Annex VI : Allocation mechanism referred to in Art. 16

The annex provides a rather complicated description of the allocation mechanism for the HFC quotas under the New Entrants Reserve (=NER, 11% of the total available for the relevant quota year).

In essence it involves a multi-step process in which the total quantity (in Tonnes CO2-equivalent) is divided by the number of the applicants (“maximum allowance”). All applicants that submitted an application equal or lower than this “maximum allowance” will receive the full quantity of their application; all other applicants receive the “maximum allowance”.
If there is a balance the balance is divided by the number of applications who have not received their full quantity of their application which is then apportioned according to the same mechanism as in the first step. The example below sets out the mechanism in simplified terms:

EXAMPLE ONLY

Starting point

  • Total quota available for NER (11% of total for that year)
    = 10,000,000 tonnes of CO2 equivalent.
  • NER requests received:
Applicant A 10,000,000 tonnes of CO2 equivalent
Applicant B 5,000,000 tonnes of CO2 equivalent
Applicant C 4,000,000 tonnes of CO2 equivalent
Applicant D 3,000,000 tonnes of CO2 equivalent
Applicant E 500,000 tonnes of CO2 equivalent
Applicant F 10,000 tonnes of CO2 equivalent
TOTAL NER requested 22,510,000 tonnes of CO2 equivalent

Round 1

  • Maximum allowance per applicant= 1,666,667 tonnes of CO2 equivalent
    (10,000,000 tonnes of CO2 equivalent divided by 6).
  • Round 1 allocation:
Concerned party Requested Received Balance
tonnes of CO2 equivalent
Applicant A 10,000,000 1,666,667 8,333,333
Applicant B 5,000,000 1,666,667 3,333,333
Applicant C 4,000,000 1,666,667 2,333,333
Applicant D 3,000,000 1,666,667 1,333,333
Applicant E 500,000 500,000 0
Applicant F 10,000 10,000 0
TOTAL NER requested 22,510,000 7,176,667 15,333,333
EXAMPLE ONLY

Round 2

  • Remaining total allowance: (10,000,000 – 7,176,667) = 2,823,333 tonnes of CO2 equivalent,
    thus maximum allowance per applicant= 705,833 tonnes of CO2 equivalent
    (2,823,333 tonnes of CO2 equivalent divided by 4, the number of remaining applicants).
  • Round 2 allocation:
Concerned party Requested Received Balance
tonnes of CO2 equivalent
Applicant A 8,333,333 705,833 7,627,500
Applicant B 3,333,333 705,833 2,627,500
Applicant C 2,333,333 705,833 1,627,500
Applicant D 1,333,333 705,833 627,500
TOTAL 15,333,333 2,823,333 12,510,000

End result after 2 allocation rounds:

Concerned party Requested Received Balance
tonnes of CO2 equivalent
Applicant A 10,000,000 2,372,500 7,627,500
Applicant B 5,000,000 2,372,500 2,627,500
Applicant C 4,000,000 2,372,500 1,627,500
Applicant D 3,000,000 2,372,500 627,500
Applicant E 500,000 500,000 0
TOTAL 22,510,000 10,000,000 12,510,000