Changes to the emissions cap
The UK ETS has ensured a seamless transition for permit holders in the old pre-Brexit EU ETS scheme. The UK version initially covers the same GHGs and sectors covered by the EU ETS for activities with a total rated thermal input in excess of 20MW.
Regulators converted permits held for the EU ETS into either a Greenhouse Gas Emissions Permit, or a Hospital or Small Emitter Permit, to align with the UK ETS framework. While the overall framework remains similar, there are some changes for the UK ETS. These include the emissions cap initially being set 5% below the UK’s previous notional share within the EU ETS Phase IV cap, allowing the UK to “go even further, faster” on reducing emissions, according to former Energy Minister, Kwasi Kwarteng .
Another potential avenue for the UK ETS would be to link with the EU ETS through an EU-Swiss style arrangement if both parties were to agree.
As the Paris Agreement’s 2050 date for climate neutrality moves ever closer, the new way in which the UK taxes carbon emissions will be a key component of the UK Government’s strategy of how to reach this target. With the outlined system changing little and keeping the familiarity with the current EU ETS for the end user of these permits, this should ensure low levels of disruption in the immediate term.
Long term, the detail of the UK ETS framework will be crucial for the UK’s pursuit of Net Zero, requiring the regulation to be robust and help provide the impetus required to reach that goal.
The team at Carbon Architecture have the technical expertise and experience to support clients through this ever-changing landscape. To ensure your organisation achieves compliance in a cost-effective and timely manner, contact us and one of the team will be happy to discuss how we can support you.