Allocation of allowances
The UK Government sets the total cap on emissions of carbon
dioxide for the UK. Each installation participating in the EU
Emissions Trading System (EU ETS) is allocated a number of
allowances as a proportion of the overall cap.
The UK has implemented a two stage allocation methodology, where
the total number of allowances is divided between sectors on the
basis of projected emissions. These sector totals are then
distributed to installations on the basis of the historic
emissions.
The National Allocation Plan (NAP) for Phase II has a
significant part to play in ensuring that the EU meets its target
under the Kyoto protocol. Key differences between Phases I and II
of the system are the increased penalties imposed on any excess
emissions, the option for Member States to choose to opt-in other
greenhouse gases or sectors, and the ability for Member States to
temporarily exclude certain installations.
To find out more about allowance allocations
and how the National Allocation Plan affects your business visit
the Department of Energy and Climate Change web page for the
Phase II National Allocation Plan 