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UK concludes major consultation on ETS reforms

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The UK ETS Authority has concluded a major public consultation on changes to the UK ETS. Launched in March of this year, the consultation covered multiple areas of scheme design, including aligning the ETS cap with the UK’s net zero target and expanding the scope of emissions covered by the scheme.

The UK ETS was launched on 1 January 2021 following the UK’s departure from the EU ETS. The consultation set out options to make the UK ETS the world’s first net-zero consistent scheme. This would involve an adjustment to the legislated cap from 2024, with a proposed total reduction of allowances of 30-35% over the period 2021-2030. The portion of freely allocated allowances would be adjusted from 2024 to align with the revised cap. The consultation also sought views on expanding the scheme to cover emissions from domestic maritime, waste incineration, and energy from waste.

Among the other topics included were integrating greenhouse gas removals into the scheme, changes to current rules for the aviation sector, and further developing market design. The conclusion of this consultation process follows an announcement in May that the government plans to instigate another consultation later in the year on the suitability of different carbon leakage protection measures, including product standards and a carbon border adjustment mechanism.

The UK ETS Authority is now analyzing the submissions received and will publish an official response with policy decisions in due course.

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