- A UK Emissions Trading Scheme (UK ETS) replaced the UK’s participation in the EU ETS on 1 January 2021, following the UK exit from the EU. The UK ETS Authority sought stakeholder views as part of a consultation in March 2022, with feedback helping to develop the scheme. The main government response and related impact assessment were published on 3 July 2023 covering the government's decision to make the UK ETS aligned with the Net Zero pathway, to deliver the 68% reduction in emissions by 2030. The emissions cap will also be expanded to more UK sectors: domestic maritime transport and waste.
- On 18 December 2023, further consultations were issued by the UK government, inviting the industry to share views on changes to the UK ETS. The first consultation focusses on the development of UK ETS markets policies. The second consultation relates to proposals to alter free allocation methodology for stationary sectors to better target those most at risk of carbon leakage. It was also confirmed the scheme would run until at least 2050, providing long-term certainty. Both consultations closed on 11 March 2024, and the outcome is expected to be published in the second half of 2024.
- On the same date, the UK government confirmed its intention to implement a UK CBAM in 2027, following a 2023 consultation. In March 2024, the government launched a new 12-week consultation on the design and implementation of the new tax. It will target imports from overseas of carbon intensive products such as iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass and cement and will represent the gap between any carbon price applied in the country of origin and the carbon price faced by UK producers. There will be seven rates of UK CBAM for the seven affected sectors.
- The EU is also reforming its ETS.
- Timing: both consultations on UK ETS closed on 11 March 2024, and the outcome is expected to be published in the second half of 2024. The consultation on the future UK CBAM opened on 21 March and closes on 13 June 2024.
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