UK Emissions Trading Scheme expansion consultation

Views sought on expanding the UK Emissions Trading Scheme to further limit carbon emissions.

The United Kingdom Emissions Trading Scheme (ETS) Authority has published a package of consultations on expanding the UK ETS to include the energy from waste and waste incineration sectors. It is also consulting on how engineered greenhouse gas removals, such as direct air carbon capture, could be integrated, and on whether high-quality nature-based removals could be suitable for the scheme.

The UK ETS Authority is made up of the UK Government, the Scottish Government, the Welsh Government and the Department of Agriculture, Environment and Rural Affairs (DAERA). The scheme launched in January 2021, following the UK’s exit from the EU ETS.

The ETS is a key part of the UK’s approach to addressing climate change. It requires operators under the scheme to obtain allowances for every unit of carbon they emit. These allowances can be traded between participants, generating a carbon price that spurs businesses to invest in cleaner or renewable energy sources and improved energy efficiency.

The UK ETS currently applies to the aviation, power, and industry sectors, but since its establishment in 2021 the Authority has been examining how carbon pricing can drive decarbonisation across more of the economy.

Stakeholders are invited to share views on two consultations to further limit carbon emissions and support progress to net zero.

Including energy from waste and waste incineration in the UK ETS

This consultation covers how the UK ETS will expand to include fossil CO2 emissions from energy from waste and waste incineration from 2028. This includes a two year phasing-in period for the sector from 2026 during which emissions will be monitored, reported and verified, with no obligation to purchase or surrender UK ETS allowances until their full membership in 2028. This will work alongside other initiatives to decarbonise the sector by providing an incentive for industry to adopt decarbonisation technologies.

Find out more about the waste and waste incineration UK ETS consultation and how to respond.

Including greenhouse gas removals in the UK ETS

This consultation covers how UK-based engineered greenhouse gas removal technologies such as Direct Air Carbon Capture, where carbon dioxide is removed from the air and permanently stored, could be integrated into the UK ETS. This aims to provide a long-term market for GGRs. It also asks whether carbon stored by the creation of new UK woodland could be integrated into the UK ETS.

Find out more about the greenhouse gas removals UK ETS consultation and how to respond.

First published 28 May 2024