What is UK Emissions Trading System - UK ETS?

The UK Emission Trading Scheme (ETS) is a cap-and-trade system run by the government to reduce greenhouse gas emissions. It replaces the European Union Emissions Trading System (EU ETS) from 1 January 2021 onward and regulates emissions from UK power stations, industrial plants, and aviation. UK ETS was created to fill the void EU ETS left following the UK’s withdrawal from the European Union. In terms of design and how the system works, UK ETS mostly resembles EU ETS.

What differentiates the UK ETS from the EU ETS is that the full scope flights are those which are landing at or departing from an airport situated in the UK, Gibraltar or the EEA. Moreover, the reduced scope (called UK ETS scope), are the UK domestic flights, flights between the UK and Gibraltar, and flights from the UK to the EEA (this also includes flights from the UK to the following EU Member State territories: Ceuta and Melilla (Spain), the Åland Islands (Finland) and Jan Mayen (Norway). In addition, in case of any offsetting obligations, the EUA emission units are not permitted to be used under UK ETS; only UK Allowances may be used. 

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Nick Houseman
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