NAO publishes report on the effectiveness of the UK ETS
The National Audit Office (NAO) has published a value for money report, assessing the performance of the UK Emissions Trading Scheme (ETS) since its introduction in 2021. The report finds that the UK ETS has maintained a functioning carbon market post-Brexit, with emissions reductions observed in covered sectors including power, industrial, and aviation. However, the NAO notes challenges in attributing these reductions solely to the UK ETS as opposed to other contributing factors. The report indicates that the scheme’s future effectiveness will depend on low-carbon technology development. It suggests that a clearer understanding of the UK ETS’ impact on investment in these technologies would enable the Department for Energy Security and Net Zero to improve transparency and plan more effectively for integrating the UK ETS with other emissions reduction policies. Although the transition from the EU system was successful, the NAO raises concerns about the UK’s carbon price (£50 per tonne) being lower than the EU’s (£60 per tonne), which could potentially limit future decarbonisation incentives. The report further recommends that the UK ETS Authority collaborate with other government bodies across the UK’s industrial and energy sectors and improve communication with the Climate Change Committee (CCC) to better anticipate the CCC’s advice on the scheme.