As mentioned in our previous updates, starting this year all full participants eligible for free allocation must report their activity level for 2019 and 2020. The introduction of dynamic allocation in Phase IV means that activity level must now be formally reported and verified.
Dynamic allocation is designed to recognise that installations can change substantially within a phase and these changes can impact their requirements for free allocation. It aims to ensure fair distribution of free allowances as the overall level of free allocation decreases over the phase.
The level of an installations free allocation will be adjusted symmetrically based on a two-year rolling average of activity level. If there is a variation of +/- 15% of the Historical Activity Level (HAL) then the level of allocation will be altered accordingly.
Activity level must be reported this year for 2019 and 2020 as if an installation’s activity level has varied by 15% of the HAL in 2019/2020, it could affect the level of free allocation in 2021.
Increase in energy efficiency is encouraged, so the guidance makes clear that if activity level decreases dis-proportionally to production by 15% and this reduction is due to energy efficiency gains, the level of free allocation will not be affected.
Monitoring Activity Level
Activity level should be monitored according to your approved MMP. For the period before the MMP was approved and for 2019 and 2020 it is acceptable to use the validated MMP used for the baseline exercise. Although, if data from more accurate data sources are available for 2019 and 2020 and are included in the approved MMP then these should be used.
During the 2020 verification verifiers will assess the activity level calculations against the MMP and will require evidence of any additional meters used to monitor activity level.
Activity level will be reported in a template similar to the NIMs and should be attached to an additional page in the annual emissions report on ETSWAP. So far only a draft version of this document has been released.
Installations in the Small Emitter and Hospital Opt-Out Scheme will not have this additional page added to their Annual Emissions Report and if installations have not applied for free allowances, then the page can be left blank.
Reporting attributable emissions to sub installations in not mandatory but will be necessary for future NIMs exercises. The completion of this section should be discussed with your verification body.
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