The UK Emissions Trading Scheme Authority (UK ETS) has announced a package of reforms that will require power, aviation, and high-energy industries to reduce emissions in alignment with the country’s net-zero goals. The regulations, which take effect next year, will incentivize these sectors to invest in long-term decarbonization and energy-efficient technologies.
To facilitate this transition, the emissions cap will be set at the highest level of the range consulted, allowing flexibility for the industries. Moreover, additional allowances will be available to the market from 2024 to 2027. The current free allocation of allowances for industry will be maintained until 2026 to protect them from international pressures.
Furthermore, the UK ETS will be extended to cover more sectors, including domestic maritime transport from 2026 and waste from 2028. Free carbon allowances for the aviation industry will be phased out in 2026 to promote further decarbonization.
With the recent rises in energy prices, it is more important than ever that we accelerate the transition away from costly fossil fuels, towards greener and more secure energy… The decisions taken here will not only put us on the path to net zero, but will also support crucial industries on their path to long-term sustainability.
UK ETS Authority Ministers, including Lord Callanan, Julie James MS, Màiri McAllan MSP and Gareth Davies MP
Additionally, investment in new Greenhouse Gas Removal technologies will be supported, which will be crucial for achieving net-zero goals. The UK ETS will drive early investment in technologies such as Direct Air Capture, which extracts carbon emissions directly from the atmosphere for storage beneath the earth’s surface.
Finally, the Authority has ensured support through free allowances at current levels until 2026 to give industries certainty over the level of support available in the medium term. This is part of a wider suite of policies including funding, regulation, and carbon pricing to deliver the required decarbonisation.