As the first UK ETS allocation period draws to a close, the free allocation and opt-out application window for the next UK ETS allocation period (2026-2030) is set to open.
Following a consultation over the winter, the application window has been delayed and will now open 1st April 2025 – 30th June 2025.
Ahead of the next UK ETS allocation period, UK ETS installations have the opportunity to opt-out of the main UK ETS scheme and join either the Hospital and Small Emitter (HSE) scheme or the Ultra-Small Emitter (USE) scheme.
An installation may be eligible for HSE status if either:
- At least 85% of the heat produced by the installation in a scheme year is used by, or supplied to, one or more hospitals.
- The installation satisfies the requirements to be a small emitter, meaning that both of these apply:
- emits less than 25,000 tCO2e in each scheme year in the baseline period
- has a total input capacity of less than 35 MW thermal in each scheme year in the baseline period
An installation may be eligible for USE status if the installation’s reportable emissions are 2,500 tonnes CO2 or below in scheme years 2021, 2022 and 2023, and the installation was carrying out a regulated activity on or before 1 January 2021.
The baseline period for the next UK ETS allocation period (2026 to 2030) is 2021, 2022 and 2023. Therefore, the installation must provide evidence that they meet the above criteria for each of the baseline years.
For more information on the UK ETS schemes and free allocation, click here.
If you have any questions on the information provided within this update or are unsure if your installation may meet the HSE/USE criteria, please contact us.
