The Greenhouse Gas Emissions Trading Scheme Order SI 2020/1265 has been published and will come into operation on 1 January 2021.
It is the UK successor to the EU Emissions Trading System (EU ETS) established by Directive 2003/87/EC, on the same subject. As the UK has left the European Union, we will no longer be a participant of the EU ETS after 31 December 2020, when the transition period will end.
This new UK version of the ETS has been created to encourage cost-effective GHG emissions reductions to contribute towards the UK's net zero goal.
This new scheme is a policy replacement for the UK’s participation in the EU ETS, and there is potential for the possibility and consideration of a link between a UK ETS and the EU ETS, if it this suited both sides’ interests, in line with the UK Government’s document on a future relationship with the EU.
Although it replaces the EU ETS, it does not impose duties that are significantly more onerous than those imposed by the EU ETS, or require participants in the UK ETS to adopt significantly different patterns of behaviour. Any requirements on UK ETS participants will only come into force from 1 January 2021, the beginning of the UK ETS’s first trading period.
To maintain continuity with the EU ETS, and a possible future working relationship, the Order relies on two related pieces of EU legislation made in 2018 for technical rules on how the emissions of operators and aircraft operators should be monitored, reported on and verified.
However, a slightly different approach is taken to those two pieces of legislation:
Due to when when the Verification Regulation 2018 came into force, it will be retained EU law. However, the Monitoring and Reporting Regulation 2018 will not.
As a result, the Order will amend a retained version of the Verification Regulation 2018. The Monitoring and Reporting Regulation 2018 will be modified to make sure that it works with the UK ETS.
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