PART 7Enforcement

CHAPTER 2Civil penalties

Ultra-small emitters: failure to notify where reportable emissions exceed maximum amountI160

1

Where—

a

an installation's reportable emissions in a scheme year (the “excess year”) for which the installation is an ultra-small emitter exceed the maximum amount; and

b

the operator of the installation fails to give notice to the regulator under paragraph 6 of Schedule 8 on or before 31st March in the following year (the “default year”) or at all,

the operator is liable to a civil penalty.

2

The civil penalty is the sum of—

a

£2,500; and

b

F2CA + ((RE – FA) x CP) for each scheme year (or part of a scheme year) falling within the penalty period (if any), where—

  • CA is an estimate of the costs avoided by the operator in the scheme year (or part of the scheme year) as a result of carrying out a regulated activity without the authorisation of the relevant permit;

  • RE is an estimate of the installation's reportable emissions in the scheme year (or part of the scheme year) during which a regulated activity that was not authorised by a permit was carried out;

  • F3FA is—

    1. a

      where—

      1. i

        an application in respect of the installation was made under the Free Allocation Regulation for free allocation in the same allocation period as the penalty year is in;

      2. ii

        the UK ETS authority informed the regulator under Article 15a(4) of that Regulation that the application was valid; and

      3. iii

        paragraph 7(5) of Schedule 8 does not apply (ultra-small emitter becoming hospital or small emitter),

        the number of tonnes of carbon dioxide equivalent represented by the final annual number of allowances that would have been allocated under Part 4A in respect of the installation for the scheme year (or part of the scheme year) if the installation had not been included in the ultra-small emitter list for 2021-2025 or, as the case may be, the ultra-small emitter list for 2026-2030, disregarding any adjustment to free allocation that might have been made under the Activity Level Changes Regulation;

      the number of tonnes of carbon dioxide equivalent represented by the final annual number of allowances that would have been allocated under Part 4A in respect of the installation for the scheme year (or part of the scheme year) if the installation had not been included in the ultra-small emitter list for 2021-2025 or, as the case may be, the ultra-small emitter list for 2026-2030, disregarding any adjustment to free allocation that might have been made under the Activity Level Changes Regulation;

    2. b

      in any other case, zero;

  • CP is the carbon price for the scheme year.

F12A

For the purpose of determining the value of FA under paragraph (2)(b) in a case where part of a scheme year falls within the penalty period, the final annual number of allowances that would have been allocated under Part 4A in respect of the installation for that part of the scheme year is the final annual number of allowances that would have been allocated in respect of an installation for the scheme year multiplied by D/Y, where—

  • D is the number of days in the scheme year in the penalty period;

  • Y is the number of days in the scheme year.

3

The penalty period is the period—

a

beginning on 1st January in the year following the default year; and

b

ending on the earlier of the following—

i

the day before the day on which a permit for the installation comes into force; and

ii

the last day of the same allocation period as the excess year is in.

4

But there is no penalty period if—

a

1st January in the year following the default year is not in the same allocation period as the excess year; or

b

a permit for the installation is in force on that date.

5

When setting the amount of the civil penalty to be imposed, the regulator may increase the amount calculated under paragraph (2)(b) by a factor designed to ensure that the amount of the civil penalty exceeds the value of any economic benefit that the operator has obtained as a result of carrying out a regulated activity that was not authorised by the relevant permit.

6

The regulator must—

a

estimate CA and RE under paragraph (2); and

b

exercise the regulator's functions under paragraph (5),

in accordance with a direction given by the relevant national authority under section 52 of CCA 2008.

7

In this article—

  • “maximum amount” has the meaning given in paragraph 1 of Schedule 8;

  • “relevant permit” means—

    1. a

      where a hospital or small emitter permit for the installation comes into force before the last day of the same allocation period as the excess year is in, a hospital or small emitter permit;

    2. b

      in any other case, a greenhouse gas emissions permit.