The UK is expanding its Emissions Trading Scheme (ETS), these efforts hope to help the UK achieve net-zero emissions
Launched in 2021, the UK ETS caps carbon emissions across aviation, power, and industry, requiring businesses to purchase tradable allowances for each tonne of CO2 emitted.
This approach not only reduces emissions but also encourages companies to adopt more environmentally friendly and greener technologies.
Expanding the emissions trading scheme
The new development plans to include emissions from the maritime sector and recognise non-pipeline transport methods by 2026.
This means ships on domestic voyages will need allowances for their carbon emissions. The move aims to cut maritime emissions and drive investments in cleaner technologies by making fuel prices reflect their environmental impact.
Discussions are ongoing about specific exemptions, such as for Scottish island communities, and how the scheme interacts with regional and international emissions policies.
Another expansion involves recognising non-pipeline transport methods for carbon capture and storage (CCS).
Industries like steel and cement, which rely heavily on CCS for decarbonisation, often lack direct pipeline connections to storage sites.
Under the new rules, CO2 transported by road, rail, or ship for permanent geological storage can be deducted from reported emissions, reducing costs for these businesses and encouraging wider CCS adoption.
Supporting economic growth
Changes will also be made to the allocation of free allowances. Businesses that halt operations will no longer benefit from excess allowances in their final year. Allocations will instead be adjusted to reflect their actual activity levels. However, sites shutting down operations to decarbonise will be exempt, aligning with the ETS’s goal of promoting carbon-efficient production.
These updates to the UK ETS aim to reduce emissions and support economic growth.
The maritime sector’s inclusion is expected to stimulate investment in clean technologies alone. Recognising non-pipeline CO2 transport could unlock CCS for a wider range of industries, which is crucial for hard decarbonising sectors.
The UK Government has already committed significant funding to launch the first CCS sites, creating 4,000 jobs and attracting £8 billion in private investment in the North West and North East of England. These efforts demonstrate how climate action can align with economic opportunities.
In a joint statement, James Murray MP and Mike Kane MP said:
“Today’s publications are about engaging and providing clarity for business, and incentivising them to lower emissions as we transition to a greener future.
“Expanding the UK ETS to include maritime and recognising non-pipeline transport for carbon capture and storage will encourage investment into clean technologies, a vital growth industry in the UK.”
A greener future
In a joint statement, UK ETS Authority ministers emphasised the importance of these measures in providing businesses with clarity and incentives to reduce emissions.
By incorporating new sectors and technologies into the ETS, the UK is positioning itself as a leader in green innovation and ensuring its industries remain competitive in a low-carbon economy.
The ongoing consultations invite effective feedback on implementing these changes, showing a collaborative approach to achieving net-zero goals. By making emissions reductions economically viable and supporting innovation, the UK ETS is not just about limiting carbon but also about driving a sustainable, prosperous future.
The expansion of the Emissions Trading Scheme follows the UK Government’s announcement of funding to establish the country’s first carbon capture sites. This initiative is expected to create 4,000 jobs and attract £8 billion in private investment in the North West and North East of England.
