The UK ETS launched on 1 January 2021, providing some reassurance of a smooth transition from the EU scheme for participants. The Government is also intending to go further than its EU counterpart, by aligning the UK ETS with the Net Zero goal, through reducing the cap on emissions allowances by 5% from the UK’s expected share of the EU ETS cap.
The UK ETS is continuing to offer free allowances to prevent carbon leakage and to protect UK competitiveness. However, a review of the UK ETS will aim to ensure that the scheme evolves and grows to make the most of new opportunities as well as being compatible with the UK’s climate commitments.
The Government has issued a Call for Evidence on how the use of free allocations can better incentivise emissions reduction and protect energy intensive industries from carbon leakage.
It will be consider::
- The advantages and disadvantages of the current approach to free allocation
- Key questions the Review should discuss and any problems that need addressing
- How they can make free allocations fairer and more targeted as allocations are decreased in line with the reduction in the overall cap.
We want to make sure that the views of businesses – particularly those in energy intensive industries that this will impact – are heard.
Please take part in our short survey here and we will feed your views back to the government.