S.L. 643.2 Art. 11Free allocation of allowances.

(1) The Authority shall determine the quantity of free Chapter III allowances to be allocated to an installation eligible to a free allocation of Chapter III allowances pursuant to Directive 2003/

87/EC. Such an allocation shall be determined in accordance with

Directive 2003/87/EC and relevant decisions and regulations adopted by the Commission pursuant to Directive 2003/87/EC.

(2) No free allocation shall be made in respect of any electricity production, except for electricity produced from waste gases. "(2a) If an installation is covered by the obligation to conduct an energy audit or to implement a certified energy management system under regulation 10 of the Energy Efficiency Regulations and if the recommendations of the audit report or of the certified energy management system are not implemented, unless the pay-back time for the relevant investments exceeds three (3) years or unless the costs of those investments are disproportionate, then the amount of free allocation shall be reduced by twenty per cent (20%). The amount of free allocation shall not be reduced if an operator demonstrates that it has implemented other measures which lead to greenhouse gas emissions reductions equivalent to those recommended by the audit report or the certified energy management system for the installation concerned.

(2b) The free allocation determined pursuant to sub-regulation

(1) shall be reduced by twenty per cent (20%) where, by 1st May, 2024, the operator of an installation whose greenhouse gas emission levels are higher than the 80th percentile of emissions levels for the relevant product benchmarks, as determined by the relevant decisions and regulation adopted by the Commission pursuant to Directive 2003/87/EC, have not established a carbon neutrality plan for such installation for its activities covered by these regulations. The said plan shall be consistent with the climate neutrality objective established in Article 2(1) of Regulation (EU) 2021/1119 and shall set out:

(a) measures and investments to reach climate-neutrality by 2050 at installation-level, excluding the use of carbon offset credits;

(b) intermediate targets and milestones to measure, by S.L.643.02 INSTALLATIONS

31st December 2025 and by 31st December of each fifth year thereafter, progress made towards reaching climate-neutrality as set out in paragraph (a); and

(c) an estimate of the impact of each of the measures and investments referred to in paragraph (a) as regards the reduction of greenhouse gas emissions:

Provided that the achievement of the targets and milestones referred to in paragraph (b) shall be verified in respect of the period until 31st December 2025 and in respect of each period ending 31st December of each fifth year thereafter in accordance with regulation 16.

(2c) No free allocation shall be given to installations in sectors or sub-sectors to the extent that they are covered by measures established by Regulation (EU) 2023/956.

(2d) Subject to the application of Regulation (EU) 2023/0956, no free allocation shall be given in relation to the production of goods listed in Annex 1 of the said Regulation.

(2e) By way of derogation from sub-regulation (2d), the production of goods listed in Annex I to Regulation (EU) 2023/ 0956 shall benefit from free allocation in reduced amounts. A CBAM factor reducing the free allocation for the production of those goods shall be applied, and shall be equal to 100% from the coming into force of Regulation (EU) 2023/0956 until 31st December 2025, to 97.5% in 2026, to 95% in 2027, to 90% in 2028, to 77.5% in 2029, to 51.5% in 2030, to 39% in 2031, to 26.5% in 2032, to 14% in 2033, and to 0% from 2034.

(3) No free allocation shall be given to:

(a) electricity generators;

(b) installations for the capture of carbon dioxide;

(c) pipelines for transport of carbon dioxide; or

(d) carbon dioxide storage sites.

(4) No free allocation shall be made in respect of any electricity production by new entrants.

(5) District heating and high efficiency cogeneration for economically justifiable demand shall be eligible for free allocation, in respect of the production of heating or cooling, in accordance with Directive 2003/87/EC and relevant decisions and regulations adopted by the Commission pursuant to Directive 2003/ 87/EC.

(6) No free allocation shall be given to an installation that has ceased operating. An installation for which the greenhouse gas emissions permit has been surrendered or revoked or for which the operation or resumption of operation is technically impossible shall be considered to have ceased operations.

(7) The Authority shall, by 30th September, 2019, submit to the INSTALLATIONS

Commission a list of installations covered by these regulations for the period of five years beginning on 1st January, 2021, including free allocations as determined in accordance with this regulation. The Authority shall submit to the Commission lists of installations for each subsequent period of five years every five years thereafter.

(8) The Authority may, where applicable, request from an operator of an installation information it deems appropriate in accordance with relevant decisions and regulations adopted by the Commission pursuant to Directive 2003/87/EC.

(9) Upon approval by the Commission of the lists submitted to the Commission pursuant to sub-regulation (7), the Authority shall ensure that the lists of installations, including any free allocation for each installation, are published.