The Union Registry ensures the accurate accounting of transactions under the system for greenhouse gas emission allowance trading within the Union (EU ETS), set up by Directive 2003/87/EC. The Union Registry is a standardised and secured electronic database containing common data elements to track the issue, holding, transfer and cancellation, as applicable, of allowances, and to provide for public access and confidentiality, as appropriate. It should ensure that there are no transfers, which are incompatible with the obligations resulting from Directive 2003/87/EC.

A new period of economy-wide legislation applies from 2021 that is the start of a new period for the EU ETS. It is necessary to ensure that the implementation and the functioning of the registries system comply also with the requirements set for this new period.

Pursuant to Article 13 of Directive 2003/87/EC, allowances issued from 1 January 2013 onwards are valid indefinitely. However, from 2021 onwards, the allowances are to include an indication of the trading period of their creation. It is therefore necessary to provide the appropriate functionalities in the Union Registry. The indication showing in which ten-year period the allowances were created should only be visible to account holders where this is needed to distinguish the allowances created in one phase from those created in another phase. This is the case during the transition from the third trading period to the fourth, taking into account the fact that allowances created in the period starting in 2021 are only valid for emissions from 1 January 2021 onwards.

In addition, restriction to the surrender of allowances should be applied to ensure that allowances can only be used for emissions from the first year of the ten-year period in which they were issued. The rules for the calculation of the compliance status figure are necessary in order to ensure the compliance with this restriction.

Directive (EU) 2018/410 deleted paragraph 7 of Article 11b of Directive 2003/87/EC. The use of international credits in the EU ETS will therefore no longer be possible in the trading period starting from 1 January 2021. Consequently, no international credits may be held on ETS accounts and international credit entitlements will cease to exist. However, until all operations required in relation to the trading period between 2013 and 2020 are concluded, the use of international credits, and consequently of international credit entitlements, should be maintained. Non-eligible units should be removed from ETS accounts after the end of the continued applicability of the relevant provisions of Regulation (EU) No 389/2013.

As allowances exist only in dematerialised form and are fungible, the title to an allowance should be established by its existence in the account of the Union Registry in which it is held. Moreover, to reduce the risks associated with the reversal of transactions entered in the Union Registry, and the consequent disruption to the system and to the market that such reversal may cause, it is necessary to ensure that allowances are fully fungible. In particular, transactions can be reversed, revoked or unwound only in accordance with the rules of the Registry, within a period set by those rules. Nothing in this Regulation should prevent an account holder or a third party from exercising any right or claim resulting from the underlying transaction that they may have in law to recovery or restitution in respect of a transaction that has entered a system, such as in case of fraud or technical error, as long as this does not lead to the reversal, revocation or unwinding of the transaction. Furthermore, the acquisition of an allowance in good faith should be protected.

The central administrator's main responsibilities should be to provide, operate and maintain the Union Registry and the European Union Transaction Log (EUTL), to manage central accounts and to perform operations which are carried out centrally. The national administrators' main responsibilities should be to be the contact point with their respective account holders in the Union Registry and perform all operations involving direct contact with them, including the opening, suspension of access to and closure of accounts.

Where Member States allocate allowances free of charge on the basis of Article 10c of Directive 2003/87/EC, these allowances should be issued in accordance with Article 10c of that Directive.

Article 11 of Directive 2003/87/EC provides that competent authorities are to transfer, by 28 February of each year, the number of allowances allocated to operators for free for that year. Where that Directive provides for the recalculation of the number of allowances allocated to an operator, the central administrator should ensure that the recalculation of the allocation is made in accordance with Directive 2003/87/EC and the required changes are carried out in the Union Registry and the EUTL before the national competent authority may transfer the allowances to the operator concerned.

Nothing in this Regulation should prevent a competent authority from requiring an operator to transfer a number of allowances, received in excess of its adjusted allocation for the relevant year, to the EU Allocation Account in cases where there has been an over allocation of allowances, including as a result of an error in the original allocation or the operator having failed to correctly or completely submit to the competent authority relevant information provided that the central administrator has carried out a change to the national allocation table of the Member State.

Allowances issued after an operator has ceased the activities performed in the installation to which those allowances relate, without informing the competent authority beforehand, cannot be classified as emissions allowances within the meaning of Directive 2003/87/EC. This implies that in case the excess allocation results from the operator not reporting the cessation of production, it should be possible to remove from the operator holding account the corresponding number of allowances even without the approval of the operator.

Records concerning all processes, operators and persons in the registries system should be kept, while personal data contained in them should be deleted after the expiry of the relevant retention period.

The Commission and the national administrators are joint controllers of the information held and processed pursuant to this Regulation. The Union Registry and the EUTL performs tasks that are carried out in the public interest. In the case of a personal data breach, the relevant notification procedures pursuant to data protection legislation are applicable.

National administrators, the central administrator and the Commission should ensure that information held and processed pursuant to this Regulation can only be used for the purpose of the functioning of the Union Registry.

The rules governing the Union Registry should be simplified in order to reduce any administrative burden to the extent possible, without undermining the environmental integrity, security or reliability of the EU ETS. To define the direction and extent of possible simplifications and alleviations, the practical experience of national administrators of the Union Registry was gathered and Member States were consulted. The resulting new rules intend to provide for easier understanding and use of the Union Registry both by its users and administrators.

Where necessary and for as long as necessary in order to protect the environmental integrity of the EU ETS, aviation operators and other operators in the EU ETS may not use allowances that are issued by a Member State which has notified the European Council of its intention to withdraw from the Union pursuant to Article 50 of the Treaty on European Union (‘TEU’).

Linking the EU ETS with other emissions trading systems expands opportunities for emissions reductions, thereby cutting the cost of fighting climate change. The operationalisation of linking agreements pursuant to Article 25 of Directive 2003/87/EC requires a number of adaptations in the Union Registry. Therefore, Regulation (EU) No 389/2013 should be amended to, inter alia, ensure the recognition of allowances of third countries for compliance, enable the transfer of such allowances, the creation of accounts, transaction processes and to include the conditions for suspension of the link.

The European Data Protection Supervisor was consulted in accordance with Article 42 of Regulation (EU) 2018/1725 and delivered an opinion on 18 October 2018,