Participating in the UK Emissions Trading Scheme (UK ETS)

A UK Emissions Trading Scheme (UK ETS) replaced the UK’s participation in the EU ETS on 1 January 2021. The 4 governments of the UK established the scheme to increase the climate ambition of the UK’s carbon pricing policy, while protecting the competitiveness of UK businesses. This guidance explains who the UK ETS applies to and what is required of businesses that are covered. --- This page provides an overview of the UK Emissions Trading Scheme and the first steps for participants looking to engage with the scheme. See also: * [Technical guidance and other tools](https://www.gov.uk/government/collections/uk-emissions-trading-scheme-uk-ets-technical-guidance-and-tools) for current scheme participants * [Operation of the UK ETS markets](https://www.gov.uk/government/publications/taking-part-in-the-uk-emissions-trading-scheme-markets/taking-part-in-the-uk-emissions-trading-scheme-markets) for how to take part in auctions and trade on the secondary market * [Policy aims of the UK ETS](https://www.gov.uk/government/publications/uk-emissions-trading-scheme-uk-ets-policy-overview/uk-emissions-trading-scheme-uk-ets-a-policy-overview) for an overview of existing policy and next steps for developing the scheme * [UK ETS reports and reviews](https://www.gov.uk/government/collections/uk-emissions-trading-scheme-uk-ets-reports-and-scheme-reviews) for scheme or compliance data and other reporting by the Authority ## Overview The UK Emissions Trading Scheme (UK ETS) came into effect on 1 January 2021. The UK Government, Scottish Government, Welsh Government and the Northern Ireland Department of Agriculture, Environment and Rural Affairs – collectively making up the UK ETS Authority – established the scheme to increase the climate ambition of the UK’s carbon pricing policy, while protecting the competitiveness of UK businesses. The UK ETS is established through [The Greenhouse Gas Emissions Trading Scheme Order 2020](https://www.legislation.gov.uk/uksi/2020/1265/contents/made) (the Order). Emissions trading schemes work on the ‘cap and trade’ principle, where a cap is set on the total amount of certain greenhouse gases that can be emitted by sectors covered by the scheme. The cap is reduced over time, so that total emissions must fall. Within this cap, participants receive free allowances and/or buy allowances at auction or on the secondary market. Each year, installation operators and aircraft operators covered by the scheme must surrender allowances to cover their emissions. The cap is reduced over time, so that total emissions must fall. The UK ETS currently applies to energy intensive industries and the power generation sector (installations) and the aviation industry. Activities in scope of the UK ETS are listed in [Schedule 1](https://www.legislation.gov.uk/uksi/2020/1265/schedule/1) (aviation) and [Schedule 2](https://www.legislation.gov.uk/uksi/2020/1265/schedule/2) (installations) to the Order. The UK ETS regulators are responsible for enforcing compliance with the UK ETS Regulations. The applicable regulator depends on the location of an installation, or where the business is registered for aviation. ### Regulator contact details | Nation | Regulator | Contact address | | --- | --- | --- | | England (and aircraft operators registered outside the UK) | Environment Agency (EA) | ethelp@environment-agency.gov.uk (installations) etaviationhelp@environment-agency.gov.uk (aviation) etmaritimehelp@environment-agency.gov.uk (maritime) | | Scotland | Scottish Environment Protection Agency (SEPA) | emission.trading@sepa.org.uk | | Wales | Natural Resources Wales (NRW) | GHGHelp@cyfoethnaturiolcymru.gov.uk | | Northern Ireland | Northern Ireland Environment Agency (NIEA) | emissions.trading@daera-ni.gov.uk | | Offshore oil and gas (DESNZ) | Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) | OPRED@energysecurity.gov.uk | ## Installations and aircraft operators Operators of installations, and aviation operators who meet the criteria for having an obligation under UK ETS in a given scheme year, have the following obligations under the scheme: * by 31 March each year, to submit a verified emissions report to their regulator that covers their emissions for the previous calendar year (or “scheme year”) * by 30 April each year, to have surrendered sufficient UK allowances to meet the total emissions generated under the UK ETS to be compliant ### Installations The UK ETS applies to regulated activities which result in greenhouse gas emissions, including combustion of fuels on a site where combustion units with a total rated thermal input exceeding 20MW are operated (except in installations where the primary purpose is the incineration of hazardous or municipal waste). Northern Ireland electricity generators remain in the EU ETS under the Ireland / Northern Ireland Protocol. This guidance enables installations covered by the UK ETS to understand and comply with their obligations under the scheme: * [UK Emissions Trading Scheme for installations: how to comply](https://www.gov.uk/government/publications/uk-emissions-trading-scheme-for-installations-how-to-comply/uk-emissions-trading-scheme-for-installations-how-to-comply) ### Compensation for the indirect costs of the UK ETS and the CPS This form is to apply for compensation for the indirect costs of the UK ETS and the Carbon Price Support (CPS) mechanism: * [UK Emissions Trading Scheme and Carbon Price Support: apply for compensation](https://www.gov.uk/government/publications/uk-emissions-trading-scheme-and-carbon-price-support-apply-for-compensation) ### Aviation The routes covered by the UK ETS include: * UK domestic flights * flights between the UK and Gibraltar * flights departing the UK to European Economic Area states These routes can be flown by any aircraft operators, regardless of nationality. Aircraft operators covered by the scheme will have will an obligation under the UK ETS unless they are exempted under [article 7](https://www.legislation.gov.uk/uksi/2020/1265/article/7) or [article 8](https://www.legislation.gov.uk/uksi/2020/1265/article/8) of the Order for a given scheme year. This guidance enables aircraft operators covered by the UK ETS to understand and comply with their obligations under the scheme: * [UK Emissions Trading Scheme for aviation: how to comply](https://www.gov.uk/guidance/uk-emissions-trading-scheme-for-aviation-how-to-comply) ## Simplified provisions for installations with lower emissions ### Hospitals and small emitters (HSEs) There are simplified provisions for hospitals as well as small emitters, that is, installations with a rated thermal input of below 35MW and emissions lower than 25,000t CO2e per annum. While installations that qualify as HSEs must still report their annual emissions, they are subject to emissions targets instead of having an obligation to surrender allowances. The lists of qualified HSEs and their targets for the 2021–2025 allocation period and 2025-2030 allocation periods, as well as further information on their eligibility and compliance requirements are available at: * [UK ETS: Hospital and Small Emitter status](https://www.gov.uk/guidance/opt-out-of-the-uk-ets-if-your-installation-is-a-hospital-or-small-emitter) ### Ultra-small emitters (USEs) If eligible, installations with emissions lower than 2,500t CO2e per annum may obtain ultra-small emitter status. They are not required to hold a permit but are still required to monitor their emissions and must notify their regulator if they go over the threshold. The list of qualified USEs for the 2021 – 2025 and 2026 – 2030 allocation periods, and further information on eligibility and compliance requirements for USEs, are available at: * [UK ETS: Ultra small emitter status](https://www.gov.uk/guidance/opt-out-of-the-uk-ets-if-your-installation-is-an-ultra-small-emitter) ## Maritime operators (onboarding) The interim response to the [2024 UK ETS Expansion to Maritime consultation](https://www.gov.uk/government/consultations/uk-ets-scope-expansion-maritime-sector) was published in July 2025 to enable operators to prepare for the scheme and express interest in voluntary onboarding with the Environment Agency. The response outlines: * our intention to launch the UK ETS Maritime regime on 1 July 2026 * the scope, which will include UK domestic journeys and emissions while in UK ports for vessels of 5000 gross tonnage (GT) and above * details of MRV requirements and who is responsible for complying with the scheme The main response to the [2024 UK ETS Expansion to Maritime consultation](https://www.gov.uk/government/consultations/uk-ets-scope-expansion-maritime-sector) was published in November 2025 and sets out the final policy detail. ### Early onboarding and regulators For all maritime operators, your regulator will provide further guidance. Maritime operators who have their registered address or are resident in England or outside of the UK will be regulated under the UK ETS by the Environment Agency. These maritime operators are encouraged to [express an interest in voluntary onboarding](https://forms.office.com/pages/responsepage.aspx?id=UCQKdycCYkyQx044U38RAv2KtCRINbVCp3z54Rd8gJpUNTZJWjhCS1FJUzRYODVRVVE1VVZTVTdSMy4u&route=shorturl), which is available now ahead of the scheme launch. This link also enables sign up for Environment Agency maritime newsletters. Early onboarding will allow operators to open an account in METS, familiarise themselves with its features, receive regular newsletters for maritime operators, and apply for an emissions monitoring plan (EMP). There is no charge for early onboarding, including the assessment of an EMP application. Maritime operators to be regulated by the Environment Agency can also contact etmaritimehelp@environment-agency.gov.uk for further queries. Maritime operators with a registered address, or who are resident, in Scotland, Wales or Northern Ireland should contact [the helpdesk of the relevant regulator](https://www.gov.uk/government/publications/participating-in-the-uk-ets/participating-in-the-uk-ets#regulator-contact-details) to register interest in onboarding and for any other queries. Verifiers will also have access to guidance through their METS accounts. If you don’t need a METS account and would like a copy of the Environment Agency’s newsletters, please email etmaritimehelp@environment-agency.gov.uk. ## Permitting, monitoring, reporting and verification If a business carries out an activity covered by the UK ETS, it must hold either: * a greenhouse gas emissions permit or a hospital or small emitter permit if it is an installation * an emissions monitoring plan if it is an aircraft operator Permits and emissions monitoring plans are issued by the UK ETS regulators. Failure to comply with the conditions of a permit or obligations under the Order may lead to significant civil penalties being applied. ### The UK ETS reporting service Operators can apply for permits and submit reports online, using the [Manage your UK ETS reporting service (METS)](https://manage-emissions-reporting.service.gov.uk/landing). Operators, regulators and verifiers can: * apply for, pay for, and manage a permit (installations) or EMP (aviation) * create, submit, or verify annual emissions reports or improvement reports (verifiers) * manage other reporting such as determining emissions, non-compliances, and activity level changes ### UK ETS verifiers UK ETS-accredited verifiers are required to verify the annual emission reports of installations and aircraft operators, as well as the annual activity level reports of installations receiving free allocation, that are submitted to their regulator. The Verification Regulation 2018 (as amended by the Order) requires verifiers to be a legal person or another legal entity that is carrying out verification activities for the purpose of UK ETS, and be accredited by the [UK Accreditation Service (UKAS)](https://www.ukas.com/find-an-organisation/browse-by-category/?cat=2539). UKAS is also responsible for the supervision of verifiers in the UK and for maintaining a list of those verifiers. There is no requirement for UK ETS accredited verifiers to have a physical office in the UK or to be a legal entity registered in the UK. See the relevant sections on verification in the how to comply guidance for [installations](https://www.gov.uk/government/publications/uk-emissions-trading-scheme-for-installations-how-to-comply/uk-emissions-trading-scheme-for-installations-how-to-comply) or [aircraft](https://www.gov.uk/guidance/uk-emissions-trading-scheme-for-aviation-how-to-comply) operators. ## The UK Emissions Trading Registry The [UK Emissions Trading Registry](https://view-emissions-trading-registry.service.gov.uk/) operates in a similar way to an online bank account. It is a secure web-based application that serves as both: * the UK ETS Registry (the Registry) holding UK allowances * the UK Kyoto Protocol Registry holding international units (see [Access your UK Kyoto Protocol Registry account](https://www.gov.uk/guidance/access-your-uk-kyoto-protocol-registry-account)). The Registry records include: * the UK allowances held in operator holding accounts (OHA), aircraft operator holding accounts (AOHA), trading accounts and government accounts * the movement of allowances between accounts * the details of verified emissions and allowances surrendered by operators ### Registry holding accounts To acquire and surrender allowances in line with their UK ETS obligations, installation operators must have an open OHA in the Registry, while aircraft operators must have an open AOHA. OHAs and AOHAs can also be used to [trade allowances (UKAs) in the UK ETS markets](https://www.gov.uk/government/publications/taking-part-in-the-uk-emissions-trading-scheme-markets/taking-part-in-the-uk-emissions-trading-scheme-markets). ### Trading accounts UK ETS trading accounts are available for the holding and trading of UKAs as an activity unrelated to UK ETS compliance. Trading accounts cannot be used for UK ETS compliance. ### Further information * apply for an [initial sign-in to the Registry](https://view-emissions-trading-registry.service.gov.uk/) * see the relevant sections on the Registry in the how to comply guidance for [installations](https://www.gov.uk/government/publications/uk-emissions-trading-scheme-for-installations-how-to-comply/uk-emissions-trading-scheme-for-installations-how-to-comply) or [aircraft](https://www.gov.uk/guidance/uk-emissions-trading-scheme-for-aviation-how-to-comply) operators * [documents required for opening an UK Emissions Trading Registry account](https://www.gov.uk/government/publications/documents-required-to-register-for-the-uk-emissions-trading-registry/documents-required-to-register-for-the-uk-emissions-trading-registry) ## Free allocation of allowances - installations The free allocation of allowances to eligible installation operators and aircraft operators is provided to reduce the risk of carbon leakage for UK businesses. Free allocation is provided on or before 28 February of each calendar year. ### Free allocation for installation operators The [UK ETS Allocation Table](https://www.gov.uk/government/publications/uk-ets-allocation-table-for-operators-of-installations) contains a list of each installation’s free allocation for the 2021 to 2025 allocation period. It is updated periodically. The [industry benchmarks](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32021R0447&qid=1615797821614) used to calculate free allocations were published by the European Commission on 12 March 2021. The start of the second allocation period for stationary installations has been moved from 2026 to 2027. The free allocation application for the 2027-2030 allocation period is a two-stage process. The first stage was during the [Baseline Data Collection](#baseline-data-collection) period of April – June 2025, with the second stage taking place from April – June 2026. Guidance will be provided to operators ahead of the second application stage. ### Activity level reports and changes in allocation If an installation is included in the Allocation Table, the operator must submit an [activity level report (ALR)](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/958997/uk-ets-activity-level-report-template.xlsx) to their UK ETS regulator. Operators must also submit a [verification report](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/958991/uk-ets-verification-report-template.xlsx) for their activity level data signed by an accredited verifier. The deadline to submit these reports is 31 March of each calendar year. If the data in the ALR shows an increase or decrease in activity of more than 15% from historic activity levels (calculated from the previous 2 years’ activity levels), free allocation of allowances will be recalculated by regulators in line with the [Activity Level Change Regulation](https://www.legislation.gov.uk/uksi/2020/1557/schedule/2/made). If approved by the UK ETS Authority, operators receive further free allocation or need to return the over-allocation, as appropriate. Any changes in free allocation is reflected in the operator’s ALR for future years. ### Activity Level Changes – COVID-19 The UK ETS Authority amended the Activity Level Change Regulation to allow eligible operators of installations to apply for activity level data for the 2020 scheme year to be omitted in the redetermination of 2021 average activity levels. The average activity levels affected free allocation entitlement for the 2021 scheme year onwards. The application window for this process closed on 31 January 2023. ### Baseline data collection 1 April - 30 June 2025 All installation operators within scope of the UK ETS were required to submit data to their regulator between 1 April and 30 June 2025, ahead of the next allocation period. This data collection period was also the application window for free allocation and for obtaining HSE and USE status for 2026-2030. Aircraft operators were not required to submit any data during this window. Guidance will be provided for operators ahead of the second free allocation application stage which will take place from 1 April – 30 June 2026. ### Cross-sectoral correction factor The cross-sectoral correction factor (CSCF) is applied when the total amount of free allowances exceeds the scheme’s industry cap, i.e. the proportion of the total cap set aside for free allocations. If the CSCF is triggered in 2026, the UK ETS Authority will mitigate its application through the use of its allowance reserves. ## Free allocation of allowances - aviation Free allocation was made available to all eligible aircraft operators who applied for a free allocation of allowances under the UK ETS during 2021. Aviation operators receive free allowances based on a separate allocation methodology to that of installations. The [UK ETS Aviation Allocation Table](https://www.gov.uk/government/publications/uk-ets-aviation-allocation-table) lists each aircraft operator’s free allocation entitlement for the 2021 to 2025 allocation period. As set out in the Authority’s response to the [Developing the UK ETS consultation](https://www.gov.uk/government/consultations/developing-the-uk-emissions-trading-scheme-uk-ets), free allocation for aviation operators will be phased out in 2026. --- ## Update February 2025 Find the [latest guidance on the baseline data collection and copies of the Baseline Data Report (BDR) template and verification report](https://www.gov.uk/government/publications/uk-ets-2025-baseline-data-collection-and-hseuse-scheme-status-how-to-meet-the-data-submission-requirements) for downloading. As per current legislation, all installation operators within scope of the UK Emissions Trading Scheme (UK ETS) are required to submit data to their regulator between 1 April and 30 June 2025, ahead of the next allocation period. The recent consultation to move the start of the second allocation period from 2026 to 2027 did not propose to change those specific data collection dates (see [Free Allocation Review](#free-allocation-review) below). Under current rules, the start date of the lists of operators with hospital or small emitter (HSE) and ultra-small emitter (USE) status is 2026. The recent consultation did not propose to change that date. This data collection exercise forms the basis of an application for free allocation (FA). It is also the window during which operators must apply for HSE or USE status. Aircraft operators are not required to submit any data during this window. The baseline data collection is an essential part of the FA application. Failure to submit this report by the deadline will result in an operator not receiving FA at any point during the second allocation period. It is also essential that any HSE and USE applications are made within this window. An operator will be unable join these lists for the 2026-2030 period if an application is not made during this window. Those with obligations to submit data include: 1. All installation operators, even those who do not want to apply for FA or will not be eligible for FA, in the next allocation period. 2. All installation operators who would like to apply for FA in the next allocation period and who have had a greenhouse gas emissions / HSE permit issued before or on 30 June 2025. This includes HSE and USE installations who may exceed the USE or HSE thresholds during the second allocation period and would then need to rejoin the main UK ETS scheme. In those circumstances, an application is required in this April-June 2025 window for these installations to be eligible for FA. 3. Those who wish to apply for HSE status from 2026-2030 under Schedule 7 of the Greenhouse Gas Emissions Trading Scheme Order 2020 (‘the Order’). 4. Those who wish to apply for USE status from 2026-2030 under Schedule 8 of the Order. The deadline of 30 June 2025 is fixed within legislation, and you are advised to engage with your suitably accredited verifier [[footnote 1]](#fn:1) early to resolve any problems, and if appropriate, to also engage with your regulator as early as possible. No change to the baseline data collection dates has been proposed. See all [relevant legislation](#relevant-legislation). ## What information to submit This section clarifies the data required for each type of application or data submission, to allow collection and verification work to commence. It is important that you read this information carefully and consult the relevant legislative provisions. Aircraft operators are not required to submit any data during this window. To aid the submission of correct data, the UK ETS Authority will share specific templates for submission along with associated guidance in January 2025. We expect the template for existing USEs to be available slightly earlier than the other templates, to allow existing USEs to begin verifying their emissions in 2024. The UK ETS Authority will alert operators when templates and guidance are available. The section numbers here correlate with the corresponding row in the [summary table](#summary-of-submission-requirements) below. ### 1. For operators applying for FA in the second allocation period All UK ETS operators applying for FA in the second allocation period (including Greenhouse Gas Emission Permit (GHGE) operators, HSE permit holders and those with USE status) must submit an independently verified Baseline Data Report (BDR) to their regulator in the 2025 application window. Additionally, unless it has already been approved under Article 8 of the Free Allocation Regulation (FAR), an operator applying for FA must also submit their monitoring methodology plan (MMP). See [row (1) of the table below](#summary-of-submission-requirements). In the Authority Response to the Developing the UK ETS consultation [[footnote 2]](#fn:2), the UK ETS Authority announced changes to the electricity generator classification that would come into effect in 2026. If operators think that they will become eligible for FA from 2026 and would like to receive FA in the second allocation period, they must submit their MMP (unless already approved under Article 8 FAR) and a full, independently verified BDR to their regulator on or before 30 June 2025. The requirement to submit data during the 2025 application window is an obligation under current legislation. This will not be impacted by decisions taken as part of the recent targeted consultation to move the start of the second allocation period for stationary installations from 2026 to 2027 and to treat 2026 as an extension of the current allocation period for the purposes of determining FA. It will also not be impacted by decisions taken as part of the Free Allocation Review. Failing to submit the ‘full’ BDR and MMP (if required) will result in an operator not receiving FA at any point during the second allocation period. ### 2. For operators who are not eligible for FA or those who choose to forego their entitlement to FA; and that do not apply for HSE or USE status for the 2026-2030 period UK ETS operators that are not eligible or do not wish to apply for FA in the second allocation period and are not applying for HSE or USE status will only need to provide installation data and activity information. This includes: * identification codes * permit information * operator data * installation detail * activities and associated NACE codes * details of eligibility for FA * a statement outlining that the operator is not applying for FA. These do not need to be verified. See [row (2) of the table below](#summary-of-submission-requirements). ### 3. For operators applying for HSE status for the 2026-2030 period UK ETS operators who wish to retain their HSE status or apply for HSE status for the first time for the 2026-2030 period will need to supply the information listed in the table to demonstrate the fulfilment of the HSE qualifying criteria. See [row (3) of the table below](#summary-of-submission-requirements). Existing GHGE or HSE operators wishing to apply for HSE status may not need to have their reports verified if they have already submitted annual emissions reports that have been verified, or self-declared. Operators should confirm with their regulator if they are unsure whether their reports will require verification. Operators applying for HSE status can also make an application for FA at the same time: refer to Section 1 above [For operators applying for FA in the second allocation period](#for-operators-applying-for-fa-in-the-second-allocation-period) if you intend to make a simultaneous application for FA. To apply for FA, you must submit a verified BDR and MMP (as [per row 1 of the table](#summary-of-submission-requirements)), unless your MMP has already been approved under Article 8 of the FAR. If UK ETS operators exceed the thresholds for HSE eligibility during the second allocation period, they must rejoin the main UK ETS scheme. If operators think that this is a possibility for their installation, they must apply for FA during this application window if they wish to receive FA when they are subject to the main UK ETS. These installations must submit their MMP (unless already approved under Article 8 FAR) and a full, independently verified, BDR to their regulator on or before 30 June 2025. ### 4. For operators applying for USE status for the 2026-2030 period UK ETS operators who wish to retain their USE status or apply for USE status for the first time for the 2026-2030 period will need to supply the information listed in the table below to demonstrate the fulfilment of the USE qualifying criteria. [See row (4) of the table below](#summary-of-submission-requirements). Existing USEs who wish to retain their USE status during the 2026-2030 period will be able to complete a separate Ultra Small Emitter Data Collection template containing 3 years’ worth of emissions data (2021, 2022 and 2023). This will need to be verified as satisfactory by a UKAS accredited verifier to demonstrate the fulfilment of the USE qualifying criteria. Existing GHGE or HSE operators wishing to apply for USE status may not need to have their reports verified if they have already submitted annual emissions reports that have been verified, or self-declared. Operators should confirm with their regulator if they are unsure whether their reports will require verification. The UK ETS Authority has recently consulted on proposals to allow operators who started a regulated activity after 1 January 2021 to apply for USE status for the 2026-2030 period. We will confirm the outcome of this consultation exercise and any amendments to submission requirements before the start of the 2025 application window. Operators applying for USE status can also make an application for FA at the same time: refer to Section 1 above [For operators applying for FA in the second allocation period](#for-operators-applying-for-fa-in-the-second-allocation-period) if you intend to make a simultaneous application for FA. To apply for FA, you must submit a verified BDR and MMP (as per [row 1 of the table](#summary-of-submission-requirements)), unless your MMP has already been approved under Article 8 of the FAR. If operators think that they may exceed the threshold for USE eligibility during the second allocation period, they must rejoin the main UK ETS scheme (or, if eligible, become HSEs). If operators think that it is a possibility that their installation may have to rejoin the main UK ETS, they must apply for FA during this application window if they wish to receive FA when they are subject to the main UK ETS. This means that they must submit the full, independently verified, BDR data to their regulator before 30 June 2025 and their MMP (unless your MMP has already been approved under Article 8 of the FAR). Refer to [Section 1: For operators applying to receive FA in the second allocation period](#for-operators-applying-for-fa-in-the-second-allocation-period) if you intend to make a simultaneous application for FA. ### Summary of submission requirements This table provides a summary of the submission requirements for each type of operator. It is indicative and intended to support you to meet your data submission requirements. For exact data requirements see the [legislation](#relevant-legislation) summarised at the bottom of this page. It will be the operator’s responsibility to ensure that they have provided the information required under the legislation. The deadline for all submissions is 30 June 2025. | Type of operator | Definition | What data is this operator required to submit? | What is the approach to verification? | | --- | --- | --- | --- | | 1. FA applicants | Operators applying for FA in the main UK ETS in the next allocation period (could be existing GHGEs, HSEs or USEs) | - Installation Data - Attribution of emissions \* - Data on energy input \* measurable heat and electricity \* - Sub-installation data relating to product benchmarks \* - Sub-installation data relating to fall-back sub-installations \* - Special data for some product benchmarks \* - Unless it has already been approved under Article 8 FAR, a monitoring methodology plan \* | Full verification \* | | 2. Non-FA, non-USE and non-HSE data submissions | All operators \*\* who are not applying for FA for the second allocation period, nor HSE status or USE status for the 2026-2030 period. Includes operators who meet the ‘electricity generator’ classification and are therefore not FA-eligible unless they produce heat from high efficiency co-generation or district heating. | - Permit information - Installation detail - Activities and associated NACE codes - Details of eligibility for FA - Statement that the operator is not applying for FA. | No verification needed | | 3. HSE applicants | Operators applying for HSE status for the 2026-2030 period. | - Installation data including details of any permit in force and annual emissions data and associated evidence to demonstrate that you meet condition A, B or C - And, if you are simultaneously registering an application for FA, all of the information listed above in (1), which includes a monitoring methodology plan (unless the MMP is already approved under Article 8 FAR) | If applying under condition B or C, verification or self-declaration is required. If applying under condition A, verification or self-declaration may be required. Please see Schedule 7 to the Order linked at the end of this page. | | 4. USE applicants | Operators applying for USE status for 2026-2030 As explained above, we expect the template for existing USEs to be available slightly earlier than the other templates, to allow existing USEs to begin verifying their emissions in 2024. | - Installation data including annual emissions data for 2021, 2022, and 2023 to demonstrate that you meet the relevant condition. - And, if you are simultaneously registering an application for FA, all of the information listed above in (1), which includes a monitoring methodology plan (unless the MMP is already approved under Article 8 FAR) | Verification or self-declaration. If you are an existing USE reapplying for USE status, and you have not had your emissions data verified or self-declared before, you will need to get it verified before applying for USE status. | \*If an operator does not complete these sections, its application for FA in the second allocation period will not be complete. If a monitoring methodology plan has not already been approved by the regulator, all operators applying for FA including USEs and HSEs must submit this alongside the BDR template. \*\* Only operators of the following installations are required to provide this data: - (a) an installation for which a permit is issued on or before 30 June 2025; - (b) an installation that is a USE for the 2025 scheme year - (c) an installation for which an application for a permit has been made but not yet determined ## Free Allocation Review As previously communicated, the UK ETS Authority has consulted operators in the scheme on a proposal to move the start of the second allocation period from 2026 to 2027 for FA purposes. This follows recognition of stakeholder views and concerns over the potential misalignment of industrial decarbonisation and carbon leakage policy. Making this change would enable us to align the implementation of the Free Allocation Review with the introduction of the UK CBAM, ensuring a holistic policy approach to carbon leakage. Under this proposal, any changes to FA policy following the Free Allocation Review are proposed to take effect from 2027. The Free Allocation Review consultation sought views on some changes to FA rules, such as changes to the carbon leakage list and application of the carbon leakage exposure factor, which, if implemented, could change eligibility for FA. If the proposal to delay the second allocation period and the Free Allocation Review to 2027 is implemented, depending on the outcome of the Free Allocation Review, some installations’ eligibility to FA could change after the baseline data collection exercise has concluded. In addition, the indicative FA values produced by the BDR template may be subject to revision following the publication of any changes to the FA rules resulting from the Free Allocation Review. The UK ETS Authority will be responding to the consultation to move the start of the second allocation period from 2026 to 2027 before the start of the baseline data collection exercise. If the proposal in the consultation is implemented, the Authority Response will set out timings for the proposed second stage of the FA application and more information on any requirements following the baseline data collection exercise. The UK ETS Authority is providing the current guidance now to ensure that all operators have early notice on requirements for the April-June 2025 baseline data collection. As per current legislation, the baseline data collection will take place between 1 April and 30 June 2025. It remains an essential part of the FA application, and failure to submit this report by the deadline will result in the operator not receiving FA at any point during the second allocation period. ## UK Carbon Border Adjustment Mechanism (CBAM) On 30 October 2024, the government issued a response to the consultation on implementing the UK Carbon Border Adjustment Mechanism (CBAM), confirming which sectors will be covered by a CBAM. UK ETS operators within CBAM sectors should apply for free allowances as usual by completing the baseline data collection exercise in 2025. The UK ETS Authority will consult in due course on how to adjust FA for CBAM covered sectors. [[footnote 3]](#fn:3) ## Other questions Can I change my mind about applying for FA after the BDR window closes? If an existing operator chooses not to submit the full independently verified BDR during the BDR submission window, they will not receive FA at any point during the second allocation period, regardless of any changes being made during that period. We will provide more information on how the end-to-end FA process will work in the upcoming Authority response to ‘Moving the Second UK ETS Free Allocation Period’. Can HSEs and USEs apply to join the main scheme? If an operator is currently on the USE or HSE list and expects to join the main scheme for the second allocation period, it is important that they complete a BDR. As explained above, an operator will only be eligible for FA if they submit all the required information, and this is submitted with a verified report and MMP (unless the MMP has already been approved under Article 8 of the FAR). ## How to submit your information The UK ETS Authority will publish templates for use by operators. We anticipate that these will be available to download from January 2025 (with the USE template being available in 2024). We will send a further alert once the templates have been published with further detailed instructions on how to submit. We advise operators to do the following: * consult the legislation to ensure that your application for FA, HSE status or USE status complies with the legislative requirements. See below for the relevant legislation * if not applying for FA nor HSE/USE status, consult the legislation to ensure that your data submission complies with the legislative requirements. See the relevant legislation below. * contact your regulator if you are unsure on the next steps regarding your specific circumstances * organise independent verification if this is needed. Operators should contract an independent and accredited verifier, in line with the Accreditation and Verification Regulation, so that the completed baseline data report template and the corresponding monitoring methodology plan, if this has not already been approved by the regulator, can be verified. [[footnote 4]](#fn:4) ## Contacts for queries and submissions Contact the UK ETS Authority if you have queries relating to UK ETS policy: emissions.trading@energysecurity.gov.uk. ### Regulator contact details Contact the regulators with queries and submissions: * for sites in England - the Environment Agency (EA) at ethelp@environment-agency.gov.uk * for sites in Scotland - the Scottish Environment Protection Agency (SEPA) at emission.trading@sepa.org.uk * for sites in Wales - Natural Resources Wales (NRW) at GHGHelp@naturalresourceswales.gov.uk * for sites in Northern Ireland - the Northern Ireland Environment Agency (NIEA) at emissions.trading@daera-ni.gov.uk * for offshore facilities - the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) at OPRED@energysecurity.gov.uk ## Relevant legislation The rules on free allocation are contained in Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 as it forms part of UK domestic law. This Regulation is known as the Free Allocation Regulation: [Commission Delegated Regulation (EU) 2019/331](https://www.legislation.gov.uk/eur/2019/331/contents) For operators not applying for FA nor USE/HSE status the requirement to submit data is contained in article 27A of the Greenhouse Gas Emissions Trading Scheme Order 2020 (the ‘Order’): [The Greenhouse Gas Emissions Trading Scheme Order 2020](https://www.legislation.gov.uk/uksi/2020/1265/article/27A) For FA-eligible operators, application detail is included in Article 4 of the Free Allocation Regulation: [Commission Delegated Regulation (EU) 2019/331, Chapter 2, Article 4](https://www.legislation.gov.uk/eur/2019/331/article/4) For HSE applicant criteria and application detail, refer to Schedule 7 to the Order \*: [The Greenhouse Gas Emissions Trading Scheme Order 2020, Schedule 7](https://www.legislation.gov.uk/uksi/2020/1265/schedule/7). For USE applicant criteria, and application detail, please refer to Schedule 8 to the Order \* (which also refers to the modifications to the Verification Regulation for existing USEs): [The Greenhouse Gas Emissions Trading Scheme Order 2020, Schedule 8](https://www.legislation.gov.uk/uksi/2020/1265/schedule/8) Schedule 8A to the Order is also relevant for HSE and USE applicants: [The Greenhouse Gas Emissions Trading Scheme Order 2020, Part 1, Article 8A](https://www.legislation.gov.uk/uksi/2020/1265/article/8A). \*See paragraph 5(6) of Schedule 7 and paragraph 3(7) of Schedule 8 to the Order for more information on verification requirements for HSE and USE applicants. 1. The verifier must be accredited by UKAS for scope 98 and the specific regulated activity for the installation. [↩](#fnref:1) 2. Consultation: [Developing the UK Emissions Trading Scheme (UK ETS)](https://www.gov.uk/government/consultations/developing-the-uk-emissions-trading-scheme-uk-ets). [↩](#fnref:2) 3. Find more information: [Consultation on the introduction of a UK carbon border adjustment mechanism](https://www.gov.uk/government/consultations/consultation-on-the-introduction-of-a-uk-carbon-border-adjustment-mechanism) [↩](#fnref:3) 4. UKAS website: [Validation and Verification Body Accreditation](https://www.ukas.com/accreditation/standards/validation-verification/) [↩](#fnref:4)