1. This Article applies where, for a scheme year (the "relevant scheme year") in an allocation period:

(a) the sum ("PFA") of the preliminary annual number of allowances to be allocated in respect of all installations in the relevant scheme year calculated under Article 16 (including any corrections required under Article 16(11)) is greater than the industry cap ("IC") for the relevant scheme year; and

(b) the amount by which PFA exceeds IC is greater than the previous unallocated amount.

2. The previous unallocated amount is TIC + FS - TFA, where:

(a) TIC is the sum of the industry cap for each scheme year preceding the relevant scheme year in the same allocation period as the relevant scheme year;

(b) FS is such number of allowances from the flexible reserve under article 23A of the UK ETS Order as the UK ETS authority may determine for the allocation period;

(c) TFA is the sum of the final allocation for each scheme year preceding the relevant scheme year in the same allocation period as the relevant scheme year.

3. The final allocation for a scheme year is the sum of -