40 Article 8 amended (content and submission of the monitoring methodology plan)
(1) Article 8 is amended as follows.
(2) For paragraph 7(a) substitute—
(a) where the monitoring methodology plan is submitted as part of the first stage of an application for free allocation in the 2027-2030 allocation period under Article 4:
(i) in the case of a type 2 2026 incumbent (as defined in Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025), on or before 31 December 2025;
(ii) in any other case, on or before 31 December 2026.
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41 Article 15a amended (assessment of applications for free allocation by operators of incumbent installations)
(1) Article 15a is amended as follows.
(2) In paragraph 1—
(a) in the words before point (a) omit “where”;
(b) in point (a) before “a deemed application” insert “where”;
(c) for point (b) substitute—
(b) in a case where the first and second stages of an application under Article 4 for free allocation in the 2027-2030 allocation period have been completed by the operator of an incumbent installation, as set out in paragraphs 6 and 7 of that Article.
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42 Article 16 amended (preliminary allocation at installation level for incumbent installations)
(1) Article 16 is amended as follows.
(2) In paragraph 1(b) for “2026-2030” in both places substitute “2027-2030”.
(3) In paragraph 5 in the second subparagraph for “2026-2030” substitute “2027-2030”.
(4) In paragraph 10 omit the words from “after benchmarks for the 2026-2030 allocation period” to the end.
(5) For paragraph 12 substitute—
12. 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.
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(1) Article 16a is amended as follows.
(2) In paragraph 1 in the words before point (a) after “allocation period” insert “other than the 2026 allocation period”.
(3) In paragraph 5 in the words before point (a) after “allocation period” insert “other than the 2026 allocation period”.
(4) After paragraph 6 and table A insert—
6a. But where the industry cap for the 2026 scheme year exceeds the total final annual number of allowances approved under Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 to be allocated for the 2026 scheme year in respect of all 2026 incumbents (as defined in Part 2 of that Order), the industry cap for the 2027 scheme year must be treated as being increased by the difference.
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(5) For paragraph 7(b) substitute—
(b) an application for free allocation in the 2027-2030 allocation period is made in respect of the installation under Article 4 and the installation is included in the hospital and small emitter list for 2026-2030 or the ultra-small emitter list for 2026-2030 unless, as part of the second stage of the application under Article 4(1a)(b)(i):
(i) the operator of the installation notifies the regulator on or before 30 June 2026 that the operator wishes the application to proceed because the operator does not wish the installation to be a hospital or small emitter or an ultra-small emitter for the scheme years in the 2027-2030 allocation period; and
(ii) the UK ETS authority informs the regulator under Article 15a(4) that the application is valid.
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(6) In paragraph 8 for “2026-2030 allocation period” substitute “2027-2030 allocation period”.
45 Article 18 amended (preliminary allocation to new entrants)
(1) Article 18 is amended as follows.
(2) In paragraph 1(a)—
(a) for “relevant period multiplied” substitute “relevant allocation period multiplied”;
(b) omit “and in this point “benchmark for the relevant period” means the benchmark for the relevant allocation period (as defined in Article 16(12)) set out in Annex 8”.
(3) In paragraph 7—
(a) in the words before point (a) omit “(except as provided in paragraph 1(a))”;
(b) in point (b) for “2026-2030 allocation period” substitute “2027-2030 allocation period or, where the start of normal operation of a new entrant is before 1st January 2027, a period consisting of the 2026 allocation period and the 2027-2030 allocation period”.
(4) After paragraph 7 insert—
8. But in paragraph 1(a) of this Article and in Articles 19 to 22, as those Articles apply for the purpose of this Article, “relevant allocation period” means the allocation period containing the scheme year for which the preliminary annual number of allowances is to be calculated.
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46 Article 24 amended (renunciation of free allocation of allowances)
(1) Article 24 is amended as follows.
(2) For paragraph 2 substitute—
2. Where an installation is an FA installation for the 2026 and 2027-2030 allocation periods, the operator of the installation may by giving notice (a “renunciation notice”) to the regulator on or after 1st January 2027 renounce free allocation in respect of the remaining scheme years of the 2027-2030 allocation period beginning with the scheme year after the year in which the notice is given.
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(1) Article 25 is amended as follows.
(2) For paragraph 9(b) substitute—
(b) where the final annual number of allowances to be allocated in respect of a new installation:
(i) for each scheme year in the 2021-2025 allocation period beginning with the first recalculated scheme year is zero, that the installation is not an FA installation for the 2021-2025 allocation period;
(ii) for the 2026 scheme year is zero, or for each scheme year in the 2027-2030 allocation period beginning with the first recalculated scheme year is zero, that the installation is not an FA installation for the 2026 and 2027-2030 allocation periods.
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(3) In paragraph 10—
(a) for point (a)(ii) substitute—
(ii) where any installation before the split or merger is an FA installation for the 2026 and 2027-2030 allocation periods:
(aa) with an entry in the allocation table for the 2026 allocation period, the 2026 allocation period;
(bb) with an entry in the allocation table for the 2027-2030 allocation period, the 2027-2030 allocation period;
;
(b) after point (d) insert—
(e) “incumbent installation” means:
(i) if the transfer date is before 31 March 2026, an installation in respect of which a deemed application for free allocation in the 2021-2025 allocation period is made;
(ii) if the transfer date is on or after 31 March 2026, an installation in respect of which an application under Article 4 for free allocation in the 2027-2030 allocation period is made.
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(4) After paragraph 10 insert—
11. This paragraph applies, in the case of a merger, where:
(a) the transfer date is after the date on which the allocation table for the 2026 allocation period is published but before 31 March 2026; and
(b) the installations before the merger include a type 1 2026 incumbent (as defined in Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025) and a type 2 2026 incumbent (as defined in that Part).
12. Where paragraph 11 applies:
(a) this Article applies as if:
(i) a reference to the first relevant calendar year were a reference to 2024;
(ii) a reference to the first recalculated scheme year were a reference to the 2027 scheme year;
(b) the operator of the new installation must comply with the obligation in Article 3 of the Activity Level Changes Regulation to report on activity levels in 2025 as if the merger had not taken place;
(c) paragraph 12 of Schedule 5A to the UK ETS Order applies as if in sub-paragraph (8) “and the transfer date (as defined in paragraph 9(6) of Schedule 6 to this Order) is on or after 31st March in a scheme year” were omitted.
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(1) Annex 7 is amended as follows.
Section 4 amended (selection of determination methodologies and data sources representing highest achievable accuracy)
(2) In section 4.2 (unreasonable costs) in the third paragraph in point (f) for “2026-2030” substitute “2027-2030”.
(1) Annex 8 is amended as follows.
(2) In the table headings and column headings after “2021-2025 allocation period” in each place insert “and 2026 allocation period”.
(3) After table C omit the words from “Where no benchmarks” to the end.
(1) Article 3 is amended as follows.
(2) In paragraph 1 after “for 2024.” insert “In 2027, this report must include data for the 2 years preceding its submission if the operator is not required under this Article to submit in 2026 a report including data for 2025.”.
52 Article 3a amended (sub-installations for which no historical activity determined)
(1) Article 3a is amended as follows.
(2) In paragraph 1 after “(see Articles 15(7) and 17(2)) of that Regulation)” insert “including under Article 15 as applied by article 7(2) of the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025”.
(3) For paragraph 4 substitute—
4. In this Article, “relevant allocation period” means:
(a) in the case of a sub-installation of an incumbent installation in respect of which a deemed application for free allocation in the 2021-2025 allocation period was made, a 2026 incumbent (as defined in Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025) or a new entrant in respect of which an application is made under Article 5 of the Free Allocation Regulation for free allocation in the 2021-2025 allocation period or the 2026 allocation period, a period consisting of the 2021-2025 allocation period and the 2026 allocation period;
(b) in the case of a sub-installation of an incumbent installation or a new entrant in respect of which an application for free allocation in the 2027-2030 allocation period is made under Article 4 or 5 of that Regulation, the 2027-2030 allocation period.
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53 Article 5 amended (adjustments to free allocation due to activity level changes)
(1) Article 5 is amended as follows.
(2) After paragraph 2 insert—
2a. In the case of a sub-installation of a type 1 2026 incumbent (as defined in Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025), for the purpose of determining whether a “further” adjustment can take place under paragraph 2 in consequence of the obligation in Article 3 to report on activity levels in 2025 on or before 31 March 2026, the reference in paragraph 2 to an “allocation period” must be read as a reference to the period consisting of the 2021-2025 allocation period and the 2026 allocation period (and consequently, if an adjustment under paragraph 1 has been approved by the UK ETS authority in that period, a further adjustment can take place only in the circumstances set out in paragraph 2).
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