UK Sets Green Light for Carbon Removals Integration in Emissions Market
The UK Emissions Trading Scheme (UK ETS) is undergoing a significant expansion, aiming to integrate greenhouse gas removals (GGRs) by the end of 2028, with full operational integration expected by the end of 2029 [1][2]. This evolution is part of a broader timetable to capture more emissions and promote decarbonisation across the economy.
The UK ETS, introduced in 2021, is legislated to run its first phase until December 2030. Further legislation will be required to continue the scheme beyond 2030 (phase two) [1]. The integration of carbon removals into the UK ETS is scheduled for the end of 2028.
The UK government's Emissions Trading Scheme Authority has decided to incorporate GGRs into the ETS to enhance its scope in reducing net emissions and support the UK’s net zero target by 2050 [1][2]. The integration will focus on engineered removals, such as Direct Air Capture (DAC) or bio-energy with carbon capture and storage (BECCS) technologies [3].
Initially, only removals taking place in the UK will be eligible. However, the government is also exploring the integration of high-quality woodland removals into the ETS [3]. Projects will be required to demonstrate a minimum carbon storage period for carbon of 200 years to be eligible for the UK ETS [3].
Removal allowances will only be awarded after carbon sequestration has taken place and been verified. The Authority plans to maintain the total number of allowances that can be created under the ETS, or the scheme's "gross cap," by replacing emissions allowances with GGR allowances on a one-for-one basis [3].
The integration of GGRs into the UK ETS could potentially provide a framework for businesses to make efficient decisions between further decarbonisation or removing their residual emissions using GGRs [3]. Companies that are successful in reducing emissions below the cap limit can sell emissions allowances on the secondary market.
The government's strategy with this expansion is to broaden the UK ETS's coverage, incentivize decarbonisation in new sectors, and incorporate removals to meet the ambitious net zero goals. This timeline reflects the government's commitment to a greener future for the UK.
[1] UK Government. (2022). Carbon pricing: UK ETS. gov.uk. Retrieved from https://www.gov.uk/guidance/carbon-pricing-uk-ets
[2] UK Government. (2022). UK ETS - phase two. gov.uk. Retrieved from https://www.gov.uk/government/consultations/uk-ets-phase-two
[3] UK Government. (2022). Clean Flexibility Roadmap. gov.uk. Retrieved from https://www.gov.uk/government/publications/clean-flexibility-roadmap/clean-flexibility-roadmap
- The integration of carbon removal strategies, such as Direct Air Capture and bio-energy with carbon capture and storage, into the UK Emissions Trading Scheme (UK ETS) is a key component of the UK's strategy to meet its net zero target by 2050, as detailed in the Clean Flexibility Roadmap.
- Science and environmental-science will play crucial roles in the effective implementation of the UK ETS, as projects seeking inclusion must demonstrate a minimum carbon storage period of 200 years and undergo verification before removal allowances are awarded.
- The expanded UK ETS offers the potential for businesses to make informed decisions on energy usage, decarbonisation strategies, and carbon removal technologies, as the scheme encourages the reduction of greenhouse gas emissions while also providing a framework for carbon removal in sectors where decarbonisation proves challenging, contributing to the fight against climate-change in the UK.
