Extending the UK Emissions Trading Scheme cap beyond 2030
This consultation is open for responses
Respond to this consultationSummary
The UK ETS Authority proposes extending the emissions trading scheme beyond its current 31 December 2030 expiry into a Phase II from 1 January 2031. The consultation considers whether to allow banking of emissions allowances between phases and the duration of Phase II. This continues the existing carbon pricing framework that affects all fossil fuel generators in the power sector.
Why it matters
Phase continuity maintains carbon pricing for electricity generation but banking allowances would allow current oversupply to depress future carbon prices. As such, the banking decision determines whether today's low ETS prices (reflecting current oversupply) persist into the 2030s or whether scarcity pricing can emerge.
Key facts
- •Phase I expires 31 December 2030
- •Phase II would start 1 January 2031
- •Banking decision affects allowance price continuity between phases
Timeline
Areas affected
Related programmes
Memo
The UK Emissions Trading Scheme (ETS) Authority is seeking input on proposals for extending the UK ETS beyond the end of Phase I at midnight on 31 December 2030. This fulfils the commitment made in December 2023 within the UK Emissions Trading Scheme long-term pathway to consult on the extension of the Scheme. This consultation proposes options and seeks views on: * Extending the UK ETS into a second phase from 1 January 2031 onward. * The length of a post-2030 Phase II. * Whether to allow banking of emissions allowances (UKAs) between Phase I and a post-2030 Phase II of the Scheme. The consultation is aimed at interested stakeholders including ETS participants, wider industry, academia and NGOs. Read the [consultation document on GOV.UK](https://www.gov.uk/government/consultations/extending-the-uk-emissions-trading-scheme-cap-beyond-2030).