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Glossary

Sub-installation – EU ETS

Under the EU Emissions Trading System (EU ETS), a share of an installation's inputs, outputs and emissions that gets its own free allocation calculation. Operators divide each installation eligible for free allocation into them.

Who it applies to
Operators of installations eligible for free allocation, which divide them into sub-installations for data reporting and monitoring. Their EU country's list of installations gives, for each sub-installation, its yearly activity level and emissions in the baseline period, whether it belongs to a sector deemed at risk of carbon leakage and whether the goods it produces are covered by the Carbon Border Adjustment Mechanism (CBAM).
Example
A paper mill that receives free allocation makes newsprint, a product with its own benchmark, and also exports steam to a district heating network. The newsprint's inputs, outputs and emissions go first to a product benchmark sub-installation, and the steam exported for district heating goes to a district heating sub-installation, each with its own calculation.
Also known as
sub-installations, product benchmark sub-installation, heat benchmark sub-installation, district heating sub-installation, fuel benchmark sub-installation, process emissions sub-installation

The Free Allocation Regulation (Delegated Regulation (EU) 2019/331) has no single definition of a sub-installation: it defines each type. The operator assigns the installation's inputs, outputs and emissions to them in this order of priority:

  • Product benchmark sub-installations, for products that have their own benchmark
  • Heat benchmark and district heating sub-installations, for measurable heat not covered by a product benchmark
  • Fuel benchmark sub-installations, for heat that isn't measurable, from burning fuel or from electricity
  • Process emissions sub-installations, for certain emissions outside product benchmarks, such as from reducing metal ores or breaking down carbonates

Measurable heat is a net heat flow carried through identifiable pipes or ducts by a medium such as steam, hot air or water, for which a heat meter is or could be installed. Each physical product of the installation goes to one sub-installation, with nothing left out or counted twice.

The EU country calculates free allocation for each sub-installation separately: for a benchmark sub-installation, the benchmark value multiplied by its historical activity level. The historical activity level is the median of yearly production, heat, fuel use or process emissions over the baseline period, the five calendar years before the deadline for submitting data to the Commission. Each sub-installation's amount is then multiplied by its factor for carbon leakage, and by the CBAM factor where it makes goods covered by CBAM. The installation's total is the sum of its sub-installations, multiplied by the cross-sectoral correction factor.

Our free allocation explainer shows the whole calculation, the codes to record for each sub-installation and what happens when activity changes. Free allocation and Installation – EU ETS have entries of their own.

Regulations

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