In July 2025 the UK ETS Authority published a number of responses to consultations covering scheme scope expansion to waste and maritime, and the integration of greenhouse gas removals. This update is the final instalment and it summarises the Authorities response regarding the integration of greenhouse gas removals in the UK ETS.
In 2023, the UK ETS Authority announced the consideration of integrating greenhouse gas removals (GGRs) in the UK ETS. The 2024 consultation discussed the technical implications, such as, how will the UK ETS cap and trade system be affected and whether all GGRs will be included.
The response outlines the following decisions made by the UK ETS Authority:
1 – The Cap
Initially the Authority will maintain the cap by replacing GHG allowances with GGR allowances on a one-for-one basis, thus maintaining market stability and incentivise decarbonisation, a factor many who replied to the consultation were concerned would be lost. Once GGRs are established within the UK ETS and have had a significant effect on reducing emissions, the Authority may reconsider the caps appropriateness.
2 – Allowance Design
The Authority intends to align standards and methodologies for monitoring, reporting and verification (MRV) for engineered GGR operators under the UK ETS with the UK GGR Standard that is currently being developed.
Unlike existing UK emissions allowances (UKAs), GGR allowances will only be awarded after the capture and verification process has been completed and only removals within the UK will be eligible for allowances.
GGR allowances will have a route to market through Government auctions and these allowances may be differentiated from existing UKAs if technically feasible.
3 – Permanence
GGR projects must demonstrate a minimum carbon storage period of 200 years and operators will be obligated to take corrective action should any carbon be released from the storage during that time. Buffer pools will be implemented as an upfront insurance mechanism for carbon reversal events.
4 – Nature-Based Removals
The Authority are yet to decide whether removals from high-quality UK woodland should be included in the UK ETS. There are many concerns surrounding the permanence, cost and other wider impacts. Further stakeholder engagement has been requested to aid the Authority in making a decision before the end of 2025.
The Authority is not considering peatland restoration for inclusion in the UK ETS.
The Authority will only include nature-based carbon removals in the UK ETS where there is a strong evidence base demonstrating their environmental integrity, and where the ETS Authority is satisfied that adverse market impacts will be avoided.
4 – Pathway to Integration
The Authority propose to finalise the legislation by the end of 2028, with operational integration commencing in 2029.
The Authority confirms that there will not be a separate market for removals and once GGRs are in the UK ETS there will be no restrictions on how they are used for compliance e.g. no limits on the proportion of surrendered allowances than can be removal allowances.
The UK ETS Authority will consult further on the technical and implementation options for integration of removals in the UK ETS in due course.
If you would like to discuss this in more detail with a Swan Energy ETS Consultant, please get in touch.
