(This note is not part of the Order)

The United Kingdom Emissions Trading Scheme (the "UK ETS") was established by the Greenhouse Gas Emissions Trading Scheme Order 2020 (the "UK ETS Order"). The UK ETS runs for ten "scheme years" beginning with 2021, split into two five-year "allocation periods". Operators of certain industrial installations and certain aircraft operators are required to monitor, report on, and surrender "allowances" equivalent to, their greenhouse gas emissions in each scheme year. Allowances (which are tradable) are held in accounts in the UK ETS registry, and there is a cap on the number of allowances that may be created. Allowances are sold at auction, but some operators of installations and aircraft operators receive an allocation of allowances free of charge.

This Order amends the UK ETS Order, Commission Delegated Regulation (EU) 2019/331 (the "Free Allocation Regulation"), Commission Implementing Regulation (EU) 2019/1842 (the "Activity Level Changes Regulation") and the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021.

Free allocation for aviation

Where an aircraft operator's free allocation for the 2024 and 2025 scheme years exceeds the aircraft operator's emissions for the year, the aircraft operator may be required to return any excess allowances: see amendments to articles 34K and 34T of the UK ETS Order.

Free allocation for "electricity generators"