Important Information about Article 27 and Article 27a Schemes

Important Information about Article 27 and Article 27a Schemes

The UK Government has issued important information for operators that have indicated an intention to apply to the Article 27 opt out and Article 27a exemption scheme for Phase IV of the EU Emission Trading System (EU ETS). This is as a result of the recent Government consultation on the Future of Carbon Pricing.

We have recieved a detailed newsletter within which it says:

For Article 27 Installations

The Government will continue to offer the “UK Small Emitter and Hospitals Opt-Out Scheme” in Phase IV of the EU ETS. The changes proposed in the recent consultation, to reflect overall reforms to the ETS Directive, will be adopted. On approval by the Commission of the equivalent measures of our Scheme, and the list of eligible UK installations seeking exclusion under Article 27, approved installations will automatically be covered, from January 2021, by the legislative provisions applying to Article 27 in the amended Greenhouse Gas Emissions Trading Scheme Regulations 2012. 

As offered in Phase III, a methodology based on historic emissions (‘the baseline’) will be used to calculate the annual emissions targets for Phase IV. The targets will reduce in line with the reduction of the emissions cap for Phase IV. 

The application of this methodology will include the following updates: 

1 - The annual reduction factor will be amended to align with the new linear reduction in the EU ETS cap in Phase IV (the linear reduction factor for the Phase IV cap is 2.2% of the original 2008-12 baseline rather than 1.74% as it was for Phase III); and

2 - The baseline will be recalculated for the second period (2026-2030) of Phase IV.

For Article 27a Installations

The Government will implement a new provision for Phase IV under Article 27a of the ETS Directive, offering stationary installations emitting less than 2,500 tCO2eq per year the option to be exempt from the main EU ETS scheme. The eligibility and implementation of the provision, proposed in the recent consultation, will be adopted. 

Eligible operators who wish to take advantage of Article 27a have until the 31st August 2019 to declare to their regulator a preference, from the below options, for what happens should they exceed the 2,500 tCO2eq emissions limit in any given year: 

Option 1: If they are eligible, enter the Article 27 “UK Small Emitter and Hospitals Opt-Out Scheme” 

Option 2: To enter the EU ETS main scheme

If, have read through information, operators decide to change their intention with regards to Article 27/27a schemes, they must email their competent authority by 31st August 2019 providing their Operator Name, their Installation Name, their Permit ID and which scheme they intend to join – either Article 27 or Article 27a.

We are informed that further guidance on the schemes, and the Government’s response to the recent consultation on the Future of Carbon Pricing, will be issued shortly. 

If you would like us to send you a copy of the full detailed newsletter, or would like to speak to the Swan Energy team, please call us on 01484 843867.

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