On 26 September 2024, the Department for Energy Security and Net Zero updated its webpage on the UK Emissions Trading Scheme (UK ETS): free allocation review by adding a note on extending the UK ETS first Free Allocation period to 2026. The note states that the UK ETS Authority is consulting operators in the scheme on a proposal to move the start of the second allocation period from 2026 to 2027, extending the current allocation period to include 2026. Operators will receive the consultation from their scheme regulator and have until 11 October to submit responses. The change is designed to align changes to Free Allocation with the introduction of the UK Carbon Border Adjustment Mechanism in 2027.
The UK ETS Authority is also proposing that:
- The baseline data reporting exercise will continue as planned from 1 April to 30 June 2025.
- Applications for the second free allocation period will be made in 2026.
- Updated lists of installations with hospital or small emitter (HSE) and ultra-small emitter (USE) status will come into effect from 2026, with the application window for inclusion on these lists open from 1 April to 30 June 2025.
- Changes to the current rules regarding the electricity generator classification will come into effect in 2026.