Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (Text with EEA relevance)

Changes over time for: Article 16

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Article 16U.K. [F1Preliminary allocation] at installation level for incumbent installations

[F21.Where the UK ETS authority informs the regulator under Article 15a(4)(b) that:

(a)a deemed application for free allocation in the 2021-2025 allocation period is valid, the regulator must calculate the preliminary annual number of allowances to be allocated in respect of the installation for each scheme year in the 2021-2025 allocation period;

(b)an application for free allocation in the [F32027-2030] allocation period under Article 4 is valid, the regulator must [F4, subject to paragraph 1a,] calculate the preliminary annual number of allowances to be allocated in respect of the installation for each scheme year in the [F32027-2030] allocation period.]

[F51a.Where the benchmarks for the 2028, 2029 and 2030 scheme years have not been adopted under paragraph 13(b)(ii) on or before 30 September 2026, the regulator must:

(a)calculate the preliminary annual number of allowances to be allocated in respect of the installation for the 2027 scheme year; and

(b)no earlier than 1 October 2027, calculate the preliminary annual number of allowances to be allocated in respect of the installation for the 2028, 2029 and 2030 scheme years.]

2.For the purpose of the calculation referred to in paragraph 1, [F6the regulator] shall first determine the preliminary annual number of emission allowances allocated free of charge for each sub-installation separately, as follows:

(a)for product benchmark sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of that product benchmark for the relevant [F7scheme year or] allocation period F8..., multiplied by the relevant product-related historical activity level;

(b)for heat benchmark sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of the heat benchmark for measurable heat for the relevant [F7scheme year or] allocation period F8..., multiplied by the heat-related historical activity level for the consumption or export to non-ETS installations or other entities of measurable heat other than district heating;

(c)for district heating sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of the heat benchmark for measurable heat for the relevant [F7scheme year or] allocation period F8..., multiplied by the district heating-related historical activity level;

(d)for fuel benchmark sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of the fuel benchmark for the relevant [F7scheme year or] [F9allocation] period F8..., multiplied by the fuel-related historical activity level for the fuel consumed;

(e)for process emissions sub-installations, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the process-related historical activity level multiplied by 0,97.

F10...

[F112a.The factors determined in paragraph 14 must be applied to the preliminary annual number of emission allowances allocated free of charge determined for each sub-installation pursuant to paragraph 2 for the year concerned where that sub-installation is a UK CBAM sub-installation.

2b.Where the sub-installation is not a UK CBAM sub-installation, a factor of 1 must be applied to the preliminary annual number of emission allowances allocated free of charge determined for each sub-installation pursuant to paragraph 2 for the year concerned.]

3.[F12The] factors determined in Annex V to this Regulation shall be applied to the preliminary annual number of emission allowances allocated free of charge determined for each sub-installation [F13following the calculation at paragraph 2a or 2b] for the year concerned where the processes in those sub-installations serve sectors or subsectors [F14other than those set out in the Annex to Commission Delegated Decision (EU) 2019/708].

By way of derogation from the first subparagraph, for district heating sub-installations, the factor to be applied shall be 0,3.

4.Where the processes in the sub-installations referred to in paragraph 2 serve sectors or subsectors deemed to be exposed to a significant risk of carbon leakage [F15set out in the Annex to Commission Delegated Decision (EU) 2019/708], the factor to be applied [F16to the preliminary annual number of emission allowances allocated free of charge determined for each sub-installation following the calculation at paragraph 2a or 2b] shall be 1.

5.The preliminary annual number of emission allowances allocated free of charge for sub-installations that received measurable heat from sub-installations producing products covered by the nitric acid benchmark shall be reduced by the annual historical consumption of that heat during the relevant baseline periods, multiplied by the value of the heat benchmark for this measurable heat for the relevant [F17scheme year or] allocation period F18....

[F19In the case of an application for free allocation in the [F202027-2030] allocation period under Article 4], the preliminary annual number of emission allowances allocated free of charge for product benchmark sub-installations for the relevant allocation period shall be reduced by the annual historical emissions stemming from waste gases flared, with the exception of safety flaring, and not used for the purpose of the production of measurable heat, non-measurable heat or electricity.

6.The preliminary annual amount of emission allowances allocated free of charge for each installation shall be the sum of all sub-installations' preliminary annual numbers of emission allowances allocated free of charge calculated in accordance with paragraphs 2 to 5.

Where an installation encompasses sub-installations producing pulp (short fibre kraft pulp, long fibre kraft pulp, thermo-mechanical pulp and mechanical pulp, sulphite pulp or other pulp not covered by a product benchmark) exporting measurable heat to other technically connected sub-installations, the preliminary amount of emission allowances allocated free of charge shall, without prejudice to the preliminary annual numbers of emission allowances allocated free of charge for other sub-installations of the installation concerned, only take into account the preliminary annual number of emission allowances allocated free of charge, to the extent that pulp products produced by this sub-installation are placed on the market and not processed into paper in the same or other technically connected installations.

7.When determining the preliminary annual amount of emission allowances allocated free of charge for each installation, [F21the regulator] shall ensure that emissions or activity levels are not double-counted and that the allocation is not negative. In particular, where an intermediate product that is covered by a product benchmark according to the definition of the respective system boundaries set out in Annex I is imported by an installation, emissions shall not be double-counted when determining the preliminary annual amount of emission allowances allocated free of charge for both installations concerned.

F228.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.For the purpose of the calculations referred to in paragraphs 1 to [F237], the number of allowances for sub-installations and installations shall be expressed as the nearest integer [F24, taking 0.5 as nearest to the previous integer].

[F2510.The regulator must send the preliminary annual number of allowances calculated in respect of each installation and each sub-installation of each installation to the UK ETS authority as soon as reasonably practicable F26....

11.The regulator must make any corrections to the calculation required by the UK ETS authority.]

[F2712.In this Article and in Articles 19 to 22, as those Articles apply for the purpose of this Article, “relevant allocation period” means:

(a)in the case of a deemed application for free allocation in the 2021-2025 allocation period, the 2021-2025 allocation period;

(b)in the case of an application under Article 4 for free allocation in the 2027-2030 allocation period, the 2027-2030 allocation period.]

[F2813.In paragraphs 2 and 5, references to a product benchmark, heat benchmark or fuel benchmark are to:

(a)for 2026 incumbents within the meaning of article 5 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025, in respect of the calculation of the preliminary annual number of allowances for the 2026 scheme year, the benchmarks set out in Annex 8;

(b)for incumbent installations applying for free allocation in the 2027-2030 allocation period:

(i)in respect of the calculation of the preliminary annual number of allowances for the 2027 scheme year, the benchmarks set out in Annex 8; and

(ii)in respect of the calculation of the preliminary annual number of allowances for the 2028, 2029 and 2030 scheme years, the benchmarks adopted by way of an order under Part 3 of the Climate Change Act 2008.

14.The factor to be applied in the 2027-2030 allocation period is:

(a)for scheme year 2027, unless otherwise provided for on or before 31 December 2026 by way of an order under Part 3 of the Climate Change Act 2008, 0.975;

(b)for scheme year 2028, unless otherwise provided for on or before 31 December 2027 by way of an order under Part 3 of the Climate Change Act 2008, 0.95;

(c)for scheme year 2029, unless otherwise provided for on or before 31 December 2028 by way of an order under Part 3 of the Climate Change Act 2008, 0.9;

(d)for scheme year 2030, unless otherwise provided for on or before 31 December 2029 by way of an order under Part 3 of the Climate Change Act 2008, 0.775.

15.Where the regulator has calculated the preliminary annual number of emissions allowances to be allocated free of charge for each UK CBAM sub-installation and a different factor is subsequently provided for under paragraph 14, the regulator must as soon as reasonably practicable after a different factor for a scheme year is provided for:

(a)recalculate the preliminary annual number of emissions allowances allocated free of charge for each UK CBAM sub-installation in respect of the relevant period in accordance with paragraphs 2 to 9;

(b)send the recalculated preliminary annual number of allowances calculated in respect of each installation and each sub-installation of each installation to the UK ETS authority; and

(c)make any corrections to the calculation required by the UK ETS authority.

16.In paragraph 15 the “relevant period” begins with the scheme year for which the factor has changed under paragraph 14 and ends with the 2030 scheme year; but:

(a)where paragraph 1a applies and the scheme year for which the factor has changed is 2027, the relevant period refers to the 2027 scheme year; or

(b)where the scheme year for which the factor has changed is 2030, the relevant period refers to the 2030 scheme year.

17.Where the product benchmark or the 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, the regulator must carry out a recalculation in respect of the sub-installation as if paragraph 15 applies, except that:

(a)the regulator must carry out the functions listed in paragraph 15 as soon as reasonably practicable after the product benchmark or PRODCOM code is added to the relevant table;

(b)the relevant period is to be read as 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 and ending with the 2030 scheme year; but:

(i)where paragraph 1a applies and the scheme year after the scheme year in which the product benchmark or PRODCOM code was added to the relevant table is 2027, the relevant period refers to the 2027 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 relevant period refers to the 2030 scheme year.

18.For the purpose of the regulator calculating (or recalculating where paragraph 15 applies) the preliminary annual number of emissions allowances to be allocated free of charge, the regulator must use the factor provided for under paragraph 14 that is in force at the time the regulator carries out the calculation (or recalculation where paragraph 15 applies).]

Textual Amendments

F1Words in Art. 16 heading substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(2)

F2Art. 16(1) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(3)

F3Word in Art. 16(1)(b) substituted (31.3.2025) by The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 (S.I. 2025/124), arts. 2, 42(2)

F4Words in Art. 16(1)(b) inserted (11.3.2026) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026 (S.I. 2026/278), arts. 2, 19(2)

F5Art. 16(1a) inserted (11.3.2026) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026 (S.I. 2026/278), arts. 2, 19(3)

F6Words in Art. 16(2) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(4)(a)(i)

F7Words in Art. 16(2)(a)-(d) inserted (11.3.2026) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026 (S.I. 2026/278), arts. 2, 19(4)(a)

F8Words in Art. 16(2)(a)-(d) omitted (11.3.2026) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026 (S.I. 2026/278), arts. 2, 19(4)(b)

F9Word in Art. 16(2)(d) substituted (31.12.2020) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(4)(a)(ii)

F10Words in Art. 16(2) omitted (31.12.2020) by virtue of The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 (S.I. 2020/1557), art. 2(2), Sch. 1 para. 19(4)(b)

F11Art. 16(2a)(2b) inserted (11.3.2026) by The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026 (S.I. 2026/278), arts. 2, 19(5)