UK Emissions Trading Scheme: free allocation review -Authority Response
Date published:
Last updated:
In November 2025 The UK ETS (Emissions Trading Scheme) Authority published its main (combined) response to a 2023 free allocation review consultation, and a 2024 free allocation review carbon leakage consultation.
The UK ETS Authority sought views on proposals to alter free allocation methodology for stationary sectors to better target those most at risk of carbon leakage.
The document sets out responses to remaining consultation proposals from the 2023 and 2024 consultations, confirming changes to free allocation rules which will take effect for free allocations distributed over the 2027 to 2030 allocation period.
Free allocations will be targeted at sectors most at risk of carbon leakage in the context of the reset industry cap, in line with the UK ETS objective of incentivising a move to more carbon efficient production across the UK’s industrial sectors. The response outlines the approach for sectors to be covered by the UK Carbon Border Adjustment Mechanism (CBAM) from 2027.