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Please call 0131 244 7815

or email us at euets@scotland.gsi.gov.uk


EU Emissions Trading Scheme

The European Union Emissions Trading Scheme (EU ETS) is one of the key policies introduced by the EU to combat climate change and to reduce industrial greenhouse gas emissions cost-effectively. It is the largest multi-national emissions trading scheme in the world and is the first of its kind.

Launched in 2005, the EU ETS works on the ‘cap and trade’ principle. This means there is a ‘cap’, or limit, on the total amount of emissions emitted by installations participating in the scheme. Within this cap, companies receive emission allowances which they can sell to or buy from one another as needed. At the end of each year, installations are required to surrender allowances to account for their actual emissions. If a company reduces its emissions, it can keep the spare allowances to cover its future needs or else sell them to another company that is short of allowances. The flexibility that trading brings ensures that emissions are cut where it costs least to do so.

The number of allowances is reduced over time so that total emissions fall. In 2020 emissions will be 21% lower than in 2005.

The scheme is mandatory for large energy-intensive industrial installations. Over 10,000 installations throughout the EU are covered by the scheme, accounting for nearly 50 per cent of the EU's total CO2 emissions. Almost 100 installations participate in the scheme in Scotland.

Latest News

6 September 2013 – National Implementation Measures Approved

The European Commission today confirmed Member States' free allowance allocation under the National Implementation Measures and set out the cross-sectoral correction factor that will be required to ensure the free allocation remains within the cap set under the ETS Directive. This factor will reduce the provisional allocation for each EU ETS installation by 5.73% in 2013, rising to 17.56% in 2020. The average reduction of allocation is therefore 11.58% over the period 2013-2020.

 Details of the provisional indicative allocation for UK installations can be found on the DECC website:

 Participating in the EU ETS: Free allocation of allowances

 The European Commission announcement can be found on their website:

Commission clears way for harmonised free allocation to industry for phase three

13 May 2013 - EU ETS 'Stop the Clock' Consultation Government Response Published  

The UK and Devolved Governments' response to the EU ETS ‘stop the clock’ consultation, which set out how the proposal for aviation emissions would be implemented in the UK, has now been published. A number of responses were received with general support for the proposal, as such it will be taken forward through amendment to the UK Greenhouse Gas Emissions Trading Scheme Regulations 2012 which will come into force on 23 May.

 See the following link for the response:

 Consultation Response Document: Implementing the Aviation Emissions Trading System ‘Stop the Clock’ Decision in UK Regulations

 See the following link for the draft amendment:

 The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2013

18 March 2013 - EU ETS 'Stop the Clock' Consultation

The aviation EU ETS ‘stop the clock’ consultation has now been published at:


 11 July 2012: The Government has made announcements about the Phase II New Entrants Reserve (NER) and plans for what are expected to be the final Phase II auctions. A letter has been sent to interested parties announcing the Government’s intention to close the Phase II NER on 1 September and inviting comments and questions on this proposed approach. In addition, further announcements have been made about the Phase II auction schedule later this year.

DECC information bulletin: final UK auction schedule for Phase II for September to October 2012[External link] (links to UK Debt Management Office (DMO) website)

Letter from DECC on timing of applications to the EU Emissions Trading System Phase II New Entrants Reserve[External link]

23 May 2012 - Small Emitter and Hospital Opt-out Scheme

Government has now launched the UK's Small Emitter and Hospital Opt-out Scheme which will allow eligible installations to be excluded form the EU ETS from Phase III (2013-2020).

The Opt-out scheme has been designed in consultation with relevant stakeholders and aims to offer a simple alternative to the EU ETS which reduces the regulatory burden on opted out small emitters whilst maintaining incentives for emission reductions.

For further details on the scheme, including the application process, please see DECC's webpage.

8 May 2012 - Public Consultation on new UK Greenhouse Gas Emissions Trading Scheme Regulations.

This consultation seeks views on the proposed revision and recastnig of the existing UK regulations implementing the EU Greenhouse Gas Emissions Trading System (EU ETS) in the UK. The new regulations will take effect fom January 2013, the start of Phase III of the EU ETS. In preparing these regulations the aim has been to simplify the legal requirements and reduce the regulatory burden for UK EU ETS participants from 2013. This is the first major change proposed to legislation by DECC as a result of the “red tape challenge” environment theme. The consultation and associated documents can be found on the Transposition of EU Directive 2009/29/EC revising EU Directive 2003/87/EC web page.

10 February 2012 - Guidance Published on the Appeals Process for Aviation Operators Regulated in the UK

DECC in conjunction with the Devolved Administrations has published guidance on the appeals process under the Aviation Greenhouse Gas Emissions Trading Scheme Regulations 2010

12 December 2011 - Phase III free allocation

The UK submitted its National Implementation Measures to the European Commission

The NIMs document sets out the levels of free allocation of allowances to installations under Phase III of the EU Emissions Trading System (2013-2020), in accordance with Article 11 of the revised ETS Directive (2009/29/EC).

The allocations have been determined in accordance with EU harmonised rules, using data provided from operators of EU ETS Phase III installations in 2010/11. These rules, along with associated guidance, can be found in EU Commission's Decision of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances[External link]. More information is also available on the European Commission: Emissions Trading System (EU ETS) web pages.

The Commission will embark on a process of checking the UK's NIMs into 2012. The allocations are not final at this stage until the European Commission accepts all UK's EU Member States' NIMs and has made any necessary adjustments to allocations, expected in late 2012. 





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