The Swan Energy team has produced a guidance document to summarise the updates shared in: Developing the UK Emissions Trading Scheme (UK ETS) – Main Response.
We are sharing key points for different audiences and this update is for Carbon Market Experts.
1 – Unallocated Free Allowances and Flexible Share
The Authority has decided to bring 53.5 million unallocated allowances to auction over 2024-2027. This will ensure there is no sudden drop in allowances between 2023 and 2024 allowing the market time to adapt. It will also sufficiently mitigate a CSCF between 2024-2026 and create a reserve of allowances for future mitigation of CSCF.
The Authority has also decided to retain 29.5 million allowances in reserve as the flexible share, subject to a review later in 2023. These allowances can be utilised for market stability intervention and future (post 2026) CSCF mitigation.
2 – Future UK ETS Market Policy
No changes will be implemented at present. A further consultation will be released in due course.
3 – Greenhouse Gas Removals
The Authority believes that the UK ETS is an appropriate long-term market for GGRs. Included GGRs must meet the robust standards that will be set by the Authority. These will include engineered and nature-based GGRs.
Decarbonisation must remain the primary goal however GGRs must be employed in order for the UK to reach net-zero.
4 – Flexible Share
UK ETS legislation will be amended to allow the Authority to create the total number of allowances from the flexible share in a scheme year, in addition to the annual cap.
If anyone would like to receive the full summary document from Swan Energy, please call us on 01484 843867 or email email@example.com and we’ll be in touch.
Swan Energy has been involved with the UK ETS since its inception and delivers 100% compliance for our clients. Click here to find out more about our service.