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Detailed guide: UK ETS: apply for free allocation

Overview

Under the UK Emissions Trading System (UK ETS), a proportion of free allowances will be allocated to qualifying aircraft operators based on their historical aviation activity.

To apply, you do not have to be an aircraft operator but must send a free allocation application to your regulator. Find out who your regulator is if you do not have an existing UK regulator.

All applications for a free allocation entitlement must be made by 31 March 2021.

To apply for a free allocation, you will need to submit 2010 and/or 2014 verified tonne-kilometre (tkm) data to your regulator. This data should cover all full-scope flights and must contain tkm data associated with UK ETS aviation activity.

Free allocation will be distributed in proportion with UK ETS aviation activity emissions rather than full-scope flight emissions.

Tonne-kilometres = distance × payload, where ‘distance’ is the great circle distance between the aerodrome of departure and the aerodrome of arrival plus an additional fixed factor of 95 km and ‘payload’ is the total mass of freight, mail and passengers carried.

Data needed to submit a free allocation application

You can apply for a free allocation by submitting verified 2010 tkm data.

You can apply with verified 2014 tkm data if you successfully applied for an allocation from the EU ETS Special Reserve as a new entrant.

You can apply with verified 2010 and 2014 tkm data if you successfully applied for an allocation from the EU ETS Special Reserve as a fast-grower and believe that at least some of this growth is attributable to UK ETS aviation activity.

All data should be accompanied by a statement that you have not undergone any business reorganisation since the relevant year of activity (for example, a split or merger). This is to assure the regulator that you are the only person that will be applying with the tkm data you have submitted.

If you have undergone a business reorganisation, you must declare this and provide evidence of how this reorganisation affects any aviation activity included in your application.

Verify your (tkm) data

Requirements for verification

The requirement for verification depends on whether you had a UK regulator or submitted data for EU ETS free allocation previously.

If you were administered by the UK for the EU ETS and have previously submitted verified tkm data to your regulator

You must confirm to your regulator that the same data can be used for your UK ETS free allocation application. In this case, you do not have to resubmit this data and it does not need to be re-verified.

If you were not administered by the UK for the EU ETS but have previously submitted the same tkm data to an EU Member State regulator to apply for an EU ETS free allocation

You must submit your verified tkm data to the your UK regulator (or the Environment Agency as a default).

You are also required to submit an additional statement from your EU ETS regulator to confirm that the tkm data you are submitting is the same as the data used to calculate your EU ETS free allocation. In this case, your data does not need to be re-verified.

If you do not provide such a statement, you will need to get your tkm re-verified as set out below.

If you have not previously applied for a free allocation

You will need to get your tkm data verified as set out below.

What you need to submit to verify your tkm data

You will need to submit:

  • a tkm data report containing the information set out in section 3 of Annex 10 to Commission Regulation (EU) 2018/2066 (as it has effect in EU law)
  • a verification report in relation to it containing the information set out in Article 27 of Commission Implementing Regulation (EU) 2018/2067 (as it has effect in EU law)

You may use a UK or EU accredited verifiers to carry out this work.

Your regulator may request additional documents if it is considered necessary to process your application. If you do not respond to any requests in the timeframe specified by the regulator, your application may be considered withdrawn.

Receiving a free allocation

Once your application for free allocation and all related information has been received, your regulator will calculate your free allocation entitlement for the UK ETS.

This will be calculated by multiplying your tkm data on UK ETS aviation activity by the aviation benchmark. This benchmark will be 0.000642186914222035, the same as was used to calculate EU ETS free allocation.

Aviation free allocation entitlement will then be reduced by a fixed amount of 2.2% of the initial free allocation amount each year, including 2021.

Example

A person’s 2010 activity data amounts to 1557179 tonne-kilometres on UK ETS routes.

This figure is then multiplied by the benchmark:

0.000642186914222035×1557179 = 1000 UK Allowances

This will then be reduced by 22 allowances (2.2% of 1000) each year, including 2021:

2021: 978

2022: 956

2023: 934

2024: 912

2025: 890

Timelines for free allocation

Your regulator will submit your application and its calculation of your level of free allocation to the UK ETS Authority for approval. If approved, your free allocation will be included in the UK ETS Aviation Allocation Table (AAT) which will be published on GOV.uk. The AAT will include the name of each person, the number of allowances they are entitled to each year for the 2021-2025 allocation period.

Your regulator will inform you once the AAT is published, which is likely to be by 1 June 2021.

To receive a free allocation, you must have an Aircraft Operator Holding Account (AOHA) in the UK ETS registry, which will be opened for you once your Regulator has issued your Emissions Monitoring Plan (EMP). Your free allocation will be allocated by 28 February of each scheme year except in 2021, when it will be issued as soon as reasonably practicable to allow for free allocation applications and accounts to be set up in the UK ETS registry.

You are only entitled to a free allocation as stated in the AAT in respect of a scheme year in which you are a UK ETS aircraft operator. If you are not a UK ETS aircraft operator in a given scheme year you will have no compliance obligations, and your AOHA will be marked as ‘excluded’ in the registry and no free allowances will be allocated.

If you receive an allocation for a given scheme year, but it transpires that you were not a UK ETS aircraft operator in that year, the allowances must be returned.