The UK Emissions Trading Scheme Authority has announced a package of reforms to tighten limits on industrial, power, and aviation emissions to begin next year. Emissions limits will be implemented gradually to give the affected industries certainty over the level of support available in the medium term.
The move comes as the country seeks to push for more significant decarbonization to reach its stated climate goals and boost energy independence.
What is the carbon emissions scheme?
The scheme launched in 2021 to replace the UK’s participation in a similar program by the European Union. The UK Emissions Trading Scheme Authority (UK ETS) is the joint body comprising the UK Government, Scottish Government, Welsh Government, and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland that runs the scheme.
The program limits the total amount of greenhouse gases aviation, power, and other energy-intensive industries can emit. This is designed to incentivize industries away from using fossil fuels and encourage them to cut their carbon footprint by investing in energy efficiency and cleaner, or renewable technologies, which can boost future energy security.
It uses a process of buying and selling emissions allowances, which companies must obtain for every tonne of emissions they produce yearly. Companies that successfully reduce their emissions can sell unused allowances to other firms.
Aviation’s free allocations to be phased out
Aviation, which has previously been given free allocations, will have to take responsibility for the full breadth of its emissions from 2026. According to the UK ETS, this decision is taken in light of the evidence of minimal risk of “carbon leakage” – a process where polluting industry activities are moved to jurisdictions with less environmental oversight to avoid reducing their carbon emissions.
The government has confirmed that the present free allocation entitlement will continue as planned until 2026 to help aircraft operators prepare for this transition. In a joint statement, the UK ETS Authority Ministers highlighted how vital investing in new technology is to decarbonization:
“With the recent rises in energy prices, it is more important than ever that we accelerate the transition away from costly fossil fuels, towards greener and more secure energy.
“Our UK Emissions Trading Scheme, along with other interventions, forms part of a wider strategy to provide a long-term framework to incentivise UK industries to decarbonise – seizing the huge opportunities that are arising from a rapidly expanding clean energy sector, and providing the certainty that industries need to invest in new green technologies.
“The decisions taken here will not only put us on the path to net zero, but will also support crucial industries on their path to long term sustainability.”
The Authority recognizes that a “comprehensive suite of policies,” including funding, regulation, and carbon pricing, is needed to deliver the decarbonization levels required by the end of this decade. Simple Flying previously looked at several emerging technologies for decarbonizing the industry.
Ministers also hope the change will hasten the development of new ideas to meet the nation’s climate targets, explicitly mentioning the UK’s potential as a long-term market for Greenhouse Gas Removal technology.
