The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025
The United Kingdom Emissions Trading Scheme (the “UK ETS”) was established by the Greenhouse Gas Emissions Trading Scheme Order 2020 (the “UK ETS Order”). The UK ETS runs for 10 “scheme years”, currently split into two 5-year “allocation periods”. Operators of certain industrial installations are required to monitor, submit verified reports on, and surrender “allowances” equivalent to, their greenhouse gas emissions each scheme year. Allowances (which are tradable) are held in accounts in the UK ETS registry, and there is a cap on the number of allowances that may be created. Allowances are sold at auction, but some operators of installations and aircraft operators receive an allocation of allowances free of charge for each scheme year. For installations that meet the eligibility criteria, there are two schemes as an alternative to the main scheme – the “HSE scheme” for “hospitals or small emitters” and the “USE scheme” for “ultra-small emitters”.