Commission Delegated Regulation (EU) 2019/331Show full title

CHAPTER III U.K. Allocation rules

Article 14 U.K. National implementation measures

1. The list pursuant to Article 11(1) of Directive 2003/87/EC shall be submitted to the Commission using an electronic template provided by the Commission and shall identify all electricity generators, small installations that may be excluded from the EU ETS pursuant to Articles 27 and 27a of Directive 2003/87/EC and installations that will be included under the EU ETS pursuant to Article 24 of that Directive.

2. The list referred to in paragraph 1 shall contain the following information for each incumbent installation applying for free allocation:

(a) an identification of the installation and its boundaries using the installation identification code in the European Union Transaction Log (EUTL);

(b) activity information and information on eligibility for free allocation;

(c) an identification of each sub-installation of an installation;

(d) for each sub-installation, the annual activity level and annual emissions in each year of the relevant baseline period;

(e) for each sub-installation, information on whether it belongs to a sector or subsector deemed to be exposed to a significant risk of carbon leakage as determined in accordance with Article 10b(5) of Directive 2003/87/EC, including the PRODCOM codes of the products produced, where applicable;

(f) for each sub-installation, the data reported in accordance with Annex IV.

3. Upon receipt of the list referred to in paragraph 1, the Commission shall assess the inclusion of each installation in the list and the related data submitted in accordance with paragraph 2.

4. Where the Commission does not reject an installation's inclusion in that list, the data shall be used for the calculation of the revised benchmark values as referred to in Article 10a(2) of Directive 2003/87/EC.

5. Member States shall determine and notify the preliminary annual amounts per installation of free allowances, using the revised benchmark values for the relevant allocation period, as determined in accordance with Article 16(2) to (7) and Articles 19 to 22.

6. Once the preliminary annual amounts of free allowances for the relevant allocation period are notified, the Commission shall determine any factor established pursuant to Article 10a(5) of Directive 2003/87/EC by comparing the sum of the preliminary annual amounts of free allowances to installations in each year over the relevant allocation period with application of the factors as determined in Annex V to this Regulation with the annual amount of allowances that is calculated in accordance with Article 10a(5) and (5a) of Directive 2003/87/EC for installations, taking into account the relevant share of the annual Union-wide total quantity, as determined pursuant to Articles 10(1) and 10a(5) of Directive 2003/87/EC. The determination shall take into account inclusions pursuant to Article 24 and exclusions pursuant to Articles 27 and 27a of Directive 2003/87/EC, as appropriate.

7. Once the factor established pursuant to in Article 10a(5) of Directive 2003/87/EC is determined, the Member States shall determine and submit to the Commission the final annual amount of emission allowances allocated free of charge for each year over the relevant allocation period in accordance with Article 16(8).

8. Upon request, each Member State shall make the reports received on the basis of Article 4(2) available to the Commission.

Article 15 U.K. Historical activity level for incumbent installations

1. Member States shall assess the baseline data reports and verification reports submitted in accordance with Article 4(2) to ensure conformity with the requirements of this Regulation. Where appropriate, the competent authority shall request corrections by the operators of any non-conformities or any errors, which impact on the determination of the historical activity levels. The competent authority may request operators to submit more data in addition to the information and documents to be provided in accordance with Article 4(2).

2. On the basis of the assessed baseline data reports and verification reports, Member States shall determine historical activity levels of each sub-installation and installation for the relevant baseline period. Member States may only decide to determine historical activity levels where data relating to an installation has been verified as satisfactory or if they are satisfied that the data gaps leading to the verifier's opinion are due to exceptional and unforeseeable circumstances that could not have been avoided even if all due care had been exercised.

3. The product-related historical activity level shall, for each product for which a product benchmark has been determined as referred to in Annex I, refer to the arithmetic mean of annual historical production of that product in the installation concerned during the baseline period.

4. The heat-related historical activity level shall refer to the arithmetic mean of annual historical import from an installation covered by the EU ETS, production, or both, during the baseline period, of net measurable heat consumed within the installation's boundaries for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, or exported to an installation or other entity not covered by the EU ETS with the exception of the export for the production of electricity expressed as terajoule per year.

The district heating-related historical activity level shall refer to the arithmetic mean of annual historical import from an installation covered by the EU ETS, production, or both, during the baseline period, of measurable heat which is exported for the purposes of district heating expressed as terajoule per year.

5. The fuel-related historical activity level shall refer to the arithmetic mean of annual historical consumption of fuels used for the production of non-measurable heat consumed for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, including safety flaring, during the baseline period expressed as terajoule per year.

6. For process emissions, which occurred in relation with the production of products in the installation concerned during the baseline period, the process-related historical activity level shall refer to the arithmetic mean of annual historical process emissions expressed as tonnes of carbon dioxide equivalent.

7. For the purposes of the determination of the arithmetic mean values referred to in paragraphs 3 to 6, only calendar years during which the installation has been operating for at least one day shall be taken into account.

If a sub-installation has been operating for less than two calendar years during the relevant baseline period, the historical activity levels shall be the activity levels of the first calendar year of operation after the start of normal operation of this sub-installation.

If a sub-installation has not been operating for a calendar year after the start of normal operation during the baseline period, the historical activity level shall be determined when the activity level report after the first calendar year of operation is submitted.

8. By way of derogation from paragraph 3, Member States shall determine the product-related historical activity level for products to which the product benchmarks referred to in Annex III apply on the basis of the arithmetic mean of annual historical production according to the formulas set out in that Annex.

Article 16 U.K. Allocation at installation level for incumbent installations

1. Where the operator of an incumbent installation has submitted a valid application for free allocation in accordance with Article 4, the Member State concerned shall, based on the data collected in accordance with Article 14, calculate, for each year, the number of emission allowances allocated free of charge from 2021 onwards to that installation.

2. For the purpose of the calculation referred to in paragraph 1, Member States 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 allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, 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 allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, 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 allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, 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 five-year period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC, 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.

If a sub-installation has been operating for less than one calendar year after the start of normal operation during the baseline period, the preliminary allocation for the relevant alloction period shall be determined after the historical activity level has been reported.

3. For the purpose of Article 10b(4) of Directive 2003/87/EC, the 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 pursuant to paragraph 2 of this Article for the year concerned where the processes in those sub-installations serve sectors or subsectors deemed not to be exposed to a significant risk of carbon leakage as determined in accordance with Article 10b(5) of Directive 2003/87/EC.

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 as determined in accordance with Article 10b(5) of Directive 2003/87/EC, the factor to be applied 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 allocation period, adopted in accordance with Article 10a(2) of Directive 2003/87/EC.

From 2026, 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, Member States and operators 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.

8. The final annual amount of emission allowances allocated free of charge for each incumbent installation, except for installations covered by Article 10a(3) of Directive 2003/87/EC, shall be the preliminary annual amount of emission allowances allocated free of charge for each installation determined in accordance with paragraph 6 of this Article, multiplied by the factor as determined in accordance with Article 14(6) of this Regulation.

For installations covered by Article 10a(3) of Directive 2003/87/EC and eligible for the allocation of free emission allowances, the final annual amount of emission allowances allocated free of charge shall correspond to the preliminary annual amount of emission allowances allocated free of charge for each installation determined in accordance with paragraph 6 of this Article annually adjusted by the linear factor referred to in Article 9 of Directive 2003/87/EC, using the preliminary annual amount of emission allowances allocated free of charge for the installation concerned for 2013 as a reference, except for any year in which those allocations are adjusted in a uniform manner pursuant to Article 10a(5) of Directive 2003/87/EC.

By way of derogation from the second subparagraph, for any year for which the factor determined in accordance with Article 14(6) is lower than 100 %, for installations covered by Article 10a(3) of Directive 2003/87/EC and eligible for the allocation of free emission allowances, the final annual amount of emission allowances allocated free of charge shall correspond to the preliminary annual amount of emission allowances allocated free of charge for each installation determined in accordance with paragraph 6 of this Article, annually adjusted by the factor as determined in accordance with Article 14(6) of this Regulation.

9. For the purpose of the calculations referred to in paragraphs 1 to 8, the number of allowances for sub-installations and installations shall be expressed as the nearest integer.

Article 17 U.K. Historical activity level for new entrants

Member States shall determine historical activity levels of each new entrant and its sub-installations as follows:

(a)

the product-related historical activity level shall be, for each product for which a product benchmark has been determined as referred to in Annex I to this Regulation or pursuant to Article 24 of Directive 2003/87/EC, the activity level of the first calendar year after the start of normal operation for the production of this product of the sub-installation concerned;

(b)

the heat-related historical activity level shall be the activity level of the first calendar year after the start of normal operation for the import from an installation covered by the EU ETS, production, or both, of measurable heat consumed within the installation's boundaries for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, or exported to an installation or other entity not covered by the EU ETS with the exception of the export for the production of electricity;

(c)

the district heating-related historical activity level shall be the activity level of the first calendar year after the start of normal operation for the import from an installation covered by the EU ETS, production, or both, of measurable heat which is exported for the purposes of district heating;

(d)

the fuel-related historical activity level shall be the activity level of the first calendar year after the start of normal operation for the consumption of fuels used for the production of non-measurable heat consumed for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, including safety flaring, of the installation concerned;

(e)

the process emissions-related activity level shall be the activity level of the first calendar year after the start of normal operation for the production of process emissions of the process unit;

(f)

By way of derogation from point (a), the product-related historical activity level for products to which the product benchmarks referred to in Annex III apply shall be the activity level of the first calendar year after the start of normal operation for the production of this product of the sub-installation concerned, determined according to the formulas set out in that Annex.

Article 18 U.K. Allocation to new entrants

1. For the purposes of the free allocation of emission allowances to new entrants, Member States shall calculate the preliminary annual number of emission allowances allocated free of charge as of the start of normal operation of the installation for each sub-installation separately, as follows:

(a) for each product benchmark sub-installation, heat benchmark sub-installation and fuel benchmark sub-installation, the preliminary annual number of emission allowances allocated free of charge for a given year shall correspond to the value of that benchmark for the relevant period multiplied by the relevant historical activity level;

(b) for each process emissions sub-installation, 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.

Article 16(3), (4), (5) and (7) shall apply mutatis mutandis to the calculation of the preliminary annual number of emission allowances allocated free of charge to new entrants.

2. The preliminary annual number of emission allowances allocated free of charge for the calendar year where the start of normal operation occurs shall correspond to the value of the applicable benchmark value for each sub-installation multiplied by the activity level of that year.

3. 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 1 and 2. The second subparagraph of Article 16(6) shall apply.

4. Member States shall notify to the Commission without delay the annual amount of emission allowances per installation allocated free of charge to new entrants.

Emission allowances from the new entrants reserve created pursuant to Article 10a(7) of Directive 2003/87/EC shall be allocated by the Commission on a first come, first served basis as from receipt of that notification.

The Commission may reject the preliminary annual amount of emission allowances allocated free of charge to a specific installation.

5. The final annual amount of emission allowances allocated free of charge shall correspond to the preliminary annual amount of emission allowances allocated free of charge for each installation determined in accordance with paragraphs 1 to 4 annually adjusted by the linear factor referred to in Article 9 of Directive 2003/87/EC, using the preliminary annual amount of emission allowances allocated free of charge for the installation concerned for the first year of the relevant allocation period as a reference.

6. For the purpose of the calculations referred to in paragraphs 1 to 5, the number of allowances for sub-installations and installations shall be expressed as the nearest integer.

Article 19 U.K. Allocation in respect of steam cracking

By way of derogation from Article 16(2)(a) and Article 18(1)(a), the preliminary annual number of emission allowances allocated free of charge for a product benchmark sub-installation relating to the production of high value chemicals (‘HVC’) shall correspond to the value of the steam cracking product benchmark for the relevant allocation period multiplied by the historical activity level determined in accordance with Annex III and multiplied by the quotient of the total direct emissions including emissions from net imported heat over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, calculated in accordance with Article 22(2) and expressed as tonnes of carbon dioxide equivalent and the sum of these total direct emissions and the relevant indirect emissions over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, calculated in accordance with Article 22(3). To the result of that calculation, 1,78 tonnes of carbon dioxide per ton of hydrogen times the mean historical production of hydrogen from supplemental feed expressed in tons of hydrogen, 0,24 tonnes of carbon dioxide per ton of ethylene times the mean historical production of ethylene from supplemental feed expressed in tons of ethylene, and 0,16 tonnes of carbon dioxide per ton of HVC times the mean historical production of other high value chemicals than hydrogen and ethylene from supplemental feed expressed in tons of HVC, shall be added.

Article 20 U.K. Allocation in respect of vinyl chloride monomer

By way of derogation from Article 16(2)(a) and Article 18(1)(a), the preliminary annual number of emission allowances allocated free of charge for a sub-installation relating to the production of vinyl chloride monomer (‘VCM’) shall correspond to the value of the VCM benchmark for the relevant allocation period multiplied by the historical activity level for VCM production expressed as tonnes and multiplied by the quotient of the direct emissions for the production of VCM including emissions from net imported heat over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, calculated in accordance with Article 22(2), expressed as tonnes of carbon dioxide equivalent and the sum of those direct emissions and the hydrogen-related emissions for the production of VCM over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, expressed as tonnes of carbon dioxide equivalent calculated on the basis of the historical heat consumption stemming from hydrogen combustion expressed as terajoules times the value of the heat benchmark for the relevant allocation period.

Article 21 U.K. Heat flows between installations

Where a product-benchmark sub-installation encompasses measurable heat imported from an installation or other entity not included in the EU ETS, the preliminary annual number of emission allowances allocated free of charge for the product benchmark sub-installation concerned determined pursuant to Article 16(2)(a) or Article 18(1)(a), as appropriate, shall be reduced by the amount of heat historically imported from an installation or other entity not included in the EU ETS in the year concerned multiplied by the value of the heat benchmark for measurable heat for the relevant allocation period.

Article 22 U.K. Exchangeability of fuel and electricity

1. For each product benchmark sub-installation corresponding to a product benchmark defined in section 2 of Annex I with consideration of exchangeability of fuel and electricity, the preliminary annual number of emission allowances allocated free of charge shall correspond to the value of the relevant product benchmark for the relevant allocation period multiplied by the product-related historical activity level and multiplied by the quotient of the total direct emissions including emissions from net imported heat over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, calculated in accordance with paragraph 2, expressed as tonnes of carbon dioxide equivalent and the sum of these total direct emissions and the relevant indirect emissions over the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, calculated in accordance with paragraph 3.

2. For the purposes of the calculation of emissions from net imported heat, the amount of measurable heat for the production of the product concerned imported from installations covered by the EU ETS during the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, shall be multiplied by the value of the heat benchmark for the relevant allocation period.

3. For the purposes of the calculation of indirect emissions, the relevant indirect emissions refer to the relevant electricity consumption as specified in the definition of processes and emissions covered in Annex I during the baseline period referred to in Article 15(2) or of the first calendar year after the start of normal operation referred to in Article 17(a), as appropriate, expressed in megawatt-hours for the production of the product concerned times 0,376 tonnes of carbon dioxide per megawatt-hour and expressed as tonnes of carbon dioxide.

Article 23 U.K. Changes to the allocation of an installation

1. Operators shall inform the relevant competent authority of any change related to the operation of an installation which has an impact on the installation's allocation. Member States may set a time-limit for that notification and may require the use of electronic templates or specific file formats.

2. After assessing the relevant information, the competent authority shall submit to the Commission all relevant information, including the revised final annual amount of emission allowances allocated free of charge for the installation concerned.

The competent authority shall submit the relevant information pursuant to the first subparagraph using an electronic system operated by the Commission.

3. The Commission may reject the revised final annual amount of emission allowances allocated free of charge for the installation concerned.

4. The Commission shall adopt a Decision based on the notification received, shall inform the relevant competent authority and shall introduce the changes, where appropriate, into the Union Registry set up pursuant to Article 19 of Directive 2003/87/EC and the EUTL, referred to Article 20 of that Directive.

Article 24 U.K. Renunciation of free allocation of allowances

1. An operator that has been granted free allocation of allowances may renounce it in respect of all or certain sub-installations at any time during the relevant allocation period by submitting an application to the competent authority.

2. After assessing the relevant information, the competent authority shall submit to the Commission the revised final annual amount of emission allowances allocated free of charge for the installation concerned as described in Article 23(2).

The revised allocation shall concern the calendar years following the year of the application referred to in the paragraph 1.

3. The Commission shall adopt a Decision as regards the renunciation and shall follow the procedure referred to Article 23(4).

4. The operator shall have no right to withdraw its application referred to in paragraph 1 the same allocation period.

Article 25 U.K. Mergers and splits

1. The operators of new installations resulting from a merger or a split shall provide the following documentation to the competent authority, as appropriate:

(a) names, addresses and contact data of the operators of the previously separate or single installations;

(b) names, addresses and contact data of the operators of the newly formed installation;

(c) a detailed description of the boundaries of the installation parts concerned if applicable;

(d) the permit identifier and the identification code of the newly formed installation(s) in the Union Registry.

2. Installations resulting from mergers or splits shall submit to the competent authority the reports referred to in Article 4(2). If the installations before the merger or split were new entrants, operators shall report to the competent authority the data from the start of normal operation.

3. Mergers or splits of installations, including splits within the same corporate group shall be assessed by the competent authority. The competent authority shall notify the Commission of the change of operators.

Based on the data received pursuant to paragraph 2, the competent authority shall determine the historical activity levels in the baseline period for each sub-installation of each newly formed installation after the merger or split. In the case that a sub-installation is split into two or more sub-installations, the historical activity level and allocation to the sub-installations after the split shall be based on the historical activity levels in the baseline period of the respective technical units of the installation before the split.

4. Based on the historical activity levels after the mergers or splits, the free allocation of allowances of the installations after mergers or splits shall correspond to the final amount of free allocation, before the mergers or splits.

5. The Commission shall review each allocation of allowances of the installations after mergers or splits and communicate the results of that assessment to the competent authority.

Article 26 U.K. Cessation of operations of an installation

1. An installation is deemed to have ceased operations where any of the following conditions is met:

(a) the relevant greenhouse gas emissions permit has been withdrawn, including if the installation no longer meets the thresholds of the activities listed in Annex I to Directive 2003/87/EC;

(b) the installation is no longer operating and it is technically impossible to resume operation.

2. Where an installation has ceased operation, the Member State concerned shall not issue emission allowances to it as of the year following the cessation of operations.

3. Member States may suspend the issuance of the emission allowances to installations that have suspended operations as long as it is not established whether they will resume operations.