The European Commission has this week published the updated EU ETS benchmarks for the current allocation period. Significantly for UK operators, these same benchmarks will be adopted for use in UK ETS and will determine free allocation from 2028 to 2030.
What EU ETS benchmarks have changed?
While not welcome news for many, but perhaps unsurprisingly, the vast majority of benchmarks have seen a significant decrease of around 34% for most. Some have seen more substantial falls such as sintered ore (-45%), iron casting (-42%) and mineral wool (-36%). However, a handful of product benchmarks will increase for the upcoming period with plasterboard, hydrogen and PVC receiving a boost.
Installations whose operations are not covered by any product benchmark receive free allocation based on their energy produced by combustion of fuel. The aforementioned 34% reduction has been applied to both the heat and fuel fall back benchmarks, now valued at 31.2 and 28.1 per TJ.
A full list of the new EU ETS benchmarks and their relative change can be found in the table below.
How are EU ETS benchmarks calculated?
Product benchmarks are derived from the emissions performance of the top 10% of installations in each sector across the EU in terms of tCO2 emitted per tonne of product.
The 17% rise in the hydrogen benchmark may seem counterintuitive where there is a focus on green hydrogen, but it reflects a nuance in how ETS benchmarks work. The benchmark covers hydrogen production broadly, predominantly still via steam methane reforming, and a rise suggests that the assessed boundary of emissions has expanded or that process efficiency data has been revised upward relative to the previous period.
What has does mean for UK operators?
As previously announced, the UK will continue to use the current benchmarks in both 2026 and 2027, before adopting the new EU ETS benchmarks from 2028 onwards. For most operators, this means a substantial decrease in free allocation even where production has remained the same.
If you’d like to discuss your future allocation or what this means more generally for your installation, please get in touch with Swan Energy.
