The Greenhouse Gas Emissions Trading Scheme Regulations 2003

PART 3 Allowances

National Allocation Plans

18.—(1) In respect of each period specified in paragraph (2), the Secretary of State shall develop a plan in accordance with Articles 9(1) and 10 and Annex III of the Directive (a “national allocation plan”).

(2) The periods in respect of which national allocation plans shall be developed shall be—

(a) the three year period beginning on 1st January 2005 (“the first phase”); and

(b) the five year period beginning on 1st January 2008 and each subsequent five year period (“the second and subsequent phases”).

(3) The Secretary of State shall send to the Scottish Ministers, the National Assembly for Wales and the Department of the Environment—

(a) a copy of the national allocation plan developed under paragraph (1) for the first phase prior to 31st March 2004;

(b) a copy of the national allocation plan developed under paragraph (1) for the second and subsequent phases, at least 18 months before the beginning of the relevant phase;

(c) information on whether the European Commission has accepted or rejected a national allocation plan or any aspect of a plan as soon as practicable after being advised of such acceptance or rejection; and

(d) any amendment to the national allocation plan proposed by the Secretary of State as soon as practicable after its communication to the European Commission.

(4) The Secretary of State shall publish in England—

(a) the national allocation plan developed for the first phase by 31st March 2004; and

(b) the national allocation plans developed for the second and subsequent phases, at least 18 months before the beginning of the relevant phase.

(5) The Secretary of State shall publish in England information on whether the European Commission has accepted or rejected a national allocation plan or any aspect of a plan as soon as practicable after being advised of such acceptance or rejection.

(6) Where the European Commission rejects a national allocation plan under Article 9(3) of the Directive and the Secretary of State proposes an amendment to the plan, the Secretary of State shall publish in England the amendment as soon as practicable after its communication to the European Commission.

(7) The Scottish Ministers shall publish in Scotland any plan, information or amendment sent to them by the Secretary of State under paragraph (3) as soon as practicable after it is received.

(8) The National Assembly for Wales shall publish in Wales any plan, information or amendment sent to it by the Secretary of State under paragraph (3) as soon as practicable after it is received.

(9) The Department of the Environment shall publish in Northern Ireland any plan, information or amendment sent to it by the Secretary of State under paragraph (3) as soon as practicable after it is received.

(10) Subject to paragraphs (11), (12) and (13), the power under paragraph (1) is exercisable—

(a) in so far as it relates to installations situated in Scotland (other than offshore installations), only with the agreement of the Scottish Ministers; and

(b) in so far as it relates to installations situated in Wales (other than offshore installations), only with the agreement of the National Assembly for Wales; and

(c) in so far as it relates to installations situated in Northern Ireland (other than offshore installations), only with the agreement of the Department of the Environment.

(11) The Secretary of State may exercise the power under paragraph (1) in relation to installations situated in Scotland where—

(a) no agreement has been reached with the Scottish Ministers;

(b) she considers that it is necessary to do so to ensure that the United Kingdom complies with its obligations under the Directive; and

(c) she serves notice on the Scottish Ministers stating that she has decided to exercise the power under paragraph (1) in relation to Scotland for the phase specified in the notice.

(12) The Secretary of State may exercise the power under paragraph (1) in relation to installations situated in Wales where—

(a) no agreement has been reached with the National Assembly for Wales;

(b) she considers that it is necessary to do so to ensure that the United Kingdom complies with its obligations under the Directive; and

(c) she serves notice on the National Assembly for Wales stating that she has decided to exercise the power under paragraph (1) in relation to Wales for the phase specified in the notice.

(13) The Secretary of State may exercise the power under paragraph (1) in relation to installations situated in Northern Ireland where—

(a) no agreement has been reached with the Department of the Environment;

(b) she considers that it is necessary to do so to ensure that the United Kingdom complies with its obligations under the Directive; and

(c) she serves notice on the Department of the Environment stating that she has decided to exercise the power under paragraph (1) in relation to Northern Ireland for the phase specified in the notice.

Allocation and issue of allowances

19.—(1) For each phase referred to in regulation 18(2), the Secretary of State shall decide upon—

(a) the total quantity of allowances to be allocated for that phase;

(b) the allocation of allowances to each installation including the number of those allowances to be issued in each scheme year in that phase; and

(c) where there is more than one greenhouse gas emissions permit relating to an installation, the division of the allowances allocated to that installation under sub-paragraph (b) between each part of the installation to which a separate greenhouse gas emissions permit relates.

(2) Decisions under paragraph (1) shall—

(a) be based upon the national allocation plan for the relevant phase as accepted by the European Commission under Article 9 of the Directive; and

(b) take due account of comments from the public in accordance with the provisions of the national allocation plan.

(3) The Secretary of State shall publish in England her decision under paragraph (1)—

(a) in respect of the first phase, by 1st October 2004; and

(b) in respect of the second and subsequent phases, at least twelve months before the beginning of the relevant phase.

(4) The Secretary of State shall notify the Scottish Ministers, the National Assembly for Wales and the Department of the Environment of her decision under paragraph (1).

(5) Subject to paragraphs (6), (8) and (9), the number of allowances issued each scheme year under regulation 20(3)(b) in respect of each permitted installation shall be the amount allocated in the decision under paragraph (1)(b), and if applicable, (1)(c) to that installation and, subject to paragraph (7), shall be issued by 28th February in each scheme year of each phase referred to in regulation 18(2) to the holder of the greenhouse gas emissions permit in respect of that installation.

(6) Where allowances allocated in respect of an installation in any phase referred to in regulation 18(2)(b) are cancelled in accordance with Article 13(3) of the Directive, allowances equal to the number of allowances cancelled shall be issued to the holder of the greenhouse gas emissions permit in respect of that installation for the following phase.

(7) Where, after the decision in paragraph (1) has been made, a partial transfer under regulation 14(5) is effected in relation to an installation, the allowances allocated to that installation under paragraph (1)(b), and if applicable, (1)(c), or issued in respect of that installation under paragraph (6) shall be issued for each scheme year remaining in the phase during which the transfer occurred to the holder of the original greenhouse gas emissions permit.

(8) Where the European Commission has provided for additional allowances to be allocated in respect of an installation, or installations of any description, under Article 29(1) of the Directive, the Secretary of State may issue such additional allowances as have been authorised by the European Commission to the holder of the greenhouse gas emissions permit in respect of that installation or of each installation falling within that description.

(9) Where—

(a) a person has made a statement which is false or misleading in a material particular in response to a request for information from the Secretary of State for the purposes of developing a national allocation plan under regulation 18(1) or failed to correct any such statement made for that purpose before the entry into force of these Regulations; and

(b) as a result of that statement the number allocated in respect of an installation to which the statement relates in a decision under paragraph (1)(b) or, if applicable, (1)(c) is greater than it would otherwise have been,

the number of allowances to be issued under regulation 20(3)(b) in respect of that installation in each scheme year in the recovery phase shall be the amount provided for in a supplementary decision by the Secretary of State.

(10) A supplementary decision under paragraph (9) shall ensure that the total number of allowances issued in respect of an installation in the phase to which the supplementary decision applies shall be reduced by the amount by which the numbers provided for in the decision under paragraph (1)(b) or, if applicable, (1)(c) in respect of the preceding phase exceeded the number that the decision under paragraph (1)(b) or, if applicable, (1)(c) would have provided for that installation if the statement referred to in paragraph (9)(a) had not been false or misleading.

(11) The Secretary of State shall as soon as practicable publish her supplementary decision under paragraph (9) in England and shall notify the Scottish Ministers, the National Assembly for Wales and the Department of the Environment of her decision.

(12) The Scottish Ministers shall publish in Scotland any decision notified to them under paragraph (4) or (11) as soon as practicable on notification.

(13) The National Assembly for Wales shall publish in Wales any decision notified to them under paragraph (4) or (11) as soon as practicable on notification.

(14) The Department of the Environment shall publish in Northern Ireland any decision notified to them under paragraph (4) or (11) as soon as practicable on notification.

(15) Subject to paragraphs (16), (17) and (18), the power under paragraphs (1) and (9) is exercisable—

(a) in so far as it relates to installations situated in Scotland (other than offshore installations), only with the agreement of the Scottish Ministers;

(b) in so far as it relates to installations situated in Wales (other than offshore installations), only with the agreement of the National Assembly for Wales; and

(c) in so far as it relates to installations situated in Northern Ireland (other than offshore installations), only with the agreement of the Department of the Environment.

(16) The Secretary of State may exercise the power under paragraph (1) or (9) in relation to installations situated in Scotland where—

(a) no agreement has been reached with the Scottish Ministers;

(b) she considers that it is necessary to do so to ensure that the United Kingdom complies with its obligations under the Directive; and

(c) she serves a notice on the Scottish Ministers stating that she has decided to exercise the power under paragraph (1) in relation to Scotland.

(17) The Secretary of State may exercise the power under paragraph (1) or (9) in relation to installations situated in Wales where—

(a) no agreement has been reached with the National Assembly for Wales;

(b) she considers that it is necessary to do so to ensure that the United Kingdom complies with its obligations under the Directive; and

(c) she serves a notice on the National Assembly for Wales stating that she has decided to exercise the power under paragraph (1) in relation to Wales.

(18) The Secretary of State may exercise the power under paragraph (1) or (9) in relation to installations situated in Northern Ireland where—

(a) no agreement has been reached with the Department of the Environment;

(b) she considers that it is necessary to do so to ensure that the United Kingdom complies with its obligations under the Directive; and

(c) she serves a notice on the Department of the Environment stating that she has decided to exercise the power under paragraph (1) in relation to Northern Ireland.

(19) In paragraph (9), the “recovery phase” means the earliest phase for which allowances allocated to that installation under paragraph (1)(b) or (1)(c) have not already been issued under regulation 20(3)(b).

Registry

20.—(1) The Secretary of State shall establish and maintain a registry in accordance with the requirements of Article 19 of the Directive.

(2) The Secretary of State shall ensure that the registry operates so that allowances are transferred, surrendered and cancelled in accordance with Articles 12 and 13 of the Directive.

(3) For the purpose of performing her duties under paragraphs (1) and (2), the Secretary of State shall carry out the following functions in respect of the registry—

(a) opening accounts in the names of operators and other persons;

(b) issuing allowances into accounts;

(c) transferring allowances;

(d) cancelling allowances;

(e) arranging for the surrender of allowances;

(f) suspending accounts;

(g) closing accounts; and

(h) correcting errors and omissions in relation to the issue, transfer, cancellation or surrender of allowances.

(4) Where—

(a) an operator fails to submit to the regulator the report required to be submitted to the regulator by conditions of the greenhouse gas emissions permit imposed pursuant to regulation 10(2)(a)(ii) or the report submitted is incomplete; or

(b) the report submitted to the regulator in accordance with conditions of the greenhouse gas emissions permit imposed pursuant to regulation 10(2)(a)(ii) or part of such report cannot be verified in accordance with the condition imposed pursuant to regulation 10(2)(b),

the operator or, where the installation is covered by a notice under regulation 21(10)(b) authorising a pool, the pool administrator, may not make further transfers of allowances until the report has been submitted to the regulator and has been verified in accordance with the conditions of the greenhouse gas emissions permit imposed pursuant to regulation 10(2)(b) or the regulator has notified a determination in accordance with regulation 24.

(5) To the extent to which any function under paragraph (3) is exercisable in relation to a particular installation, the Secretary of State may delegate that function to the regulator of that installation.

Pooling

21.—(1) One or more operators of installations to which this regulation applies may make a joint application to the appropriate authority to form a pool for the first phase or second phase referred to in regulation 18(2), or both.

(2) This regulation applies to installations which carry out activities which—

(a) fall within the same description in Schedule 1; and

(b) do not fall within any description in Annex I of Council Directive 96/61/EC concerning integrated pollution prevention and control(1).

(3) An application under paragraph (1) shall be made at least 6 months before the start of the phase in which the operators wish to form a pool and shall—

(a) identify the installations to be included in the pool;

(b) contain the names and postal addresses of the operators of those installations and, if different, any addresses to which correspondence should be sent;

(c) contain a copy of the greenhouse gas emissions permit in respect of each of those installations and identify the regulator which granted that permit;

(d) nominate a person to act as pool administrator and contain a declaration from that person that he is willing to act as pool administrator;

(e) specify whether the pool should apply for the first or second phase referred to in regulation 18(2), or both; and

(f) contain evidence that the pool administrator will be able to fulfil the obligations in paragraph (12).

(4) Where an application is duly made under paragraph (1) and the appropriate authority considers it appropriate to allow the pool—

(a) where the Secretary of State is not the appropriate authority, the appropriate authority shall send a copy of the application to the Secretary of State; and

(b) the Secretary of State shall submit the application to the European Commission.

(5) The appropriate authority shall notify—

(a) the operator of each installation to be included in the pool;

(b) the regulator or regulators for the installations to be included in the pool; and

(c) the person nominated to act as pool administrator under paragraph (3)(d),

of whether it considers it appropriate to allow the pool.

(6) If the European Commission rejects the application within 3 months of the date it receives the application—

(a) where the Secretary of State is not the appropriate authority, the Secretary of State shall notify the appropriate authority; and

(b) the appropriate authority shall notify—

(i) the operator of each installation to be included in the pool;

(ii) the regulator or regulators for the installations to be included in the pool; and

(iii) the person nominated to act as pool administrator under paragraph (3)(d),

that the application has been rejected and of the reasons given by the European Commission for the rejection.

(7) Where operators are notified under paragraph (6) that the European Commission has rejected their application, they may submit an amended application to the appropriate authority.

(8) If the appropriate authority considers that the amended application addresses the reasons given by the European Commission for rejection of the application—

(a) where the Secretary of State is not the appropriate authority, the appropriate authority shall send a copy of the amended application to the Secretary of State; and

(b) the Secretary of State shall submit the amended application to the European Commission.

(9) The appropriate authority shall notify—

(a) the operator of each installation to be included in the pool;

(b) the regulator or regulators for the installations to be included in the pool; and

(c) the person nominated to act as pool administrator under paragraph (3)(d),

of whether it considers that the amended application addresses the reasons given by the European Commission for rejection of the application.

(10) If the European Commission does not reject the application within 3 months of the date it receives the application or accepts an amended application submitted under paragraph (8)(b)—

(a) where the Secretary of State is not the appropriate authority, the Secretary of State shall notify the appropriate authority; and

(b) the appropriate authority shall serve a notice authorising the pool on—

(i) the operator of each installation to be included in the pool;

(ii) the regulator for each installation to be included in the pool; and

(iii) the person nominated to act as pool administrator under paragraph (3)(d).

(11) A notice under paragraph (10)(b) shall—

(a) identify the installations included in the pool;

(b) identify the person who will act as pool administrator;

(c) specify any conditions applying to the approval of the pool; and

(d) specify the phase for which the pool is approved.

(12) For the duration of the period for which a group of installations are covered by a notice under paragraph (10)(b) authorising the pool—

(a) the allowances issued in respect of each installation referred to in paragraph (11)(a) shall be issued to the pool administrator;

(b) the pool administrator shall surrender allowances equal to the annual reportable emissions from all the installations within the pool for which he is acting as pool administrator (as increased if required by regulation 10(4)) within 4 months of the end of the scheme year during which those emissions arose; and

(c) regulation 33 shall apply to a pool administrator who fails to comply with the obligation in sub-paragraph (b) as it applies to an operator who fails to comply with a condition imposed pursuant to regulation 10(3).

(13) An operator of an installation which is included in a notice authorising a pool in accordance with paragraph (11)(a) shall be deemed to be in compliance with any condition of a greenhouse gas emissions permit imposed pursuant to regulation 10(3).

(14) Where the pool administrator fails to pay a civil penalty under regulation 33 by the due date determined in accordance with regulation 35(4), the appropriate authority shall revoke the notice under paragraph (10)(b) authorising the pool.

(15) For the purposes of this regulation, where an application to form a pool relates to installations in more than one country of the United Kingdom, the appropriate authority in relation to the application and any subsequent pool shall be the Secretary of State.

(16) Where the Secretary of State is the appropriate authority by virtue of paragraph (15), she shall exercise the powers under paragraphs (4) and (8)—

(a) in so far as they relate to installations situated in Scotland (other than offshore installations), only with the agreement of the Scottish Ministers;

(b) in so far as they relate to installations situated in Wales (other than offshore installations), only with the agreement of the National Assembly for Wales; and

(c) in so far as they relate to installations situated in Northern Ireland (other than offshore installations), only with the agreement of the Department of the Environment.

(17) Where—

(a) the Secretary of State is the appropriate authority by virtue of paragraph (15);

(b) no agreement has been reached under paragraph (16) in relation to a decision under paragraph (4); and

(c) the deadline in paragraph (3) for making an application to form a pool has passed,

the Secretary of State shall forthwith serve a notice on those persons referred to in paragraph (5) indicating that, as no agreement has been reached, it is not considered appropriate to allow the pool and providing that the operators of installations included in the application which are situated in the same country of the United Kingdom may make a new application under paragraph (1) to the appropriate authority within 2 weeks of the date of the notice under this paragraph.

(18) Where—

(a) the Secretary of State is the appropriate authority by virtue of paragraph (15);

(b) no agreement has been reached under paragraph (16) in relation to a decision under paragraph (8); and

(c) a period of 4 weeks from the date of submission of an amended application to the Secretary of State under paragraph (7) has expired,

the Secretary of State shall forthwith serve a notice on those persons referred to in paragraph (9) indicating that it has not been agreed that the amended application addresses the reasons given by the European Commission for rejection of the application to form a pool and providing that the operators of installations included in the application which are situated in the same country of the United Kingdom may submit a further amended application under paragraph (8) to the appropriate authority within 2 weeks of the date of the notice under this paragraph.

(1)

OJ No. L 257, 10.10.1996, p.26; to which there are amendments not relevant to this regulation.