On 12 February 2025, the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 (the Order) was laid before Parliament and published on legislation.gov.uk, along with an explanatory memorandum.
The Order makes amendments to the legislation that gives effect to the UK Emissions Trading Scheme (UK ETS), which incentivises decarbonisation by requiring operators to purchase allowances based on carbon emissions.
Some operators are given free allocation of allowances to mitigate the risk of carbon leakage, and there are two allocation periods – 2021-2025 and 2026-2030 – during which free allocation is calculated and provided to eligible operators. The Order moves the start of the second allocation period for stationary installations from 2026 to 2027, making 2026 a standalone year, and provides for the calculation of free allocation in the 2026 standalone scheme year.
In addition, the Order makes three changes to other aspects of the scheme, to:
- Require the publication of full details of transactions between accounts in the scheme’s Registry after a three year delay.
- Add limited exceptions to the prohibition on disclosure of Scheme data in order to support the development and implementation of related policies, and support the statutory functions of the Climate Change Committee.
- Extend qualification criteria so that installations with low levels of emissions which started operations between 2nd January 2021 and 1st January 2024 inclusive can apply to be classed as Ultra-Small Emitters during the 2026-2030 period, thereby benefitting from a reduced administrative burden.
The Order will come into force on 31 March 2025.