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Jurisdiction: EU
Commencement: 10th December 2024
Amends: New Legislation
Air quality provisions for Member States aiming to achieve a zero-pollution objective by 2050 are set out in this Directive. Objectives for ambient air* quality designed to avoid, prevent or reduce harmful effects on human and environmental health are defined.
*Ambient air refers to outdoor air in the atmosphere, excluding workplaces.
Jurisdiction: United Kingdom
Commencement: 31st March 2024
Amends: The Greenhouse Gas Emissions Trading Scheme Order 2020
Following the UK’s exit from the EU, The Greenhouse Gas Emissions Trading Scheme Order 2020 establishes a UK Emissions Trading Scheme (UK ETS) covering greenhouse gas emissions from power and heat generation, energy intensive industries and aviation.
Various duties apply.
The next application window for free allocations, as well as for Hospital Small Emitter and Ultra Small Emitter schemes, has been moved to 1st April 2025 – 30th June 2025. Operators not applying for free allocations must also provide information to the UK ETS Authority during this window.
This change was made in order to allow the UK ETS Authority to finalise the policy for the 2026-2030 allocation period. It aims to provide certainty to UK ETS operators about what the free allocation rules will be during the allocation period 2026-2030 before they apply.
Changes to publication dates
The lists of hospitals or small emitters and ultra-small emitters for the 2026-2030 allocation period must be published by 17th October 2025. The allocation table for the 2026-2030 allocation period must be published by 28th February 2026.
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Jurisdiction: Great Britain
Commencement: 1st January 2024
Amends: New legislation
A series of trading schemes are established to limit greenhouse gas emissions from cars and vans.
From 3rd January 2024, manufacturers of non-zero emission vehicles* must sign up to the following schemes.
*Non-zero emission vehicles are vehicles that emit greenhouse gases.
Register of trading schemes
The Secretary of State must establish a register. This must include information on:
Various duties apply and are available to view on the Legislation Update Service.
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Jurisdiction: UK
Commencement: 4th October 2023 & 1st January 2024
Amends: The Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021
The legal framework for auctioning of emissions allowances under the UK Emissions Trading Scheme (UK ETS) is established by The Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021
The UK Emissions Trading Scheme (UK ETS) implements the principals of emissions trading by allocating and trading greenhouse gas (GHG) emissions allowances to participants of the scheme. These Regulations set out the legal framework to allow auctioning of emissions allowances.
One allowance equals one tonne of carbon dioxide (CO2) equivalent. At the end of each year, installations must have enough allowances to account for their GHG emissions. They have the flexibility to buy additional allowances on top of their allocation, or to sell surplus allowances generated from reducing their emissions below their allocation at auction. An allowance allows a participant to emit 1 tonne of carbon dioxide equivalent.
The UK ETS was implemented in the UK by The Greenhouse Gas Emissions Trading Scheme Order 2020 (‘2020 Order’). It replaces the European Union Emissions Trading System (EU ETS) for UK participants, which also follows the principles of emissions trading. For more general information on the UK ETS and how it works for participants see the entry for the 2020 Order.
The UK ETS authority for these Regulations are the national authorities, which are:
The Regulations are made under the power in section 96 of the Finance Act 2020 to make Regulations on the allocation of emissions allowances in exchange for payment. They are equivalent to the provisions made around allowances for EU ETS by Regulation (EU) 1031/2010 on the timing, administration and other aspects of auctioning of greenhouse gas allowances.
As with the EU ETS, under the UK ETS auctioning continues to be the main means of introducing allowances into the market. Participants are also able to trade UK ETS emissions allowances on a secondary market. It is set out in Part 2 of the Regulations how bids are to be submitted and withdrawn, and how the auction clearing price is to be determined.
The minimum volume bid is one lot, and each lot auctioned must consist of 500 allowances. Each bid must state:
Each bid may only be submitted, modified or withdrawn during the bidding window set by the auction platform. Any unsold allowances can be added to the next four auctions up to a limit of 125% of their original volume.
The Auction Reserve Price (ARP) is set by these Regulations and this is the minimum price for which allowances can be sold at auctions. Bids below this price will not be accepted. The UK ETS has an ARP of £22. It is not intended that any changes will be made to the ARP before it is likely withdrawn as the scheme matures.
Auction Calendar
The auctioneer sets the auction calendar, including the bidding windows, individual volumes, auction dates, as well as the auctioned product, payment and delivery dates of the allowances to be auctioned in individual auctions each calendar year. The auction platform provider, ICE Futures, was appointed to host emissions auctions on behalf of the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS), which has been appointed as the UK Auctioneer by the Treasury. ICE published the 2021 calendar for UK ETS auctions on 26th February 2021. The first UK ETS auction is 19th May 2021.
The appointed auction platform must publish the auction calendar for a year by 15th July of the preceding year or as soon as practicable after that date. The auction platform must also report transactions to the Financial Conduct Authority in order to provide appropriate regulatory oversight.
This legislation provides for fees and costs to be charged by the auction platform and auctions are to be monitored for issues such as market abuse, money laundering, terrorist financing or other criminal activity.
Auction participants will need to register with the appointed auction platform and must also hold a registry account in the UK Emissions Trading Registry. This registry system is used to ensure the accurate accounting of all allowances issued under the UK ETS, and it is used by operators to surrender allowances each year as required by the 2020 Order.
Cost Containment Mechanism
The Cost Containment Mechanism will be triggered if the average price for one allowance on secondary futures markets is more than:
If any of the above occur then the Treasury can authorise changing the distribution of allowances or increasing the volume of allowances to be auctioned at auctions within a calendar year.
Access to Auctions
Part 4 of the Regulations legislates access to auctions by participants and details the eligibility criteria and process for those applying to bid in auctions and participate in the auction platform’s secondary market. The appointed auction platform can refuse, revoke or suspend admission to bid in auctions.
There is a right of appeal set by these Regulations against decisions made by the auction platform, such as admissions to bid.
In order to move towards net-zero*, the number of carbon allowances auctioned from 2024 are reduced. The new allowances are set out in regulation 3.
From 2026, there will no longer be any free allocation** for aviation sectors.
*Net-zero is the Government’s commitment to cutting greenhouse gas emissions to as close to zero as possible.
**Free allocation is the process of distributing free carbon allowances to organisations. The alternative allocation method is via paid auction.
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Jurisdiction: United Kingdom
Commencement: 1st January 2024
Amends: The Greenhouse Gas Emissions Trading Scheme Order 2020
Following the United Kingdom’s (UK) exit from the European Union (EU), The Greenhouse Gas Emissions Trading Scheme Order 2020 establishes a UK Emissions Trading Scheme (UK ETS) covering greenhouse gas emissions (GHG) from power and heat generation, energy intensive industries and aviation. It replaces the European Union Emissions Trading System (EU ETS) for UK participants.
The UK ETS begins on 1st January 2021. Before the UK left the EU, the EU ETS was applied in the UK through The Greenhouse Gas Emissions Trading Scheme Regulations 2012. All UK operators that carried out an activity covered by the EU ETS were required to hold a permit, which was a licence to operate and emit greenhouse gases covered by the EU ETS. Activities covered by the EU ETS are any of the activities listed in Annex I to Directive 2009/29/EC to improve and extend the greenhouse gas emission allowance trading scheme of the Community (‘EU ETS Directive’).
The UK ETS does not significantly change the requirements for participating UK operators from those brought in by the EU ETS. Elements of the scheme will be familiar to operators. It is designed to maintain continuity with the EU ETS and to facilitate possible linkage in the future, however this is subject to ongoing trade negotiations between the UK and EU and would require further secondary legislation.
Key provisions included in this Order cover the scope of the scheme, monitoring and reporting requirements, the cap (the total level of emissions permitted) and the trajectory (the rate at which the cap declines) and the roles of the regulators in monitoring and enforcing the rules of the UK ETS. Secondary legislation will be introduced under the Finance Act 2020 to establish other parts of the UK ETS including rules for the auctioning of emissions allowances. Secondary legislation for the UK ETS currently includes:
The regulated activities covered by the UK ETS are listed in Schedule 2. Aviation activities are covered by the scheme and the definition of this is given in Schedule 1. The scheme covers electricity generation and heavy energy-using industries such as power stations, refineries, iron and steel, cement and lime, paper, food and drink, glass, ceramics, engineering, and the manufacture of vehicles. Other organisations, including universities and hospitals, may also be covered by the UK ETS depending upon the combustion capacity of equipment at their sites.
The UK ETS continues the principles of emissions trading by allocating and trading GHG emissions allowances. One allowance equals one tonne of carbon dioxide (CO2) equivalent. At the end of each year, installations must have enough allowances to account for their GHG emissions. They have the flexibility to buy additional allowances on top of their allocation, or to sell surplus allowances generated from reducing their emissions below their allocation.
Allocation periods
Phase I of the UK ETS will run from 2021-2030 and is split into two allocation periods:
The regulators in each jurisdiction that the Regulations apply to are the following:
*’Installation’ means a stationary technical unit where one or more regulated activities listed in Schedule 2 are carried out. ‘Installation’ does not include any of the following (which are outside the scope of the UK ETS):
For qualifying aircraft operators the regulators depend on which jurisdiction the aircraft operator is registered in:
The EA is the default regulator for new aircraft operators that do not have a registered office or place of residence in the UK. From 2026, the regulator for aircraft operators will be one of the four above and depend on the jurisdiction where the highest proportion of emissions occur.
Duties
Various duties apply.
Free allocation for installations
The methodology for calculating the free allocation* of lime and malt extract for 2024 and 2025 is updated. This is the result of malt extract being at risk of carbon leakage. Installations** that currently benefit from free allocation must recalculate their free allocation as soon as practicable after 1st January 2024.
*Free allocation is the free giving of CO2 allowances. Organisations may emit CO2 equal to the amount of allowances they have. Other methods of obtaining an allowance is via an auction or a trading scheme.
**An installation is a stationary technical unit where regulated activities (defined in Schedule 2) are carried out.
The benchmark figures for calculating free allocation are set out in Annex 8. These figures will now be used for calculating free allocation in the 2026-2030 allocation period instead of those used for the EU Emissions Trading System.
Installations whose allocations were reduced after calculating free allowances using data from 2020, may now apply for recalculation using data from other years.
Applications for hospitals, small emitters* or ultra-small emitters who want to benefit from free allocation must now include information to enable the historical activity level of installations to be determined.
*A small emitter emits less than 25,000 tonnes of carbon dioxide equivalent each year in the relevant period and has a total rated thermal input of less than 35 megawatts. An ultra-small emitter emits less than this.
N.B. Operators (including aircraft operators) may apply to surrender and return over-allocated, allowances.
These Regulations come into force on 1st January 2024.
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Jurisdiction: United Kingdom
Commencement: 1st July 2023
Amends: New Legislation
A framework is introduced to enable the monitoring and review of carbon emission targets, in accordance with Part 1 of the Climate Change Act 2008.
From 31st March 2024, the Secretary of State must review the maximum allowable carbon emission targets*.
*The maximum allowable carbon emission targets is the maximum carbon emissions that may be released in order to achieve the UK’s commitment under the Kyoto Protocol.
This review must identify whether the maximum allowable carbon emissions is greater than:
*Carbon budget is any carbon budget made under The Carbon Budgets Order 2009.
**The second commitment period is the second emissions reduction period under the Kyoto Protocol which ran from 2013 to 2020.
The review must consider the net emissions reported:
The Secretary of State must, where the maximum allowable carbon emissions is greater than the carbon or second commitment budgets, calculate the excess emissions using UK assigned units*.
*UK assigned units are units assigned to the United Kingdom under the Kyoto Protocol for the purpose of determining compliance.
N.B. Excess UK assigned emissions must not be used to offset greenhouse gas emissions.
There are no duties for organisations under these Regulations; duties are held by the Secretary of State.
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Jurisdiction: United Kingdom
Commencement: 1st January 2023
Amends: The Greenhouse Gas Emissions Trading Scheme Order 2020
Following the United Kingdom’s (UK) exit from the European Union (EU), the Greenhouse Gas Emissions Trading Scheme Order 2020 establishes a UK Emissions Trading Scheme (UK ETS) covering greenhouse gas emissions (GHG) from power and heat generation, energy intensive industries and aviation. It replaces the European Union Emissions Trading System (EU ETS) for UK participants.
The UK ETS begins on 1st January 2021. Before the UK left the EU, the EU ETS was applied in the UK through The Greenhouse Gas Emissions Trading Scheme Regulations 2012. All UK operators that carried out an activity covered by the EU ETS were required to hold a permit, which was a licence to operate and emit greenhouse gases covered by the EU ETS. Activities covered by the EU ETS are any of the activities listed in Annex I to Directive 2009/29/EC to improve and extend the greenhouse gas emission allowance trading scheme of the Community (‘EU ETS Directive’).
The UK ETS does not significantly change the requirements for participating UK operators from those brought in by the EU ETS. Elements of the scheme will be familiar to operators. It is designed to maintain continuity with the EU ETS and to facilitate possible linkage in the future, however this is subject to ongoing trade negotiations between the UK and EU and would require further secondary legislation.
Key provisions included in this Order cover the scope of the scheme, monitoring and reporting requirements, the cap (the total level of emissions permitted) and the trajectory (the rate at which the cap declines) and the roles of the regulators in monitoring and enforcing the rules of the UK ETS. Secondary legislation will be introduced under the Finance Act 2020 to establish other parts of the UK ETS including rules for the auctioning of emissions allowances. Secondary legislation for the UK ETS currently includes:
The regulated activities covered by the UK ETS are listed in Schedule 2. Aviation activities are covered by the scheme and the definition of this is given in Schedule 1. The scheme covers electricity generation and heavy energy-using industries such as power stations, refineries, iron and steel, cement and lime, paper, food and drink, glass, ceramics, engineering, and the manufacture of vehicles. Other organisations, including universities and hospitals, may also be covered by the UK ETS depending upon the combustion capacity of equipment at their sites.
The UK ETS continues the principals of emissions trading by allocating and trading GHG emissions allowances. One allowance equals one tonne of carbon dioxide (CO2) equivalent. At the end of each year, installations must have enough allowances to account for their GHG emissions. They have the flexibility to buy additional allowances on top of their allocation, or to sell surplus allowances generated from reducing their emissions below their allocation.
Allocation periods
Phase I of the UK ETS will run from 2021-2030 and is split into two allocation periods:
The regulators in each jurisdiction that the Regulations apply to are the following:
*’Installation’ means a stationary technical unit where one or more regulated activities listed in Schedule 2 are carried out. ‘Installation’ does not include any of the following (which are outside the scope of the UK ETS):
For qualifying aircraft operators the regulators depend on which jurisdiction the aircraft operator is registered in:
The EA is the default regulator for new aircraft operators that do not have a registered office or place of residence in the UK. From 2026, the regulator for aircraft operators will be one of the four above and depend on the jurisdiction where the highest proportion of emissions occur.
Various duties apply.
The UK Emissions Trading Scheme (UK ETS) now includes flights departing from an aerodrome in Great Britain and arriving at an aerodrome in Switzerland.
Allocation of free entitlement
Due to the addition of Switzerland to the scheme, changes are made to the application process for the allocation of free entitlement.
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Jurisdiction: United Kingdom
Commencement: 1st January 2023
Amends: The Greenhouse Gas Emissions Trading Scheme Order 2020
Following the United Kingdom’s (UK) exit from the European Union (EU), this Order establishes a UK Emissions Trading Scheme (UK ETS) covering greenhouse gas emissions (GHG) from power and heat generation, energy intensive industries and aviation. It replaces the European Union Emissions Trading System (EU ETS) for UK participants.
The UK ETS begins on 1st January 2021. Before the UK left the EU, the EU ETS was applied in the UK through The Greenhouse Gas Emissions Trading Scheme Regulations 2012. All UK operators that carried out an activity covered by the EU ETS were required to hold a permit, which was a licence to operate and emit greenhouse gases covered by the EU ETS. Activities covered by the EU ETS are any of the activities listed in Annex I to Directive 2009/29/EC to improve and extend the greenhouse gas emission allowance trading scheme of the Community (‘EU ETS Directive’).
The UK ETS does not significantly change the requirements for participating UK operators from those brought in by the EU ETS. Elements of the scheme will be familiar to operators. It is designed to maintain continuity with the EU ETS and to facilitate possible linkage in the future, however this is subject to ongoing trade negotiations between the UK and EU and would require further secondary legislation.
Key provisions included in this Order cover the scope of the scheme, monitoring and reporting requirements, the cap (the total level of emissions permitted) and the trajectory (the rate at which the cap declines) and the roles of the regulators in monitoring and enforcing the rules of the UK ETS. Secondary legislation will be introduced under the Finance Act 2020 to establish other parts of the UK ETS including rules for the auctioning of emissions allowances. Secondary legislation for the UK ETS currently includes:
The regulated activities covered by the UK ETS are listed in Schedule 2. Aviation activities are covered by the scheme and the definition of this is given in Schedule 1. The scheme covers electricity generation and heavy energy-using industries such as power stations, refineries, iron and steel, cement and lime, paper, food and drink, glass, ceramics, engineering, and the manufacture of vehicles. Other organisations, including universities and hospitals, may also be covered by the UK ETS depending upon the combustion capacity of equipment at their sites.
The UK ETS continues the principals of emissions trading by allocating and trading GHG emissions allowances. One allowance equals one tonne of carbon dioxide (CO2) equivalent. At the end of each year, installations must have enough allowances to account for their GHG emissions. They have the flexibility to buy additional allowances on top of their allocation, or to sell surplus allowances generated from reducing their emissions below their allocation.
Allocation periods
Phase I of the UK ETS will run from 2021-2030 and is split into two allocation periods:
The regulators in each jurisdiction that the Regulations apply to are the following:
*’Installation’ means a stationary technical unit where one or more regulated activities listed in Schedule 2 are carried out. ‘Installation’ does not include any of the following (which are outside the scope of the UK ETS):
For qualifying aircraft operators the regulators depend on which jurisdiction the aircraft operator is registered in:
The EA is the default regulator for new aircraft operators that do not have a registered office or place of residence in the UK. From 2026, the regulator for aircraft operators will be one of the four above and depend on the jurisdiction where the highest proportion of emissions occur.
Various duties apply.
Operational changes and other minor changes are made to the UK Emissions Trading Scheme (UK ETS). These changes come into effect on 1st January 2023.
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The Government has announced the establishment of a new Best Available Techniques framework for the United Kingdom (UK BAT) to prevent and reduce harmful industrial emissions to air, water and land, as the country moves away from the European Union’s framework.
N.B. Although the UK no longer needs to meet the requirements of any new European Union (EU) BAT following Brexit, existing EU BAT continue to apply in the UK through the European Union (Withdrawal) Act 2018.
Best Available Techniques (BAT) are the best economically and technologically viable techniques to prevent or minimise emissions and impacts on the environment. You need to use BAT if your organisation has any permitted installations, e.g. a refinery or food factory.
The new UK BAT framework will be developed by technical working groups (TWG) which will include experts from:
The draft UK BAT Conclusions (BATC) will be published in public consultations for comment, following which the UK, Scottish and Welsh governments together with the Northern Ireland Department for Agriculture, Environment and Rural Affairs (DAERA) will publish the final BATC as statutory instruments. The BATC will then be used as a basis for environmental permit conditions.
Given the complexity of the industrial sector, the UK BAT system will take between 1 and 3 years to complete, with the order of the industries to be announced in advance by the Government. For now, the first 4 industries to establish new BAT (likely by the second half of next year) are:
If you would like to read a bit more into UK BAT, please click here.
Jurisdiction: UK
Commencement: 14th April 2022
Amends: The Greenhouse Gas Emissions Trading Scheme Order 2020
Following the UK’s exit from the EU, The Greenhouse Gas Emissions Trading Scheme Order 2020 establishes a UK Emissions Trading Scheme (UK ETS) covering greenhouse gas emissions from power and heat generation, energy intensive industries and aviation.
Various duties apply
A number of changes are made to the 2020 Order, as summarised below.
*An authorised person is a person authorised, in writing, by an enforcing authority to exercise the regulator’s powers under this Order.
**The regulators are:
***The excess emissions penalty is a civil penalty that the operator of an installation, or an aircraft operator, must pay if they fail to surrender allowances. The penalty is £100 multiplied by the inflation factor for each allowance that is not surrendered.
Articles 24, 26 and 31 to The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 are revoked and replaced by Articles 7, 11, and 12 respectively, in this Order. This substitution does not bring any changes to duties for organisations.
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