The UK will continue to reduce carbon emissions as part of proposals to expand the UK Emissions Trading Scheme (ETS), which will help the country meet its net zero goals while supporting economic growth.
The UK ETS Authority is consulting on proposals to expand the scheme to reduce carbon emissions from the maritime sector and recognise non-pipeline transport methods, such as shipping, road or rail, for moving captured carbon into geological storage.
The UK ETS Authority has also confirmed that it will make changes to free allocation rules to ensure participants who permanently cease their operations cannot benefit from surplus free allowances in their final year.
The changes include an exemption for sites ceasing activity to decarbonise. This will help support the UK ETS’s objective of incentivising a move to more carbon-efficient production across the UK’s industrial sectors.
UK ETS: Helping to reduce carbon emissions across key sectors
Launched in 2021, the UK ETS helps the UK reduce carbon emissions across aviation, power, and industry by setting a limit on emissions.
The scheme allocates allowances that can be traded, creating a carbon price that incentivises businesses to reduce their emissions.
The UK ETS Authority is made up of the UK Government, the Scottish Government, the Welsh Government and the Department of Agriculture, Environment and Rural Affairs for Northern Ireland.
The UK ETS Regulators are responsible for enforcing compliance with the UK ETS Regulations, including operational functions such as issuing and ensuring compliance with permits (for installations) and emissions plans (for aviation).
The regulators for each of the UK nations, controlled waters, territorial sea and the UK sector of the continental shelf are listed in article 10 of The Greenhouse Gas Emissions Trading Scheme Order 2020.
By expanding the scheme to reduce carbon emissions in the maritime sector, businesses with ships operating domestic voyages would need to obtain allowances for every tonne of carbon they emit.
This will ensure that the price of fuels used by the sector better reflects their environmental impacts.
The role of carbon capture and storage in a net zero future
Carbon capture and storage will be crucial for achieving net zero targets, especially for energy-intensive sectors such as steel, cement, and chemicals.
Sites without direct pipeline connections will require alternative transport options, such as road, rail, or ship, to access carbon capture and storage technology.
Recognising this within the UK ETS will ensure that operators transporting CO2 for storage can deduct the amount they send to storage from their reportable carbon emissions, providing economic support for industrial sites without access to pipelines.
In a joint statement, UK Emissions Trading Scheme Authority ministers Sarah Jones MP, Huw Irranca-Davies MS, Gillian Martin MSP, Andrew Muir MLA, James Murray MP and Mike Kane MP said: “The expansion of the UK ETS is about engaging and providing clarity for business and incentivising them to reduce carbon emissions as we transition to a greener future.
“Expanding the UK ETS to include maritime and recognising non-pipeline transport for carbon capture and storage will encourage investment into clean technologies, a vital growth industry in the UK.”
How the expansion will further decarbonise industry
Today’s publications build on previous commitments to consult on the expansion of the scheme.
The two consultations cover:
- How the UK ETS will expand to include maritime emissions, outlining the definition of a domestic voyage under the scheme, details of the threshold for ships, proposed exemptions, including to Scottish island communities, and the greenhouse gases to be covered.
- How the UK ETS will recognise non-pipeline transport of CO2 using shipping, road or rail to permanent geological storage. This will mean emitters storing CO2 in this way would not have to pay a carbon price for CO2 they successfully capture.
This comes after the UK government confirmed funding to launch the UK’s first carbon capture sites, which will create 4,000 jobs and attract £8bn in private investment in the North West and North East of England.
