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ARTICLE · 06 JULY 2021

Understanding The UK's New Emissions Trading Scheme

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At the end of the Brexit transition period, the UK exited the EU's emissions trading scheme (EU ETS). Given the importance of such a scheme for combatting climate change, the UK has designed...

United KingdomEnergy and Natural Resources
Mark Bartholomew
Mark Bartholomew

At the end of the Brexit transition period, the UK exited the EU's emissions trading scheme (EU ETS). Given the importance of such a scheme for combatting climate change, the UK has designed and implemented its own scheme (UK ETS), on the recommendation of the Climate Change Committee.

The recently published  Energy White Paper stated that the UK ETS would have a significant role to play in ensuring that the 2050 net zero target is achieved, but this is just one tool available to help meet this challenging target, and it cannot work in isolation.

The EU's emissions trading scheme

The EU ETS was established in 2005 and uses a ‘cap and trade' approach. Emissions limits are placed on certain industries within each member state to lower overall emissions. There have been various phases of the EU ETS, with new sectors being added over time; it now covers:

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