EU Emissions trading system—outline

The following Environment practice note provides comprehensive and up to date legal information covering:

  • EU Emissions trading system—outline
  • Brexit impact
  • How does the EU ETS work?
  • Registries
  • Benchmarking
  • Market oversight

EU Emissions trading system—outline

The EU emissions trading system (EU ETS) covers approximately 11,000 power stations and industrial plants in 30 countries (the 27 EU member states plus Iceland, Liechtenstein and Norway). It covers CO2 emissions from installations such as power stations, combustion plants, oil refineries and iron and steel works, as well as factories making cement, glass, lime, bricks, ceramics, pulp, paper and board. Nitrous oxide emissions from certain processes are also covered. Between them, the installations currently in the scheme account for almost half of the EU's CO2 emissions and 45% of its total greenhouse gas (GHG) emissions. Airlines were added to the scheme in January 2012.

Brexit impact

11 pm (GMT) on 31 December 2020 marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements came to an end and significant changes began to take effect across the UK’s legal regime. For further guidance, see Practice Note: Brexit—impact on environmental law and News Analysis: Brexit Bulletin—key updates, research tips and resources.

The UK ceased participation in the EU Emissions Trading System (EU ETS) at the end of the implementation period. The UK has set up its own UK emissions trading scheme (UK ETS) and requirements on UK ETS participants took

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