EU ETS Phase III UK implementation—allocation of allowances and auctioning
EU ETS Phase III UK implementation—allocation of allowances and auctioning

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

  • EU ETS Phase III UK implementation—allocation of allowances and auctioning
  • Brexit impact
  • Allocation of allowances
  • Caps
  • Auctioning
  • Free allocation
  • Carbon leakage
  • Eligibility of CERs, ERUs
  • UK withdrawal from the EU
  • Brexit and the EU ETS, carbon price support and the carbon emissions tax

Originally produced in partnership with Navraj Singh Ghaleigh, Senior Lecturer in Climate Law, University of Edinburgh

The EU Emissions Trading System (EU ETS) is the largest ETS in the world by volume. It works on a cap-and-trade basis, where a limit is set on the total greenhouse gas emissions allowed by all participant sectors covered by the scheme and this limit is converted into tradable allowances.

For more information, see Practice Notes:

  1. Emissions trading—overview

  2. EU ETS Directive 2003/87/EC—snapshot

  3. EU Emissions trading system—outline

  4. EU ETS Phase III UK implementation—legal framework, key obligations and administration

  5. EU ETS Phase III UK implementation—regulated activities, operators, and installations

  6. EU ETS Phase III UK implementation—compliance, enforcement and appeals

  7. When is a greenhouse gas permit required?

This note focuses on the allocation of allowance as implemented at the UK. Although specified in broad terms by the revised EU ETS Directive, the details of allocation are contained in the UK’s National Implementation Measures (NIMs) and encompass auctioning, free allocation, and leakage.

Brexit impact

This content is likely to be impacted by the UK’s withdrawal from the EU. For information on how leaving the EU will affect environmental law, see Practice Note: Brexit—environmental law implications, which details the relevant aspects of the withdrawal process, as well as providing insights into developments affecting environmental protection, such as the draft Environmental Principles and Governance