Since the end of the Transition Period on 31 December 2020, the UK no longer participates in the EU Emissions Trading System . This carbon market is a key mechanism to incentivise decarbonisation from the “traded” sector (power generation, energy intensive industry and aviation within the EU, which collectively constitute around 25% of Scotland’s carbon emissions).
The UK Government and Devolved Administrations intended to establish a UK Emissions Trading System (ETS), with Phase I running from 2021 – 2030. This could operate as either a linked or standalone system. The UK Government and Devolved Administrations have indicated that they would be open to considering a link between any future UK ETS and the EU ETS (similar to the approach taken by Switzerland), if it suited both sides’ interests.
The framework was discussed in session 5 by the Environment, Climate Change and Land Reform Committee.