The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020

Made: 16th December 2020

Laid before Parliament: 17th December 2020

Laid before the Northern Ireland Assembly: 17th December 2020

Laid before the Scottish Parliament: 17th December 2020

Laid before Senedd Cymru: 17th December 2020

Coming into force in accordance with article 2

At the Court at Windsor Castle, the 16th day of December 2020

Present,

The Queen's Most Excellent Majesty in Council

This Order is made in exercise of the powers conferred by sections 44, 46(3), 54 and 90(3) of, and Schedule 2 and paragraph 9 of Schedule 3 to, the Climate Change Act 2008 .

In accordance with paragraph 10 of Schedule 3 to that Act, before the recommendation to Her Majesty in Council to make this Order was made—the advice of the Committee on Climate Change, including on the amount of the limit referred to in section 48(2) of that Act, was obtained and taken into account; andsuch persons likely to be affected by the Order as the Secretary of State, the Department of Agriculture, Environment and Rural Affairs, the Scottish Ministers, the Welsh Ministers considered appropriate were consulted.

In accordance with paragraph 10 of Schedule 3 to that Act, before the recommendation to Her Majesty in Council to make this Order was made—

the advice of the Committee on Climate Change, including on the amount of the limit referred to in section 48(2) of that Act, was obtained and taken into account; and

such persons likely to be affected by the Order as the Secretary of State, the Department of Agriculture, Environment and Rural Affairs, the Scottish Ministers, the Welsh Ministers considered appropriate were consulted.

Accordingly, Her Majesty, by and with the advice of Her Privy Council, makes the following Order:

PART 1 — Preliminary

Citation

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This Order may be cited as the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020.

Commencement

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• (1) Except as provided by paragraph (2), this Order comes into force on 31st December 2020.

• (2) The following provisions come into force on IP completion day—

• (a) article 46 and Schedule 1 (Free Allocation Regulation amended);

• (b) article 47 and Schedule 2 (Activity Level Changes Regulation amended).

Extent

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This Order extends to the whole of the United Kingdom.

PART 2 — Greenhouse Gas Emissions Trading Scheme Order 2020 amended

Greenhouse Gas Emissions Trading Scheme Order 2020 amended

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The Greenhouse Gas Emissions Trading Scheme Order 2020 is amended in accordance with this Part.

Article 4 amended (interpretation)

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• (1) Article 4 is amended as follows.

• (2) In paragraph (1)—

• (a) after the definition of “2026-2030 allocation period” insert—

“account” means account in the registry; “Activity Level Changes Regulation” means Commission Implementing Regulation (EU) 2019/1842 of 31 October 2019, as it forms part of domestic law;

• (b) after the definition of “aircraft operator” insert—

“aircraft operator holding account” means an aircraft operator holding account opened under paragraph 13(3) of Schedule 5A;

• (c) after the definition of “allocation period” insert—

“allocation table” means an allocation table for the 2021-2025 allocation period or the 2026-2030 allocation period referred to in article 34A;

• (d) after the definition of “aviation activity” insert—

“aviation allocation table” means the aviation allocation table for the 2021-2025 allocation period referred to in article 34N;

• (e) after the definition of “CCA 2008” insert—

“central account” has the meaning given in paragraph 9(2) of Schedule 5A;

• (f) after the definition of “excluded flights” insert—

“FA installation”, “FA installation for the 2021-2025 allocation period” and “FA installation for the 2026-2030 allocation period” must be construed in accordance with article 4A;

• (g) after the definition of “flight” insert—

“free allocation” means the allocation of allowances free of charge under Part 4A; “free allocation conditions” means the conditions referred to in paragraph 4(6) of Schedule 6; “Free Allocation Regulation” means Commission Delegated Regulation (EU) 2019/331 of 19 December 2018, as it forms part of domestic law;

• (h) in the definition of “Monitoring and Reporting Regulation 2018” after “of the Council” insert “ (disregarding any amendments adopted after 11th November 2020) and, except in article 24 and Schedule 4, it means that Regulation ”;

• (i) after the definition of “operator” insert—

“operator holding account” means an operator holding account for an installation opened under paragraph 11(4) or 12(3) of Schedule 5A;

• (j) in the definition of “permit” after “Schedule 7)” insert “ and, in the case of a greenhouse gas emissions permit, any monitoring methodology plan (see paragraph 4(1)(hb) and (7) of Schedule 6) ”;

• (k) after the definition of “permit” insert—

“registry” has the meaning given in paragraph 5(1) of Schedule 5A; “registry administrator” has the meaning given in article 8A;

• (l) in the definition of “surrender” for “in such a way that the allowance ceases to be available for any other purpose” substitute “ in accordance with article 27 or 34 ”;

• (m) in the definition of “Verification Regulation 2018” after “of the Council” insert “ (disregarding any amendments adopted after 11th November 2020) and, except in article 25 and Schedule 5, it means that Regulation as given effect subject to modifications by article 25 ”;

• (n) after the definition of “Verification Regulation 2018” insert—

“verification report” has the same meaning as in the Verification Regulation 2018.

Article 4A inserted

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After article 4 insert—

(4A) (1) For the purposes of this Order, an installation is an “FA installation” if the installation is— (a) an FA installation for the 2021-2025 allocation period; or (b) an FA installation for the 2026-2030 allocation period. (2) For the purposes of this Order, an installation is an FA installation for the 2021-2025 allocation period from— (a) the date of publication of the allocation table for the 2021-2025 allocation period (including an updated allocation table) that first includes an entry for the installation; or (b) if earlier, the date on which the regulator gives notice of the final annual amount of allowances to be allocated in respect of the installation for any scheme year in the 2021-2025 allocation period under— (i) article 34H(7) (installations: errors in applications for free allocation, etc.); (ii) Article 18a(9) of the Free Allocation Regulation (new entrants); (iii) Article 25(9) of that Regulation (mergers and splits). (3) An installation ceases to be an FA installation for the 2021-2025 allocation period at the earliest of— (a) the end of the 2025 scheme year; (b) if the operator of the installation gives a renunciation notice under Article 24 of the Free Allocation Regulation in respect of the installation as a whole, the end of the scheme year in which the renunciation notice is given; (c) the date on which, following the partial transfer under paragraph 9 of Schedule 6 of the greenhouse gas emissions permit of an installation that is an FA installation, the regulator gives notice to the transferring operator (within the meaning of that paragraph) under Article 25(9)(b) of the Free Allocation Regulation that the installation is not an FA installation for the 2021-2025 allocation period; (d) if the installation's permit is surrendered under paragraph 11(1) of Schedule 6 or revoked under paragraph 12(1) of that Schedule, the end of the scheme year in which the installation ceases operation; (e) if the installation's permit is surrendered under paragraph 11(2) of Schedule 6 or revoked under paragraph 12(3) of that Schedule, the end of the scheme year in which the surrender or revocation takes effect; (f) the date on which, following the inclusion of an entry for the installation in the allocation table for the 2021-2025 allocation period in error, the regulator gives notice to the operator under article 34H(7)(c) that the installation is not an FA installation for the 2021-2025 allocation period. (4) For the purposes of this Order, an installation is an FA installation for the 2026-2030 allocation period from— (a) the date of publication of the allocation table for the 2026-2030 allocation period (including an updated allocation table) that first includes an entry for the installation; or (b) if earlier, the date on which the regulator gives notice of the final annual amount of allowances to be allocated in respect of the installation for any scheme year in the 2026-2030 allocation period under— (i) article 34H(7) (installations: errors in applications for free allocation, etc.); (ii) Article 18a(9) of the Free Allocation Regulation (new entrants); (iii) Article 25(9) of that Regulation (mergers and splits). (5) An installation ceases to be an FA installation for the 2026-2030 allocation period at the earliest of— (a) the end of the 2030 scheme year; (b) if the operator of the installation gives a renunciation notice under Article 24 of the Free Allocation Regulation on or after 1st January 2025 in respect of the installation as a whole, the end of the scheme year in which the renunciation notice is given; (c) the date on which, following the partial transfer under paragraph 9 of Schedule 6 of the greenhouse gas emissions permit of an installation that is a FA installation, the regulator gives notice to the transferring operator (within the meaning of that paragraph) under Article 25(9)(b) of the Free Allocation Regulation that the installation is not an FA installation for the 2026-2030 allocation period; (d) if the installation's permit is surrendered under paragraph 11(1) of Schedule 6 or revoked under paragraph 12(1) of that Schedule, the end of the scheme year in which the installation ceases operation; (e) if the installation's permit is surrendered under paragraph 11(2) of Schedule 6 or revoked under paragraph 12(3) of that Schedule, the end of the scheme year in which the surrender or revocation takes effect; (f) the date on which, following the inclusion of an entry for the installation in the allocation table for the 2026-2030 allocation period in error, the regulator gives notice to the operator under article 34H(7)(c) that the installation is not an FA installation for the 2026-2030 allocation period.

Article 8A inserted

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After article 8 insert—

(8A) (1) A reference in this Order to the “registry administrator” is a reference to— (a) the chief inspector; (b) the Environment Agency ; (c) NRW ; (d) the Secretary of State; and (e) SEPA . (2) Functions conferred or imposed by this Order on the “registry administrator” may be exercised— (a) by all of the persons referred to in paragraph (1) jointly; or (b) by one of the persons referred to in paragraph (1) (or by more than one of the persons referred to in paragraph (1) jointly) on behalf of the other persons referred to in paragraph (1) with their agreement.

Article 9 amended (meaning of regulator)

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• (1) Article 9 is amended as follows.

• (2) After paragraph (2) insert—

(2A) Articles 11 to 13 apply for the purpose of determining the regulator of a person other than an aircraft operator in relation to— (a) monitoring and reporting of the person's aviation emissions; (b) free allocation to the person under Chapter 2 of Part 4A (aviation free allocation); (c) the opening, operation or closure of the person's aircraft operator holding account, as if references to “aircraft operator” were to the person.

Article 14 amended (meaning of UK ETS authority, etc.)

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• (1) Article 14 is amended as follows.

• (2) After paragraph (4) insert—

(5) In this article, a reference to this Order includes a reference to the Monitoring and Reporting Regulation 2018, the Verification Regulation 2018, the Free Allocation Regulation and the Activity Level Changes Regulation.

Article 18 amended (allowances)

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• (1) Article 18 is amended as follows.

• (2) In paragraph (1) for “direct that allowances be created” substitute “ create allowances in the registry ”.

• (3) After paragraph (2) insert—

(3) Allowances may be held only in accounts in the registry.

Article 20 amended (cap for scheme years)

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• (1) Article 20 is amended as follows.

• (2) For paragraph (1) substitute—

(1) The number of allowances created in a scheme year may not exceed the sum of— (a) the base for the scheme year multiplied by— (i) if the scheme year is in the 2021-2025 allocation period, the 2021-2025 hospital and small emitter reduction factor; (ii) if the scheme year is in the 2026-2030 allocation period, the 2026-2030 hospital and small emitter reduction factor; and (b) the balance of allowances in the new entrants' reserve on 1st January in the scheme year (see article 34G for the new entrants' reserve).

Article 21 amended (cap: hospital and small emitter reduction factors)

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• (1) Article 21 is amended as follows.

• (2) In paragraph (4)—

• (a) in sub-paragraph (a) after “verified” insert “ as satisfactory ”;

• (b) after sub-paragraph (a) insert—

(aa) determined under regulation 44 of GGETSR 2012 or article 45 of this Order;

Article 24 amended (monitoring and reporting of emissions)

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• (1) Article 24 is amended as follows.

• (2) For “Commission Implementing Regulation (EU) 2018/2066 of 19 December 2018 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council” substitute “ The Monitoring and Reporting Regulation 2018 ”.

Article 25 substituted

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For article 25 substitute—

(25) The Verification Regulation 2018 has effect for the purpose of the UK ETS, subject to the modifications in Schedule 5 (see also paragraph 4 of Schedule 8 which makes further modifications in relation to ultra-small emitters).

Chapter 4 of Part 2 inserted

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After article 25 insert—

(25A) Schedule 5A (registry) has effect.

Article 27A inserted

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After article 27 insert—

(27A) (1) This article applies where the operator of an installation referred to in paragraph (2) does not make an application under any of the following— (a) paragraph 5 of Schedule 7 (hospital or small emitter status for 2026-2030 allocation period); (b) paragraph 3 of Schedule 8 (ultra-small emitter status for 2026-2030 allocation period); (c) Article 4 of the Free Allocation Regulation (free allocation in 2026-2030 allocation period). (2) The installations are— (a) an installation for which a permit is issued on or before 30th June 2024; (b) an installation that is an ultra-small emitter for the 2024 scheme year; (c) an installation for which an application for a permit has been made but not yet determined. (3) The operator must submit the following to the regulator— (a) details of the installation, including details of any permit in force; (b) activity information (that is to say, the information set out in section 1.3 of Annex 4 to the Free Allocation Regulation); (c) details of eligibility for free allocation (that is to say, the information set out in section 1.4 of Annex 4 to the Free Allocation Regulation); (d) a statement that the operator is not applying for free allocation in the 2026-2030 allocation period under Article 4 of the Free Allocation Regulation. (4) The information referred to in paragraph (3) must be submitted in the period beginning on 1st April 2024 and ending on 30th June 2024. (5) The regulator must send the information submitted by the operator to the UK ETS authority on or before 30th September 2024.

Article 33 amended (reporting aviation emissions)

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• (1) Article 33 is amended as follows.

• (2) In paragraph (1) after “verified” insert “ as satisfactory ”.

• (3) In paragraph (2) for “verified in accordance” substitute “ verified as satisfactory in accordance ”.

• (4) In paragraph (3) after “under paragraph (1)” insert “ (and the verification report) ”.

Part 4A inserted

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After Part 4 insert—