The government has updated its Emission Trading Scheme to limit the number or carbon allowances for companies to buy in 2024 to 69 million – 12.4% fewer than in 2023, and their lowest-ever level.
After Brexit, the UK created its own Emission Trading Scheme to reduce greenhouse gas emissions in energy intensive sectors.
Companies in industries including manufacturing, power and aviation are required to buy carbon allowances for every unit they emit.
With fewer available to buy, these sectors will need to take further steps to cut their emissions.
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In a joint statement, UK Emissions Trading Scheme Authority ministers: “We want to give our industries the confidence to decarbonise, by investing in efficiency measures and moving away from fossil fuels to cleaner, more secure energy.
“The UK Trading Emissions Scheme will cut supply of allowances auctioned, with a 45% reduction by 2027, to help us on our path to net zero,” the statement added.
“The auction calendar for 2024 and introduction of the new net zero consistent cap will help provide certainty for businesses, while spurring investment and helping to grow the economy.”
Climate Change Committee chief executive Chris Stark wrote on X the change to the scheme is “very good to see.”
“That’s a big change from the current path – puts UK Emissions Trading Scheme on a net zero trajectory,” he added.
As part of wider changes to the scheme, the UK Emissions Trading Scheme Authority has also committed to exploring measures for the future of the carbon allowances market, including examining the merits of a supply adjustment mechanism.
This would provide a means of amending the supply of carbon allowances in response to market conditions.
