DEP. FOR ENERGY SECURITY, UK

This award is bestowed upon The United Kingdom, honoured with the Consolidation of National ETS Leadership award, recognising its exemplary and transformative leadership in forging and evolving a comprehensive carbon pricing policy at a national scale.

A cornerstone of this distinction is the rapid establishment and robust consolidation of the UK Emissions Trading Scheme (ETS). Launched in January 2021 following the UK's departure from the EU ETS, it swiftly became a foundational pillar of its national climate policy, covering approximately a quarter of the nation's total greenhouse gas emissions. The scheme encompasses around 1,000 industrial and power sector installations, alongside some 400 airlines operating flights within the UK and those departing for the European Economic Area and Switzerland. The allocation of allowances, primarily through auctions with strategic free allowances to mitigate carbon leakage risks, demonstrates a sophisticated market design.

The UK ETS is intrinsically aligned with the UK's ambitious net-zero climate objectives, with its emissions cap continually adjusted downwards to ensure consistency with the 2050 net-zero target. This includes a notable 30% reduction in total allowances between 2021 and 2030, charting a clear long-term decarbonisation pathway. Furthermore, the UK Government has proactively announced the introduction of a Carbon Border Adjustment Mechanism (CBAM) by January 2027. This mechanism will apply a carbon price to high-emission industrial goods imported from at-risk sectors like aluminium, cement, fertilisers, hydrogen, and iron and steel, covering both direct and indirect emissions, demonstrating a strategic commitment to upholding its domestic carbon pricing integrity and promoting global decarbonisation.

Beyond these market mechanisms, the UK ETS also exhibits a clear intent for continuous sectoral expansion, with consultations ongoing to include emissions from waste incineration and domestic maritime transport. Furthermore, the exploration of integrating engineered greenhouse gas removals (GGRs) into the scheme highlights a forward-thinking approach to leveraging innovative climate technologies within its compliance framework. Beyond the ETS, the UK maintains a comprehensive and adaptive carbon pricing policy, including a Carbon Price Support (CPS) tax and domestic credit mechanisms like the Woodland Carbon Code, ensuring a multi-faceted approach to national decarbonisation.