UK Emissions Trading Scheme: future markets policy
Date published:
The UK Emissions Trading Scheme (ETS) Authority has published a Response to a consultation seeking input and views on a number of proposals to develop future markets policy.
In December 2023 the UK ETS Authority published a consultation seeking views on:
- whether the Authority has identified the most significant risks to effective market functioning
- the suitability of different policy options to address the risks identified
- how individual market stability policies should be designed to most effectively address market risks while minimising intervention and disruption in the market
In this response, we set out the final markets policy decisions agreed by the UK ETS Authority, and a summary of the stakeholder consultation responses.
We have made the following decisions:
- to retain and inflation-proof the Auction Reserve Price (ARP) to maintain its real value, implementing an inflation-based increase since its introduction (that is, from £22 to £28) in 2026 and increase the value yearly by inflation from 2027
- to retain the existing design and operation of the Cost Containment Mechanism (CCM) and retain discretion
- to discount the implementation of a quantity-triggered Supply Adjustment Mechanism (SAM) for a standalone UK ETS
It was announced at the 19 May 2025 UK-EU Summit that the UK and EU have agreed to work towards linking the UK ETS and EU Emissions Trading System (EU ETS) as set out in the Common Understanding.
The decisions in this document set out changes to markets policy for the UK ETS. The decisions do not represent UK positions for the negotiations, and they also do not preclude any changes that may need to be made in the event that the UK and EU agree to link their schemes.