This Order establishes a UK-wide ETS, covering the key areas of energy intensive industries, the electricity generation sector and aviation. This means that a UK ETS applies to greenhouse gas emitting processes in sectors like refining, heavy industry and manufacturing.
The purpose of this Order is to establish a UK-wide greenhouse gas emissions trading scheme (ETS), to encourage cost-effective emissions reductions which will contribute to the UK’s emissions reduction targets and net zero goal.
This Order is a policy replacement for the UK’s participation in the EU Emissions Trading System, which ceased at the end of the Transition Period on 31st December 2020.
This Order allows for the possibility and consideration of a link between a UK ETS and the EU ETS, if it suited both sides’ interests, in line with the UK Government’s relationship with the EU. It should be noted that policy positions for a UK ETS, operational from 1st January 2021, have been agreed by the four Governments of the UK nations, and are set out in the Government Response to the Future of Carbon Pricing consultation, which was published on 1st June 2020.
