Developing the UK ETS 2022

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The UK ETS Authority – made up of the UK Government, Scottish Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland – sought stakeholder views on proposals to develop the UK ETS which operates across England, Scotland, Wales and Northern Ireland between 25th March and 17 June 2022. This consultation has now concluded and a copy of the full outcome can be downloaded from the link below.

The consultation was called Developing the UK emissions Trading Scheme (UK ETS), all details can be found at Developing the UK Emissions Trading Scheme (UK ETS).

Detail of outcome

Main government response

We have made the following decisions:

  • setting the UK ETS cap to be consistent with net zero and doing this at the top of the net zero consistent range
  • smoothing the transition to the net zero cap through releasing 53.5 million additional allowances from the reserve pots to the market between 2024 and 2027
  • setting the industry cap at 40% of the overall cap
  • providing long term market resilience, putting aside 29.5 million allowances for future market management
  • reviewing technical changes to free allocation
  • phasing out free allocation for the aviation sector for the 2026-2030 allocation period
  • expanding the scope of the scheme to include additional sectors in the UK ETS and capping a greater proportion of UK emissions
  • incorporating Greenhouse Gas Removal (GGR) technologies in the UK ETS, subject to further consultation

See the main government response for the full detail.

Initial government response

This consultation included a small number of proposals that require implementation via legislation ahead of the 2023 scheme year, so we published an early response to set out final positions on these particular proposals before they take effect.

This early response outlines the feedback we received and the Authority decisions on the following proposals:

  • aviation
    • the inclusion of flights from the UK to Switzerland in the UK ETS from January 2023
    • the permitting of virtual site visits for aviation verifiers in situations other than circumstances that are serious, extraordinary and unforeseeable
    • updating the references in UK ETS legislation to the Renewable Transport Fuel Obligation (RTFO) sustainability criteria that are relevant to the eligibility of sustainable aviation fuels
  • amendment to the Activity Level Changes Regulation due to the 2020 COVID year
  • operational amendments to the UK ETS included in Chapter 9 of the consultation, including minor permitting, monitoring, reporting and verification (PMRV) amendments, and a window for hospitals and small emitters to re-enter the main scheme

Detail of feedback received

We spoke to and received responses from over 300 organisations, representing a wide range of stakeholders from:

  • energy, industrial and aviation sectors
  • non-government organisations (NGOs)
  • academia
  • advocacy groups
  • UK Climate Change Committee (CCC)

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