UK Emissions Trading Scheme (UK ETS)
What businesses must do to meet their obligations if they are covered by the UK Emissions Trading System.
Emissions trading schemes work by setting a cap on the total amount of certain greenhouse gases that can be emitted by sectors covered by the scheme and then decreases that cap over time. Within the cap, participants receive free allowances and/or buy emission allowances at auction or on the secondary market which they can trade with other participants as needed.
What is the UK ETS?
A UK Emissions Trading Scheme (UK ETS) replaced the UK鈥檚 participation in the EU ETS on 1 January 2021. The UK Government and devolved administrations established the scheme to increase the climate ambition of the UK鈥檚 carbon pricing policy, while protecting the competitiveness of UK businesses.
The UK ETS applies to energy intensive industries, the power generation sector and aviation. Activities in scope of the UK ETS are listed in Schedule 1 (aviation) and Schedule 2 (installations) of the .
Northern Ireland electricity generators remain in the EU ETS under the Northern Ireland Protocol - find out more about the EU ETS.
Find out more about and about how to .
How to comply with the UK ETS
The UK ETS applies to regulated activities carried out at installations.
Operators of installations who carry out regulated activities must have either a greenhouse gas emissions (GHGE) permit or a hospital or small emitter (HSE) permit. You must apply for a permit before you begin your regulated activities. This is unless the installation has ultra-small emitter status for the 2021 to 2025 allocation period, in which case you will not require a permit.
Your business must meet targets set by the UK ETS by either cutting your carbon emissions or by trading allowances.
If you do not comply with the UK ETS requirements your regulator may take enforcement action which could result in a civil penalty.
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