The first auction of the UK’s post-Brexit emissions trading scheme will be held on 19 May 2021, the Government has announced.
The UK ETS applies to energy intensive industries and aviation by controlling emissions from greenhouse gases, seeking to encourage businesses to reduce the amount of greenhouse gases they emit to meet the UK’s statutory emissions reduction commitments.
The UK scheme works on the ‘cap and trade’ principle similar to the EU scheme.
A cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the scheme, and is reduced over time so that total emissions fall.
As a part of this announcement, Intercontinental Exchange (ICE), which was appointed to host emissions auctions on behalf of the Department for Business, Energy and Industrial Strategy (BEIS), published an auction calendar on the scheme.
Energy Minister Anne-Marie Trevelyan commented: “The publication of our ambitious UK Emissions Trading Scheme’s auction calendar is another crucial step towards our target of eliminating our contribution to climate change by 2050.
“Our scheme is even more ambitious than the EU system it replaces and today’s publication will give businesses and operators clarity over this year’s supply of emissions allowances, enabling them to plan ahead, build back greener and better prepare for the transition to a low-carbon economy.”
The calendar confirms the volume of allowances available in each auction, with the potential for minor revisions once volumes for aviation free allocation are finalised, expected in June.
Gordon Bennett, Managing Director of Utility Markets at ICE, added: “We are excited about the addition of a new carbon market and believe the UK ETS will be pivotal in supporting the climate ambitions of the four governments of the UK.
“UK emissions have fallen 41% since 1990, more than any other major developed country and this has been driven by the UK’s leadership in promoting market-based mechanisms to support climate goals.
“There is an enormous opportunity for cap and trade programs to take an even greater role in supporting the goals of the Paris Agreement, whether it is increasing their sector coverage or encouraging international linking.”
The auction calendar is available on the ICE website.
