Integrating greenhouse gas removals in the UK Emissions Trading Scheme
Read the full outcome
Detail of outcome
In this UK ETS Authority response, we set out further detail on the design of the UK ETS market for greenhouse gas removals (GGRs), including how GGRs will be integrated into the scheme and the safeguards that will apply. This forms a key step in building a long-term, robust market for high-integrity removals in the UK.
In this response, we have made the following decisions:
- the Authority will aim to legislate to integrate removals in the UK ETS by the end of 2028, aiming for integration to be operational by the end of 2029 subject to consideration of appropriate legislative powers, regulatory assessments and further consultation
- the Authority will maintain the gross cap, i.e. the total number of allowances that can be created, for initial integration of removals into the UK ETS
- UK removal allowances will be awarded to GGR operators ex-post (i.e. only once carbon sequestration has taken place and been verified)
- the permanence framework will consist of a minimum storage period for removals, liability measures and fungibility measures
- the Authority will require projects to demonstrate a minimum carbon storage period for carbon of 200 years before they are eligible for entry into the UK ETS
- the Authority is minded to differentiate between greenhouse gas removal allowances and existing UK emissions allowances (UKAs) subject to further work on technical implementation
- the Authority intends to provide auctions to facilitate a route to market for GGR operators
- the Authority will adopt transitional supply controls consistent with the net zero pathway for GGRs
- only removals that have taken place in the UK will be eligible to receive UK ETS allowances for initial integration
The Authority has not yet made a decision on whether high-quality UK Woodland removals should be included in the UK ETS. We are publishing new evidence on woodland inclusion, and welcome stakeholder engagement on this ahead of aiming to make a decision later this year.
Detail of feedback received
We spoke to and received responses from over 160 organisations, representing a wide range of stakeholders from:
- UK ETS sectors
- greenhouse gas removal developers
- the finance sector
- voluntary carbon market sectors
- non-governmental organisations and academics
- the land-use sector
Original consultation
Consultation description
The UK Emissions Trading Scheme (UK ETS) Authority (UK Government, Scottish Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs for Northern Ireland) is seeking input on the integration of greenhouse gas removals (GGRs) in the UK ETS.
This follows a commitment made in July 2023 to consult on proposals regarding the integration of engineered GGRs into the UK ETS and consideration of high quality nature-based GGRs, subject to further work to consider the range of potential issues raised regarding permanence, costs and wider land management impacts.
The consultation proposes options and seeks views on:
- principles for policy design when integrating GGRs into the UK ETS
- cap policy options
- allowance design for GGRs
- permanence of carbon storage
- pathways to integration
Audience
This consultation is open to any organisation or individual, but will be of particular interest to:
- individual companies and representatives of industrial, power and aviation sectors with obligations under the UK ETS, including future participants from the maritime and waste sectors
- individual companies and representatives of the greenhouse gas removal sector, including both engineered and nature-based solutions
- ETS market traders, financial institutions and investors
- environmental groups
To note, the consultation does not apply to Northern Ireland electricity generators who participate in the EU ETS by virtue of the Ireland / Northern Ireland Protocol and Windsor Framework.
Read our consultation privacy notice.
Documents
Updates to this page
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Authority response published.
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First published.