ALC adjustment applies to the UK CBAM sub-installation for the scheme year immediately preceding the relevant period, the regulator must—
(a) make an equivalent adjustment to the final number of allowances to be allocated in the relevant period for the UK CBAM sub-installation; and
(b) reflect this adjustment in the final annual number of allowances to be allocated in the relevant period in respect of the installation which that UK CBAM sub-installation forms part of.
(12) Subject to paragraph 4(13), in paragraph 4(10) and (11), “relevant period” means—
(a) in the case of paragraph (10)(c)(i)—
(i) the period beginning with the scheme year for which the factor has changed under Article 16(14) of the Free Allocation Regulation and ending with the 2030 scheme year; or
(ii) where the scheme year for which the factor has changed is 2030, the 2030 scheme year;
(b) in the case of paragraph (10)(c)(ii)—
(i) the period beginning with the scheme year after the scheme year in which the product benchmark or PRODCOM code was added to the relevant table in Annex 9 to the Free Allocation Regulation and ending with the 2030 scheme year; or
(ii) where the scheme year after the scheme year in which the product benchmark or PRODCOM code was added to the relevant table is 2030, the 2030 scheme year.
(13) Where paragraph 4(9) applies and either of the following circumstances apply “relevant period” means the 2027 scheme year—
(a) the scheme year for which the factor has changed under Article 16(14) of the Free Allocation Regulation is 2027; or
(b) the scheme year after the scheme year in which the product benchmark or PRODCOM code was added to the relevant table in Annex 9 to the Free Allocation Regulation is 2027.
(14) In paragraph 4(9)(b) and (11) an “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.

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Source: https://www.legislation.gov.uk/uksi/2020/1265/schedule/8A/paragraph/4 (the official version)
Page: https://openlegislation.uk/greenhouse-gas-emissions-trading-scheme-order-2020/schedule-8A/paragraph-4
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.