The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020

Article 25 substituted U.K.

30.  For Article 25 substitute—

“Article 25 U.K. Mergers and splits

1.   This Article applies where an application for the transfer of a greenhouse gas emissions permit of an installation that is an FA installation at the transfer date is granted under paragraph 9 of Schedule 6 to the UK ETS Order.

2.   But this Article does not apply if the application contains a statement by the new operator (as defined in paragraph 7 of that Schedule) that the new operator renounces free allocation in respect of the transferred units (as defined in that paragraph).

3.   The operators of installations (“new installations”) resulting from a merger or split must submit the following to the regulator:

(a) the relevant report or reports (see paragraphs 4 and 5);

(b) a report on the activity level of each sub-installation of each new installation in the calendar year preceding the transfer date containing the information referred to in Article 3(2) of the Activity Level Changes Regulation, as if the merger or split had taken place at the beginning of that year;

(c) a verification report on the reports referred to in points (a) and (b) in accordance with the Verification Regulation 2018.

4.   In the case of a merger, the relevant report is:

(a) if at least one of the installations before the merger was an incumbent installation whose start of normal operation occurred before the end of the baseline period, a report verified in accordance with the Verification Regulation 2018 containing the data referred to in Article 4(2)(a) covering the baseline period for the new installation and its sub-installations, as if the merger had taken place at the beginning of the baseline period;

(b) in any other case, a report verified in accordance with the Verification Regulation 2018 on the activity level of the first calendar year after the start of normal operation of the following installations before the merger and their sub-installations:

(i) the installation with the earliest start of normal operation; and

(ii) any other installation whose start of normal operation occurred in the same year as the installation with the earliest start of normal operation.

5.   In the case of a split, the relevant reports are:

(a) if the installation before the split was an incumbent installation whose start of normal operation occurred before the end of the baseline period, a report verified in accordance with the Verification Regulation 2018 containing the data referred to in Article 4(2)(a) covering the baseline period for each new installation and its sub-installations, as if the split had taken place at the beginning of the baseline period;

(b) in any other case, a report verified in accordance with the Verification Regulation 2018 on the activity level of the installation in the first calendar year after the start of normal operation for each new installation and its sub-installations, as if the split had taken place at the beginning of that year.

6.   After assessing the reports referred to in paragraph 3, the regulator must:

(a) determine the historical activity level of each sub-installation of each new installation:

(i) where paragraph 4(a) or 5(a) applies, in accordance with Article 15;

(ii) where paragraph 4(b) or 5(b) applies in accordance with Article 17;

(b) based on the historical activity levels, calculate the preliminary and final annual number of allowances to be allocated in respect of each new installation and of each sub-installation of each new installation for each scheme year in the relevant allocation period beginning with the scheme year after the year in which the transfer date occurs:

(i) where paragraph 4(a) or 5(a) applies, in accordance with Articles 16 and 16b;

(ii) where paragraph 4(b) or 5(b) applies, in accordance with Article 18 and 18a;

(c) send the information contained in the relevant report or reports referred to in paragraph 3(a), the determination referred to in point (a) and the calculation referred to in point (b) to the UK ETS authority.

7.   For the purposes of paragraph 6:

(a) where a sub-installation of an installation before a split is split into 2 or more sub-installations, the historical activity level and allocation in respect of the sub-installation of the new installation must be based on the historical activity level of the respective stationary technical units of the installation before the split;

(b) the final annual number of allowances to be allocated in respect of the new installation or installations for a scheme year must correspond to the final annual number of allowances to be allocated in respect of the installation or installations before the merger or split for the scheme year.

8.   The UK ETS authority must:

(a) approve the final annual number of allowances to be allocated in respect of each new installation for each scheme year in the relevant allocation period beginning with the scheme year after the year in which the transfer date occurs, making any corrections that the UK ETS authority considers appropriate; and

(b) inform the regulator accordingly.

9.   The regulator must give notice to the operator of each new installation:

(a) of the final annual number of allowances approved; and

(b) where the final annual number of allowances to be allocated in respect of a new installation for each scheme year in the relevant allocation period after the scheme year in which the transfer date occurs is zero, that the installation is not an FA installation for the relevant allocation period.

10.   In this Article:

(a) “relevant allocation period” means:

(i) where any installation before the split or merger is an FA installation for the 2021-2025 allocation period, the 2021-2025 allocation period;

(ii) where any installation before the split or merger is an FA installation for the 2026-2030 allocation period, the 2026-2030 allocation period;

(b) “transfer date”, in relation to the transfer referred to in paragraph 1, has the meaning given in paragraph 9 of Schedule 6 to the UK ETS Order.”.

Commencement Information

I1 Sch. 1 para. 30 in force at 31.12.2020 on IP completion day, see art. 2(2)(a)