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The Greenhouse Gas Emissions Trading Scheme Order 2020

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PART 4U.K.Emissions targets

Emissions targets other than for hospital-qualifying installations may not exceed maximum amountU.K.

15.—(1) Except in the case of a hospital-qualifying installation, an emissions target for a scheme year may not exceed the maximum amount.

(2) This paragraph overrides paragraphs 16 and 17.

Commencement Information

I1Sch. 7 para. 15 in force at 12.11.2020, see art. 2(1)

Emissions targets for 2021-2025 allocation periodU.K.

16.—(1) This paragraph applies for the purpose of calculating an installation's emissions targets for the scheme years in the 2021-2025 allocation period under paragraph 11(1)(f)(i) and (iii).

(2) Where a regulated activity began to be carried out at the installation before 2019, the installation's emissions target for a scheme year is the installation's relevant emissions multiplied by the reduction factor for the scheme year.

(3) For the purpose of sub-paragraph (2), the relevant emissions of an installation are—

(a)where a regulated activity began to be carried out at the installation before 2016, the sum of the installation's reportable emissions in 2016, 2017 and 2018 divided by 3;

(b)where a regulated activity began to be carried out at the installation in 2016, the sum of the installation's reportable emissions in 2017 and 2018 divided by 2;

(c)where a regulated activity began to be carried out at the installation in 2017, the installation's reportable emissions in 2018;

(d)where a regulated activity began to be carried out at the installation in 2018, the installation's reportable emissions in 2019.

(4) Where a regulated activity began to be carried out at the installation in 2019, the installation's emissions target—

(a)for the 2021 scheme year is the 2021 estimate multiplied by the reduction factor for the 2021 scheme year;

(b)for every other scheme year (the “relevant scheme year”) in the 2021-2025 allocation period is the installation's reportable emissions in 2020 multiplied by the reduction factor for the relevant scheme year.

(5) Where a regulated activity began to be carried out at the installation in the period beginning on 1st January 2020 and ending on 31st October 2020, the installation's emissions target—

(a)for the 2021 scheme year is the 2021 estimate multiplied by the reduction factor for the 2021 scheme year;

(b)for the 2022 scheme year is the 2021 estimate multiplied by the reduction factor for the 2022 scheme year;

(c)for every other scheme year (the “relevant scheme year”) in the 2021-2025 allocation period is the installation's reportable emissions in the 2021 scheme year multiplied by the reduction factor for the relevant scheme year.

(6) In sub-paragraphs (4) and (5), “2021 estimate” means the conservative estimate of annual average emissions referred to in Article 19(4) of the Monitoring and Reporting Regulation 2012 used for the purposes of a monitoring plan submitted under that Regulation and contained in the application for a permit under GGETSR 2012 (see paragraph 1(1)(f) of Schedule 4 to GGETSR 2012).

(7) For the purpose of this paragraph, the reduction factor for a scheme year set out in column 1 of table D is the value set out in the corresponding entry in column 2.

Table D
Column 1Column 2
Scheme yearReduction factor
20210.8697
20220.8461
20230.8224
20240.7988
20250.7751

(8) In this paragraph, a reference to reportable emissions is a reference to reportable emissions (within the meaning of GGETSR 2012 or this Order)—

(a)verified [F1as satisfactory] in accordance with the Verification Regulation 2012 or the Verification Regulation 2018;

[F2(aa)determined under regulation 44 of GGETSR 2012 or article 45 of this Order; or]

(b)where relevant, set out in an emissions report accompanied by the notice or declaration referred to in paragraph 3(8)(b)(ii) of Schedule 5 to GGETSR 2012 or paragraph 11(2)(b)(ii) of this Schedule.

(9) This paragraph is subject to paragraph 14.

Emissions targets for 2026-2030 allocation periodU.K.

17.—(1) This paragraph applies for the purpose of calculating an installation's emissions targets for the scheme years in the 2026-2030 allocation period under—

(a)paragraph 11(1)(f)(ii) and (iv);

(b)paragraph 21.

(2) Where a regulated activity begins to be carried out at the installation before 2024, the installation's emissions target for a scheme year is the installation's relevant emissions multiplied by the reduction factor for the scheme year.

(3) For the purpose of sub-paragraph (2), the relevant emissions of an installation are—

(a)where a regulated activity begins to be carried out at the installation before 2021, the sum of the installation's reportable emissions in 2021, 2022 and 2023 divided by 3;

(b)where a regulated activity begins to be carried out at the installation in 2021, the sum of the installation's reportable emissions in 2022 and 2023 divided by 2;

(c)where a regulated activity begins to be carried out at the installation in 2022, the installation's reportable emissions in 2023;

(d)where a regulated activity begins to be carried out at the installation in 2023, the installation's reportable emissions in 2024.

(4) Where a regulated activity begins to be carried out at the installation in 2024, the installation's emissions target—

(a)for the 2026 scheme year is the 2026 estimate multiplied by the reduction factor for the 2026 scheme year;

(b)for every other scheme year (the “relevant scheme year”) in the 2026-2030 allocation period is the installation's reportable emissions in the 2025 scheme year multiplied by the reduction factor for the relevant scheme year.

(5) Where a regulated activity begins to be carried out at the installation in the period beginning on 1st January 2025 and ending on 31st October 2025, the installation's emissions target—

(a)for the 2026 scheme year is the 2026 estimate multiplied by the reduction factor for the 2026 scheme year;

(b)for the 2027 scheme year is the 2026 estimate multiplied by the reduction factor for the 2027 scheme year;

(c)for every other scheme year (the “relevant scheme year”) in the 2026-2030 allocation period is the installation's reportable emissions in the 2026 scheme year multiplied by the reduction factor for the relevant scheme year.

(6) In sub-paragraphs (4) and (5), “2026 estimate” means the estimate of the installation's reportable emissions in the 2026 scheme year provided under—

(a)in the case of a hospital-qualifying installation, paragraph 6(3)(b);

(b)in any other case, paragraph 6(6).

(7) For the purpose of this paragraph, the reduction factor for a scheme year set out in column 1 of table E is the value set out in the corresponding entry in column 2.

Table E
Column 1Column 2
Scheme yearReduction factor
20260.8882
20270.8602
20280.8322
20290.8043
20300.7763

(8) In this paragraph, a reference to reportable emissions is a reference to reportable emissions—

(a)verified [F3as satisfactory] in accordance with the Verification Regulation 2018; F4...

[F5(aa)determined under article 45; or]

(b)where relevant, set out in an emissions report accompanied by the declaration referred to in paragraph 11(2)(b)(ii).

(9) This paragraph is subject to paragraph 14.

Emissions targets: calculation of later targets where initial targets based on estimatesU.K.

18.—(1) This paragraph applies where an installation's emission targets for the scheme years in an allocation period are required to be calculated under—

(a)paragraph 16(4) or (5);

(b)paragraph 17(4) or (5).

(2) Paragraph 11(1)(f)(i) and (ii) do not require the installation's hospital or small emitter permit to contain emissions targets for scheme years (the “relevant scheme years”) for which, at the date of issue of the permit, the information required to calculate the emission targets is not available.

(3) As soon as reasonably practicable after the information to calculate the installation's emissions targets for the relevant scheme years becomes available, the regulator must vary the installation's hospital or small emitter permit under paragraph 6 of Schedule 6 by adding the emissions targets.

(4) But sub-paragraph (3) does not apply if the regulator has given a conversion notice to the operator of the installation, the effect of which is that the installation will not be a hospital or small emitter for the relevant scheme years.

Commencement Information

I4Sch. 7 para. 18 in force at 12.11.2020, see art. 2(1)

Emissions targets: hospital or small emitters must not exceed targetsU.K.

19.—(1) The operator of an installation must ensure that the installation's reportable emissions in a scheme year for which the installation is a hospital or small emitter do not exceed the emissions target for that year.

(2) This paragraph is subject to paragraph 14.

Commencement Information

I5Sch. 7 para. 19 in force at 12.11.2020, see art. 2(1)

[F6Capacity increases: application to increase emissions targetsU.K.

19A.(1) Where a capacity increase is put into operation at an installation after the reference date, the operator of the installation may apply to the regulator to increase the installation’s emissions targets for scheme years after the capacity increase is put into operation (including, if the capacity increase is put into operation on or after 1st January 2021, for the scheme year in which the capacity increase is put into operation).

(2) An application may be made to increase emissions targets for scheme years in the 2021-2025 allocation period or the 2026-2030 allocation period (or both).

(3) But an application may not be made to increase an emissions target—

(a)for the 2021 or 2022 scheme year if the emissions target for that year was calculated under paragraph 16(4)(a) or (5)(a) or (b);

(b)for the 2026 or 2027 scheme year if the emissions target for that year was calculated under paragraph 17(4)(a) or (5)(a) or (b).

(4) Nor may an application be made to increase an emissions target—

(a)for the 2021 scheme year unless the application is made on or before 31st March 2022;

(b)for any other scheme year unless the application is made on or before the later of—

(i)the end of the scheme year; and

(ii)where the capacity increase is put into operation in the scheme year, 3 months after the date on which the capacity increase is put into operation.

(5) Subject to sub-paragraph (4), an application to increase emissions targets may be made at any time.

Capacity increases: content of applicationU.K.

19B.(1) For the purpose of an application to increase an installation’s emissions targets, the operator must divide the installation into sub-installations in accordance with Article 10 of the Free Allocation Regulation.

(2) The application must contain the following—

(a)evidence of the capacity increase and the sub-installation to which it relates, including evidence that it has been put into operation and is not temporary;

(b)evidence of any capacity decrease at the installation since the reference date and the sub-installation to which it relates, including, where relevant, evidence that it is temporary;

(c)evidence to enable the combined capacity utilisation factor to be calculated (see paragraph 19F);

(d)where the capacity increase or any capacity decrease relates to a district heating sub-installation or a heat benchmark sub-installation of an installation that consumes or exports measurable heat produced outside the installation, evidence of whether or not the capacity increase or capacity decrease is solely associated with measurable heat produced at the installation.

Capacity increases: grant of applicationU.K.

19C.(1) An application to increase an installation’s emissions targets may be granted only if the regulator considers that—

(a)a capacity increase has been put into operation at the installation;

(b)the capacity increase is not temporary; and

(c)the net change in installed capacity at the installation since the reference date (see paragraph 19D) is greater than zero.

(2) Where the application is granted, the regulator must—

(a)calculate new emissions targets for each scheme year for which the application is made by increasing the existing emissions target for the scheme year by the increase in the emissions target for the scheme year (see paragraph 19E); and

(b)vary the installation’s hospital or small emitter permit under paragraph 6 of Schedule 6 by substituting the new emissions targets for the existing targets.

(3) Except where the installation is a hospital-qualifying installation, if increasing the emissions target for a scheme year would result in an emissions target that exceeds the maximum amount, the emissions target must be increased by such amount as results in an emissions target of the maximum amount.

(4) Where, after calculating new emissions targets and varying the permit under sub-paragraph (2), the regulator considers that, as a result of incorrect or incomplete evidence in the application, either the application would not have been granted or the installation’s emissions targets would not have been increased to the same extent—

(a)the regulator may, for the current and future scheme years, determine that the emissions targets should not have been increased or, as the case may be, recalculate the new emissions targets under sub-paragraph (2)(a); and

(b)if the regulator does either of the things referred to in paragraph (a), the regulator must vary the permit under paragraph 6 of Schedule 6 accordingly.

Capacity increases: net change in installed capacity at installation since reference dateU.K.

19D.(1) The net change in installed capacity at the installation since the reference date must be calculated as follows.

Step 1

Calculate the following for each relevant sub-installation—

the net change in installed capacity at the relevant sub-installation since the reference date x the benchmark for the sub-installation.
Step 2

Add up all calculations done under Step 1.

The net change in installed capacity at the installation since the reference date is the result of Step 2.

(2) For the purposes of sub-paragraph (1)—

(a)the net change in installed capacity at a relevant sub-installation must be determined by taking into account only capacity increases and capacity decreases (other than capacity decreases that are temporary) that relate to the sub-installation since the reference date;

(b)where capacity decreases exceed capacity increases at a sub-installation, the net change in installed capacity must be a negative value;

(c)in calculating the net change in installed capacity at a district heating sub-installation or a heat benchmark sub-installation of an installation that consumes or exports measurable heat produced outside the installation, any capacity increase or capacity decrease that relates to the sub-installation must not be taken into account unless it is solely associated with measurable heat produced at the installation.

(3) In this paragraph, “relevant sub-installation” means—

(a)the sub-installation to which the capacity increase relates;

(b)any other sub-installation to which a capacity decrease at the installation since the reference date relates.

Capacity increases: increase in emissions targets for scheme yearsU.K.

19E.(1) The increase in an installation’s emissions target for each scheme year for which the application is made is NC x CCUF x RF x FYF, where—

NC is the net change in installed capacity at the installation since the reference date (see paragraph 19D);

CCUF is the combined capacity utilisation factor (see paragraph 19F);

RF is the reduction factor for the scheme year;

FYF is the first year factor.

(2) The reduction factor—

(a)for a scheme year set out in column 1 of table D in paragraph 16 is the value set out in the corresponding entry in column 2;

(b)for a scheme year set out in column 1 of table E in paragraph 17 is the value set out in the corresponding entry in column 2.

(3) The first year factor is—

(a)for the scheme year in which the capacity increase is put into operation, (Y-D)/Y;

(b)for any other scheme year, 1.

(4) For the purposes of sub-paragraph (3)—

(a)Y is the number of days in the scheme year;

(b)D is the number of days in the scheme year before the date on which the capacity increase is put into operation.

(5) Where an application is made in respect of two or more capacity increases, for the purpose of calculating the first year factor, the capacity increases must be treated as being put into operation on the date on which the last capacity increase is put into operation.

Capacity increases: combined capacity utilisation factorU.K.

19F.(1) The combined capacity utilisation factor must be calculated as follows.

Step 1

Calculate the following for each sub-installation to which the capacity increase relates—

the capacity increase x the benchmark for the sub-installation x the capacity utilisation factor.
Step 2

Add up all calculations done under Step 1.

Step 3

Calculate the following for each sub-installation to which the capacity increase relates—

the capacity increase x the benchmark for the sub-installation.
Step 4

Add up all calculations done under Step 3.

Step 5

Divide the result of Step 2 by the result of Step 4.

The combined capacity utilisation factor is the result of Step 5.

(2) In calculating the combined capacity utilisation factor, a capacity increase that relates to a district heating sub-installation or a heat benchmark sub-installation of an installation that consumes or exports measurable heat produced outside the installation must not be taken into account unless it is solely associated with measurable heat produced at the installation.

(3) Where an application is made in respect of two or more capacity increases that relate to the same sub-installation, for the purpose of calculating the combined capacity utilisation factor, the calculations under Steps 1 and 3 must be done separately for each such capacity increase as if the capacity increases related to separate sub-installations.

(4) In this paragraph, “capacity utilisation factor”, in relation to a capacity increase, means the expected level of production or consumption, expressed as a proportion of the increase in installed capacity.

Capacity increases: interpretationU.K.

19G.(1) In this paragraph and paragraphs 19A to 19F—

benchmark” means—

(a)

in relation to a sub-installation other than a process emissions sub-installation, the benchmark referred to in Article 16(2) of the Free Allocation Regulation used to determine the preliminary annual number of allowances allocated free of charge in respect of the sub-installation—

(i)

where an application is made to increase an installation’s emissions targets for scheme years in the 2021-2025 allocation period, for scheme years in that allocation period;

(ii)

where an application is made to increase an installation’s emissions targets for scheme years in the 2026-2030 allocation period, for scheme years in that allocation period;

(b)

in relation to a process emissions sub-installation, 0.97;

capacity decrease”, in relation to an installation or a sub-installation, means a decrease in installed capacity as a result of one or more physical changes relating to its technical configuration and functioning;

capacity increase”, in relation to an installation or a sub-installation, means an increase in installed capacity as a result of one or more physical changes relating to its technical configuration and functioning;

district heating sub-installation” has the meaning given in point (5) of Article 2(1) of the Free Allocation Regulation;

fuel benchmark sub-installation” has the meaning given in point (6) of Article 2(1) of the Free Allocation Regulation;

heat benchmark sub-installation” has the meaning given in point (3) of Article 2(1) of the Free Allocation Regulation;

installed capacity” means the maximum capacity—

(a)

in the case of a product benchmark sub-installation, for producing a product;

(b)

in the case of a district heating sub-installation or a heat benchmark sub-installation, for producing measurable heat;

(c)

in the case of a fuel benchmark sub-installation, for consuming fuel;

(d)

in the case of a process emissions sub-installation, for producing the emissions referred to in point (10) of Article 2(1) of the Free Allocation Regulation;

measurable heat” has the meaning given in point (7) of Article 2(1) of the Free Allocation Regulation;

process emissions sub-installation” has the meaning given in point (10) of Article 2(1) of the Free Allocation Regulation;

product benchmark sub-installation” has the meaning given in point (2) of Article 2(1) of the Free Allocation Regulation;

“reference date” must be determined in accordance with sub-paragraphs (2) to (5);

sub-installation” means a district heating sub-installation, a fuel benchmark sub-installation, a heat benchmark sub-installation, a process emissions sub-installation or a product benchmark sub-installation.

(2) Where an application is to increase an installation’s emissions targets for scheme years in the 2021-2025 allocation period, the reference date is—

(a)where a regulated activity began to be carried out at the installation before 2018, 31st December 2018;

(b)where a regulated activity began to be carried out at the installation in 2018, 31st December 2019;

(c)where a regulated activity began to be carried out at the installation in 2019 or 2020, 31st December 2020.

(3) But if the installation’s emissions targets for scheme years in the 2021-2025 allocation period were increased following an application in respect of a previous capacity increase, the reference date is the date on which the last such capacity increase was put into operation.

(4) Where an application is to increase an installation’s emissions targets for scheme years in the 2026-2030 allocation period, the reference date is—

(a)where a regulated activity begins to be carried out at the installation before 2023, 31st December 2023;

(b)where a regulated activity begins to be carried out at the installation in 2023, 31st December 2024;

(c)where a regulated activity begins to be carried out at the installation in 2024 or 2025, 31st December 2025.

(5) But if the installation’s emissions targets for scheme years in the 2026-2030 allocation period were increased following an application in respect of a previous capacity increase, the reference date is the date on which the last such capacity increase was put into operation.

(6) For the purpose of calculating the net change in installed capacity at an installation since the reference date under paragraph 19D or the combined capacity utilisation factor under paragraph 19F, a capacity increase or a capacity decrease at a sub-installation must be expressed in the following units—

(a)if the capacity increase or capacity decrease relates to a product benchmark sub-installation, tonnes of product produced per year;

(b)if the capacity increase or capacity decrease relates to a district heating sub-installation or a heat benchmark sub-installation, terajoules of measurable heat produced per year;

(c)if the capacity increase or capacity decrease relates to a fuel benchmark sub-installation, terajoules of fuel consumed per year;

(d)if the capacity increase or capacity decrease relates to a process emissions sub-installation, tonnes of carbon dioxide equivalent emitted per year.]

Emissions targets: banking overachieved targetU.K.

20.—(1) In this paragraph, an installation's “bankable amount”, in relation to a scheme year, means ET – RE, where—

  • ET is the installation's emissions target for that year;

  • RE is the reportable emissions stated in the installation's emissions report for that year.

(2) But if the installation's emissions target for a scheme year is calculated in accordance with any of the following provisions (emissions targets based on estimates), for the purposes of this paragraph the installation's bankable amount for that scheme year must be treated as zero—

(a)paragraph 16(4)(a);

(b)paragraph 16(5)(a) or (b);

(c)paragraph 17(4)(a);

(d)paragraph 17(5)(a) or (b).

(3) Subject to sub-paragraphs (5) and (6), where an installation's bankable amount for a scheme year (the “scheme year in question”) is greater than zero—

(a)the regulator may increase the installation's emissions target for the following scheme year (the “next scheme year”) by the bankable amount; and

(b)if the regulator does so, the regulator must vary the installation's hospital or small emitter permit under paragraph 6 of Schedule 6 by substituting the increased emissions target for the existing target.

(4) Subject to sub-paragraph (6), where the amount of reportable emissions stated in the installation's emissions report for the scheme year in question is amended following a determination of emissions under article 45, the regulator must—

(a)calculate the bankable amount for the scheme year in question as if RE in sub-paragraph (1) were the amount of reportable emissions for that year as amended following the determination; and

(b)where an increased emissions target for the next scheme year has been substituted under sub-paragraph (3)(b), further vary the permit under paragraph 6 of Schedule 6 by substituting a revised emissions target for that year, based on the revised calculation of the bankable amount under paragraph (a).

(5) Sub-paragraph (3) does not apply if the scheme year in question is—

(a)the 2025 scheme year;

(b)the 2030 scheme year.

(6) Except where the installation is a hospital-qualifying installation, if increasing the emissions target for the next scheme year would result in an emissions target that exceeds the maximum amount, the emissions target must be increased by such amount as results in an emissions target of the maximum amount.

Commencement Information

I6Sch. 7 para. 20 in force at 12.11.2020, see art. 2(1)

Emissions targets: targets for 2026-2030 allocation period for hospital or small emitters in 2021-2025 allocation periodU.K.

21.—(1) This paragraph applies where—

(a)a hospital or small emitter permit is in force for an installation that contains emissions targets for a scheme year in the 2021-2025 allocation period; and

(b)the installation is included in the hospital and small emitter list for 2026-2030.

(2) The regulator must, on or before 31st December 2025—

(a)calculate an emissions target for the installation for each scheme year in the 2026-2030 allocation period; and

(b)vary the installation's hospital or small emitter permit under paragraph 6 of Schedule 6 to include those emissions targets.

(3) But sub-paragraph (2) does not apply if the regulator has given a conversion notice to the operator of the installation (the effect of which is that the installation will not be a hospital or small emitter for the scheme years in the 2026-2030 allocation period).

Commencement Information

I7Sch. 7 para. 21 in force at 12.11.2020, see art. 2(1)

Emissions targets: errorsU.K.

22.—(1) This paragraph applies where the amount of an installation's reportable emissions used to calculate the installation's emission targets (including revised emissions targets under [F7paragraph 19C or 20]) for scheme years in an allocation period is amended following a determination of emissions under article 45.

(2) The regulator may calculate revised emissions targets for the current and future scheme years in the allocation period and, if the regulator does so, the regulator must vary the installation's hospital or small emitter permit under paragraph 6 of Schedule 6 to include those emissions targets.

(3) In calculating revised emissions targets under sub-paragraph (2), the regulator may take account of what revised emissions targets for past scheme years in the allocation period calculated under this paragraph might have been if the determination had been made earlier (but may not calculate revised emissions targets for past years).

(4) In this paragraph—

(a)a reference to reportable emissions used to calculate emissions targets for the 2021-2025 allocation period includes a reference to reportable emissions within the meaning of GGETSR 2012; and

(b)a reference to a determination of emissions under article 45 includes, in the case of reportable emissions referred to in paragraph (a), a reference to a determination of emissions under regulation 44(3) of GGETSR 2012 or Article 70(1) of the Monitoring and Reporting Regulation 2012.

Textual Amendments

Commencement Information

I8Sch. 7 para. 22 in force at 12.11.2020, see art. 2(1)

[F8Publication of emissions targets and reportable emissionsU.K.

22A.(1) The regulator must inform the UK ETS authority of—

(a)emissions targets (including any revised emissions targets) calculated by the regulator;

(b)the reportable emissions in each scheme year of every installation that is a hospital or small emitter for the scheme year that are reported to the regulator.

(2) The UK ETS authority must publish the information referred to in sub-paragraph (1) as soon as reasonably practicable after receiving it.

(3) This paragraph is subject to article 75C (national security).]

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