The UK Emissions Trading Scheme

The Four administrations announced in June 2020 that they would be introducing a UK ETS  to replace the EU ETS after the UK left the EU. This was following a consultation and recommendations from the Climate Change Committee.

The UK government and the devolved administrations collectively constitute the UK ETS Authority to oversee the UK ETS. The UK ETS, a cap and trade emissions scheme, is of similar design and has similar aims to the EU ETS. However, it will have a 5% reduction in the emissions cap that would have been set under that scheme. In addition, the aim is to align it with the UK 2050 net zero target by 2024 at the latest. Further details of the UK ETS were provided in the Industrial Decarbonisation Strategy published in March 2021. The Government also announced the first auction of allowances would take place in May 2021.

The UK and EU Trade and Cooperation Agreement committed both parties to explore options for linking their schemes but does not go further.