UK Emissions Trading Scheme Consultations

In December 2023, the United Kingdom's Department for Energy Security and Net Zero ("DESNZ") launched two consultations to garner views on the efficient operation of the UK's Emissions Trading Scheme ("ETS").

Post Brexit, following the UK's withdrawal from the EU ETS, the UK ETS commenced in January 2021, so as to replicate for UK participants the main elements of EU ETS. It operates on a similar basis to the EU scheme so as to help the UK to achieve its international net zero commitments. As a cap-and-trade scheme, it seeks to reduce greenhouse gas emissions by requiring operators in certain energy-intensive sectors (including manufacturing, power stations, and aviation) to surrender an equal number of emission allowances as the total emissions incurred by such operators for that year. Some allowances are allocated for free, while others are purchased at auction or through the secondary market. Currently, scheme participants are required to obtain alowances for