UK Emissions Trading Scheme: Common Framework

The Climate Change, Environment and Rural Affairs Committee is undertaking work on the proposed UK Emissions Trading Scheme (UKETS), including associated legislation and non-legislative framework.

The UK currently participates in the EU Emissions Trading Scheme (EU ETS), which is the world’s largest trading system for greenhouse gas emissions. Emissions trading schemes work on a ‘cap and trade’ principle, where a cap is set on the total amount of certain greenhouse gases that can be emitted by participating installations and aircraft. Participants receive or buy allowances equivalent to their own emissions, which they can trade with one another as needed. Over time, the cap is reduced so that total emissions fall.

At the end of the transition period (on 31 December 2020), the UK will leave the EU ETS. A replacement ‘carbon pricing’ policy is therefore required to support emissions reduction from those UK emitters currently participating in the EU ETS.

The UK Government and devolved administrations (including the Welsh Government) have agreed to establish a single, UK-wide ETS with a common set of rules for participants. Any proposals for policy divergence between administrations will be considered by the four administrations, using an agreed governance process, to be set out in the UK ETS Framework Outline Agreement (FOA) and concordat.

Business type: Committee Inquiry

Reason considered: Senedd Business;

Status: For consideration

First published: 23/09/2020


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