This week, the UK Government and Devolved Administrations have released their response following the UK ETS consultation which saw responses from over 130 varied stakeholders.
As the UK ceases to be part of the EU following BREXIT, there has been much speculation surrounding what this will mean for the UK’s participation in the existing EU Emissions Trading System (ETS). Currently approximately one third of the UK’s emissions are covered by it.
The UK will cease to be a part of the scheme once 2020 allowances have been surrendered in April 2021 and preparations are now being made to forge ahead with the UK ETS. The government is still committed to its 2050 Net Zero target and the UK ETS will ultimately play an important part in the future of carbon pricing in the UK.
Here we summarise the main takeaways from the latest consultation.
The UK ETS scheme is to start on 1st January 2021. The Government has a preference to link it to the EU ETS scheme, but it can operate as a standalone UK ETS scheme. Efforts are being made to smooth the transition and the Government has also stated that moving forward it is open to considering a more direct link between the two schemes.
It will be really important that the scheme supports the UK climate targets and this is being taken into account.
The consultation has also outlined some of the administrative aspects of the scheme and how it will work:
This response on the UK ETS can start to provide some clarity for large emitters and enable them to plan for a smooth transition to the UK ETS. There is still much work to be done to forge ahead with the scheme and still ongoing negotiations to be made with the EU on trade which will influence exactly how the final UK ETS will work. Ultra-low emitters will also have some relief, as there will be reduced administrative and financial burden for them in the UK ETS, although monitoring of emissions will still need to be done. However, all participants should not lose the focus on reducing their overall emissions to achieve their own climate ambition.
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