Overall UK ETS Emissions drop by almost 13%

Emissions reported under UK ETS have dropped by 12.5% from 2022 to 2023 reporting years, as shown by the UK ETS Trading Registry Compliance Report published on 7th June. Total Emissions have dropped below 100m tCO2e for the first time since the inception of UK ETS in 2021.

 

Emissions table

 

It is difficult to celebrate this cut in emissions as, on the surface, it appears that the UK ETS is achieving its primary purpose, to lower UK industrial emissions. Indeed, a similar drop has also been recorded in the EU ETS.

However, critics are pointing towards the fact that instead of UK industrial sites decarbonising, the overall reduction can be attributed to the carbon leakage of industry to regions where emissions are not as costly, or where prices are not as volatile.

The first example of potential carbon leakage is electricity production. Almost 50% of annual emissions captured by UK ETS can be attributed to this sector, and emissions dropped 23.1% from 48.2million tCO2e in 2022 to 37.1million tCO2e in 2023. Taken at face value, this look like the UK Energy Mix has become cleaner.

However, according to DESNZ’s 2023 UK Greenhouse Gas Emissions, provisional figures, published 28 March 2024, this is due to a reduction is gas use in UK power stations, which in turn was caused by higher electricity imports from France, as well as declining UK demand.

A second example of carbon leakage looks likely to occur at Port Talbot Steelworks, the single largest stationary installation in terms of emissions, where emissions have dropped from 6.64million tCO2e to 5.71million tCO2e (-14.1%) in the 2 years from 2021 to 2023. Here, the site’s owners, TATA Steel, have committed to replacing blast furnaces with electric arc equivalents in the name of the environment. However, this article published by the Guardian points out that in India, new TATA owned blast furnaces are being still commissioned.

The scheme’s critics also point out that the since the introduction of aviation emissions, the sector has continued to grow, with a 13.1% increase in reportable emissions 2022 to 2023, highlighting the failure of the scheme in reducing overall emissions.

 

The introduction of a UK CBAM will impose a tariff on certain carbon intensive goods from January 2027, and so is designed to prevent the loss of industry due to carbon leakage across certain sectors. The UK CBAM will mirror a very similar EU CBAM, for more info on how the EU CBAM works, click here.

Get in touch with the Swan Energy team if you would like to discuss UK ETS.

 

Joe Youldon

Operations Manager

Joe Youldon

Operations Director

Joe joined the Swan Energy team in 2019, having graduated that year from the University of Leeds with a BSc in Environmental Science.

Since joining Swan Energy, Joe has progressed to be Operations Director and plays a key role in the strategic direction of the business. He manages the company’s portfolio across the UK, supported by a team of Carbon Consultants.

Joe has delivered focus groups on the future of the ETS and its systems, and workshops for clients. He also develops and manages our strategic partnerships.

Joe is London based.