Skip to main content
Guidance

Participating in the UK ETS

Updated 1 July 2026

© Crown copyright 2026

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at https://www.gov.uk/government/publications/participating-in-the-uk-ets/participating-in-the-uk-ets

This page provides an overview of the UK Emissions Trading Scheme and the first steps for participants looking to engage with the scheme.

See also:

Overview

The UK Emissions Trading Scheme (UK ETS) came into effect on 1 January 2021.

The UK Government, Scottish Government, Welsh Government and the Northern Ireland Department of Agriculture, Environment and Rural Affairs – collectively making up the UK ETS Authority – established the scheme to increase the climate ambition of the UK’s carbon pricing policy, while protecting the competitiveness of UK businesses.

The UK ETS is established through The Greenhouse Gas Emissions Trading Scheme Order 2020 (the Order).

Emissions trading schemes work on the ‘cap and trade’ principle, where a cap is set on the total amount of certain greenhouse gases that can be emitted by sectors covered by the scheme. Each year, operators covered by the scheme must surrender allowances to cover their emissions. The cap is reduced over time, so that total emissions must fall.

Within this cap, participants receive free allowances and/or buy allowances at auction or on the secondary market.

The UK ETS currently applies to energy intensive industries and the power generation sector (installations), the aviation industry and maritime activity. Activities in scope of the UK ETS are listed in Schedule 1 (aviation), Schedule 2 (installations) and Schedule 2A (maritime) to the Order.

The UK ETS regulators are responsible for enforcing compliance with the UK ETS.

The applicable regulator depends on the location of an installation, or where the business is registered for aviation and maritime.

Regulator contact details

Installations are regulated by the regulator for the location in which they are based. Aircraft and maritime operators are assigned to a regulator based on the location of their place of residence or registered address, as per below.

  • for installations in England and aircraft and maritime operators registered in England or outside the UK: Environment Agency
  • for installations in Scotland and aircraft and maritime operators registered in Scotland: Scottish Environment Protection Agency (SEPA)
  • for installations in Wales and aircraft and maritime operators registered in Wales: Natural Resources Wales (NRW)
  • for installations in Northern Ireland and aircraft and maritime operators registered in Northern Ireland: Northern Ireland Environment Agency (NIEA)
  • for installations offshore: Offshore Petroleum Regulator for Environment and Decommissioning (OPRED)
Location Regulator Contact address
England (and aircraft operators and maritime operators registered outside the UK) Environment Agency (EA) ethelp@environment-agency.gov.uk (installations)

etaviationhelp@environment-agency.gov.uk (aviation)

etmaritimehelp@environment-agency.gov.uk (maritime)
Scotland Scottish Environment Protection Agency (SEPA) emission.trading@sepa.org.uk
Wales Natural Resources Wales (NRW) GHGHelp@cyfoethnaturiolcymru.gov.uk
Northern Ireland Northern Ireland Environment Agency (NIEA) emissions.trading@daera-ni.gov.uk
Offshore oil and gas (DESNZ) Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) OPRED@energysecurity.gov.uk

Installations and aircraft operators

Operators of installations, and aircraft operators who meet the criteria for having an obligation under the UK ETS in a given calendar year (or “scheme year”), have the following obligations under the scheme:

  • by 31 March each year, to submit a verified emissions report to their regulator that covers their emissions in the previous scheme year
  • by 30 April each year, to have surrendered sufficient UK allowances to meet the total emissions generated under the UK ETS in the previous scheme year

Maritime operators

Emissions from the domestic maritime sector are included in the UK ETS from 1 July 2026, with offshore vessels included from 1 January 2027. Maritime operators who meet the criteria for having an obligation under the UK ETS in a given scheme year will have the following obligations under the scheme:

  • to apply for an emissions monitoring plan within 42 days of a maritime activity as defined in the UK ETS Order
  • to submit to your regulator in METS a verified annual emissions report for each scheme year by 31 March in the year following the scheme year
  • by 30 April 2028,  surrender a number of allowances equal to the total of the emissions figures for surrender for the 2026 and 2027 scheme years (i.e. from 1 July 2026 to 31 December 2027)
  • for the 2028 scheme year onwards, surrender by 30 April in the year following the scheme year a number of allowances equal to the emissions figure for surrender for the scheme year

Installations

The UK ETS applies to regulated activities which result in greenhouse gas emissions, including combustion of fuels on a site where combustion units with a total rated thermal input exceeding 20MW are operated (except in installations where the primary purpose is the incineration of hazardous or municipal waste).

Northern Ireland electricity generators remain in the EU ETS under the Ireland/Northern Ireland Protocol.

This guidance enables installations covered by the UK ETS to understand and comply with their obligations under the scheme:

Compensation for the indirect costs of the UK ETS and the CPS

This form is to apply for compensation for the indirect costs of the UK ETS and the Carbon Price Support (CPS) mechanism:

Aviation

The routes covered by the UK ETS include:

  • UK domestic flights
  • flights between the UK and Gibraltar
  • flights departing the UK to European Economic Area states
  • flights departing the UK to Switzerland

These routes can be flown by any aircraft operators, regardless of nationality.

Aircraft operators covered by the scheme will have an obligation under the UK ETS unless they are exempted under article 7 or article 8 of the Order for a given scheme year.

This guidance enables aircraft operators covered by the UK ETS to understand and comply with their obligations under the scheme:

Maritime

The UK ETS applies to ships of 5000 gross tonnage (GT) and above, regardless of flag state, in respect of emissions of carbon dioxide, nitrous oxide and methane from:

  • Domestic voyages, meaning voyages beginning and ending in ports of call in the UK, including voyages beginning and ending at the same port of call
  • In-port activities, meaning both emissions at berth in ports of call in the UK and movements within ports of call in the UK.

Maritime operators covered by the scheme will have an obligation under the UK ETS unless their ships or activities are exempted in a given scheme year under paragraph 5 or paragraph 8 of Schedule 2A of the Order, respectively. For example, offshore ships, as defined in the Order, will be in scope from 1 January 2027.

To incentivise the use of sustainable fuels, the UK ETS allows for eligible fuels to be assigned an emission factor of zero following a successful emissions reduction claim by a maritime operator. The following ministerial directions define which fuels are eligible, including the requirements for certification under a recognised voluntary scheme and the relevant sustainability and greenhouse gas emissions saving criteria:

The most recent UK ETS Authority responses outlining the policy can be found here:

This guidance enables maritime operators covered by the UK ETS to understand and comply with their obligations under the scheme:

Simplified provisions for installations with lower emissions

Hospitals and small emitters (HSEs)

There are simplified provisions for hospitals as well as small emitters, that is, installations with a rated thermal input of below 35MW and emissions lower than 25,000t CO2e per annum.

While installations that qualify as HSEs must still report their annual emissions, they are subject to emissions targets instead of having an obligation to surrender allowances.

The lists of qualified HSEs and their targets for the 2021–2025 allocation period and 2025–2030 allocation period, as well as further information on their eligibility and compliance requirements are available at:

Ultra-small emitters (USEs)

If eligible, installations with emissions lower than 2,500t CO2e per annum may obtain ultra-small emitter status. They are not required to hold a permit but are still required to monitor their emissions and must notify their regulator if they go over the threshold.

The list of qualified USEs for the 2021 – 2025 and 2026 – 2030 allocation periods, and further information on eligibility and compliance requirements for USEs, are available at:

Permitting, monitoring, reporting and verification

If a business carries out an activity covered by the UK ETS, it must hold either:

  • a greenhouse gas emissions permit or a hospital or small emitter permit if it is an installation
  • an emissions monitoring plan if it is an aircraft or maritime operator

Permits and emissions monitoring plans are issued by the UK ETS regulators.

Failure to comply with the conditions of a permit or obligations under the Order may lead to significant civil penalties being applied.

The UK ETS reporting service

Operators can apply for permits and submit reports online, using the Manage your UK ETS reporting service (METS).

Operators, regulators and verifiers can:

  • apply for, pay for, and manage a permit (installations) or EMP (aviation and maritime)
  • create, submit, or verify annual emissions reports or improvement reports (verifiers)
  • manage other reporting such as determining emissions, non-compliances, and activity level changes

UK ETS verifiers

UK ETS-accredited verifiers are required to verify the annual emission reports of installations, aircraft operators and maritime operators, as well as the annual activity level reports of installations receiving free allocation, that are submitted to their regulator.

The Verification Regulation 2018 (as amended by the Order), and, in relation to maritime operators, Schedule 2A of the Order, requires verifiers to be a legal person that is carrying out verification activities for the purpose of the UK ETS, and to be accredited by the UK Accreditation Service (UKAS). Accreditation is granted for specific scopes of verification activity and is detailed on the accreditation certificate.

UKAS is also responsible for the supervision of verifiers in the UK and for maintaining a list of those verifiers.

There is no requirement for UK ETS accredited verifiers to have a physical office in the UK or to be a legal entity registered in the UK.

See the relevant sections on verification in the how to comply guidance for installations, aircraft operators or maritime operators.

The UK Emissions Trading Registry

The UK Emissions Trading Registry operates in a similar way to an online bank account. It is a secure web-based application that holds UK allowances.

The Registry records include:

  • the UK allowances held in the holding accounts of scheme participants, as well as trading accounts and government accounts
  • the movement of allowances between accounts
  • the details of verified emissions and allowances surrendered by operators

Registry holding accounts

The following holding accounts in the Registry are required for acquiring and surrendering allowances to meet a UK ETS obligation:

  • installation operators - Operator Holding Account
  • aircraft operators - Aircraft Operator Holding Account
  • maritime operators - Maritime Operator Holding Account

Holding accounts can also be used to trade allowances (UKAs) in the UK ETS markets.

Trading accounts

UK ETS trading accounts are available for the holding and trading of UKAs as an activity unrelated to UK ETS compliance. Trading accounts cannot be used for UK ETS compliance.

Further information

Free allocation of allowances - installations

The free allocation of allowances to eligible installation operators is provided to reduce the risk of carbon leakage for UK businesses.

Free allocation is provided on or before 28 February of each calendar year.

Free allocation for installation operators

The UK ETS Allocation Table contains a list of each installation’s free allocation for the 2021 to 2026 allocation period. It is updated periodically.

The industry benchmarks used to calculate free allocations were published by the European Commission on 12 March 2021.

The start of the second allocation period for stationary installations has been moved from 2026 to 2027. The free allocation application for the 2027-2030 allocation period is a two-stage process. The first stage was during the Baseline Data Collection period of April – June 2025, with the second stage taking place from April – June 2026. Guidance for operators  on how to comply with the second application stage is available in our technical guidance and tools page.

Activity level reports and changes in allocation

If an installation is included in the Allocation Table, the operator must submit an activity level report (ALR) to their UK ETS regulator.

Operators must also submit a verification report for their activity level data signed by an accredited verifier.

The deadline to submit these reports is 31 March of each calendar year.

If the data in the ALR shows an increase or decrease in activity of more than 15% from historic activity levels (calculated from the previous 2 years’ activity levels), free allocation of allowances will be recalculated by regulators in line with the Activity Level Change Regulation.

If approved by the UK ETS Authority, operators receive further free allocation or need to return the over-allocation, as appropriate.

Any changes in free allocation are reflected in the operator’s ALR for future years.

Activity Level Changes – COVID-19

The UK ETS Authority amended the Activity Level Change Regulation to allow eligible operators of installations to apply for activity level data for the 2020 scheme year to be omitted in the redetermination of 2021 average activity levels. The average activity levels affected free allocation entitlement for the 2021 scheme year onwards.  

The application window for this process closed on 31 January 2023.

Baseline data collection 1 April - 30 June 2025

All installation operators within scope of the UK ETS were required to submit data to their regulator between 1 April and 30 June 2025, ahead of the next allocation period. This data collection period was also the application window for free allocation and for obtaining HSE and USE status for 2026-2030.  

Aircraft operators were not required to submit any data during this window.

The free allocation application process for the 2027-2030 allocation period is a two-stage process. Guidance for operators on how to comply with the second free application stage from 1 April to 30 June 2026 is available in our technical guidance and tools page.

Cross-sectoral correction factor

The cross-sectoral correction factor (CSCF) is applied when the total amount of free allowances exceeds the scheme’s industry cap, i.e. the proportion of the total cap set aside for free allocations. If the CSCF is triggered in 2026, the UK ETS Authority will mitigate its application through the use of its allowance reserves.

Free allocation of allowances - aviation

As set out in the Authority’s response to the Developing the UK ETS consultation, free allocation for aircraft operators has been phased out from 2026.

The UK ETS Aviation Allocation Table lists each aircraft operator’s free allocation entitlement for the 2021 to 2025 allocation period.

Back to top