Recalculating 2021 allocation post COVID.

A deadline of 31 January 2024 has been set for operators to apply to recalculate their 2021 allocation if the effects of the COVID pandemic meant that the 2019 to 2020 change in their Activity Level in a particular sub installation was greater than 15% larger than the change in their reportable emissions attributable to the same sub-installation.

Potentially confusingly, it is the difference between the changes that determines whether an installation is eligible.

Activity Level Drop Image

In the example above Activity Level has dropped by 50% while tCO2 has dropped by 29%, meaning the difference between the changes is 21%.

The UK ETS Authority has given the following formula to calculate this:

Eligibility = (AL2019 – AL2020) / AL2019 – (E2019 – E2020) / E2019

If this formula gives ≥0.15, an installation may be eligible.

Remember, Activity Level may be given in Tonnes of Product or in TJ of heat (as below) and emissions are those attributable to the particular sub-installation.

Worked Example:

An Installation has a Measurable Heat Sub-Installation and a Fuel Sub-Installation:

2022 Allocation COVID Blog - Worked example

The Measurable Heat of this sub-installation has dropped by 50%, while the emissions have only dropped by 29%, leaving a discrepancy of +21%. This means this sub-installation may be eligible to have its 2021 Allocation recalculated and based upon 2018 & 2019 Activity Level.

The equivalent figure for Fuel of +7% is below the threshold so no recalculation is possible.

An operator should contact their Regulator as soon as possible if they intend to make an application.

Further information can be found in the Participating in the UK ETS Guidance.

Please contact Swan Energy if you are unsure whether your installation could benefit from this new amendment.

Background

The Initial Initial UK ETS Authority Response (August 2022) to the Developing the UK ETS consultation included provision for operators to apply for the Activity Level data for the 2020 scheme year to be effectively ignored in the calculation of their 2022 free allocation (which was calculated based upon a two year average activity level of 2020 and 2021. The deadline for this application was 31 January 2023.

In the subsequent Full Response, reference was made to the fact that 2020 Activity Level also impacts 2021 Allocation, and some operators had requested that the same terms were applied for 2021 allocation, the above was circulated.

Joe Youldon

Operations Manager

Joe Youldon

Operations Director

Joe joined the Swan Energy team in November 2019. He graduated from the University of Leeds with a BSc in Environmental Science (International) in July 2019, having spent a year in Melbourne studying as part of his course.

In his role, to which has has recently been promoted, Joe manages the company’s portfolio across the UK, mentoring the team of Carbon Analysts. Joe is London-based.