The UK Emissions Trading Scheme (ETS) Authority has extended the consultation deadline on the proposed expansion of the ETS to include energy from waste and waste incineration. The deadline has been extended by two weeks to enable further engagement with stakeholders after the election. The consultation now closes on 2 August 2024.

The UK Emissions Trading Scheme (UK ETS) Authority has launched a consultation seeking views on the impact of ending aviation free allocation in 2026 on regional connectivity. The consultation examines whether intervention is needed to support regional aviation connectivity following the cessation of free allocation for UK ETS aircraft operators in 2026. The Authority is seeking input on potential mitigation options that specifically target risks to regional air connectivity for isolated communities. The consultation will close on 19 December 2025.

The UK Emissions Trading Scheme (ETS) Authority has launched a package of consultations on expanding the ETS to further limit carbon emissions. The first consultation considers the inclusion of fossil CO2 emissions from energy-from-waste and waste incineration sectors within the UK ETS from 2028. The second consultation looks at how engineered greenhouse gas removal technologies such as direct air carbon capture (where carbon dioxide is removed from the air and permanently stored) could be integrated into the ETS, and whether carbon stored by the creation of new UK woodland could be suitable for the scheme. The UK ETS waste scope expansion consultation closes on 18 July 2024, and the consultation on the integration of greenhouse gas removals in the UK ETS closes on 15 August 2024.

The UK Emissions Trading Scheme (UK ETS) Authority has reviewed responses to its consultation on extending the Scheme beyond 2030 and confirmed that the UK ETS will continue into a second phase beginning on 1 January 2031. The Authority stated that extension is necessary to maintain a carbon price across covered sectors and to support long-term progress towards net zero. It also noted that the Phase I cap trajectory will remain unchanged while a separate consultation is undertaken on the detailed Phase II cap profile.

The UK Emissions Trading Scheme (ETS) Authority has published its final decisions on free allocation reforms for the 2027-2030 period following consultations in 2023-2024. Key changes include allowing operators to exclude 2020 or 2020-2021 activity data from historical activity level calculations, retaining current benchmarks for 2027 with intent to adopt updated EU values from 2028 and maintaining the existing carbon leakage list. The Authority will phase out free allocations for UK Carbon Border Adjustment Mechanism sectors over nine years from 2027, coinciding with the UK CBAM's 1 January 2027 introduction. The decisions reflect the UK-EU agreement to work towards linking their emissions trading systems announced in May 2025.

The UK Emissions Trading Scheme (ETS) Authority is seeking views on four amendments to existing civil penalties within the scheme, to ensure civil penalty values are comparable to penalties of a similar nature and are proportionate to the type of breach. The first amendment would relate to the punitive element of penalties related to operating without a permit. The second amendment would concern the civil penalty associated with Article 56 of the Greenhouse Gas Emissions Trading Scheme Order 2020 (the Order). The third amendment would deal with Article 52 of the Order on inflation factor calculation. Finally, the fourth amendment would change the Order's Article 53 penalty so that it aligns under-surrender penalties whether the under-surrender is discovered before or after a permit transfer. Any feedback should be submitted by 8 March 2024.

Since the end of the Brexit transition period (IP completion day) on 31 December 2020, the UK no longer participates in the Emissions Trading System of the EU (EU ETS). The EU ETS seeks to limit the total amount of certain greenhouse gases (GHG) emitted by factories, power plants and other installations in the system through a scheme of allowance trading on the cap and trade principle. It commenced with Phase I in 2005 and is based on Directive 2003/87/EC (later amended by Directive 2009/29/EC). Phase III of the EU ETS commenced in January 2013 and ended in 2020. Phase IV runs from 2021–30. For more details on the EU ETS and carbon trading, see Practice Notes: • EU Emissions Trading System (ETS) Phase IV—Directive 2003/87/EC • EU Emissions trading system—outline • EU Emissions Trading System (ETS) for aviation • EU Emissions Trading System (ETS) for maritime transport • EU Emissions Trading System (ETS II) for buildings, road transport, and additional sectors • Carbon markets—basic principles and future developments • Carbon markets—carbon trading agreements • Carbon markets—price of Carbon

Since the end of the Brexit transition period on 31 December 2020 (IP completion day), the UK no longer participates in the Emissions Trading System of the EU (EU ETS). The EU ETS seeks to limit the total amount of certain greenhouse gases (GHGs) emitted by factories, power plants and other installations in the system through a scheme of allowance trading on the cap and trade principle. It commenced with Phase I in 2005 and is based on Directive 2003/87/EC (later amended by Directive 2009/29/EC). Phase III of EU ETS commenced in January 2013 and ended in 2020. Phase IV runs from 2021–30. For more details on the EU ETS and carbon trading, see Practice Notes: • EU Emissions Trading System (ETS) Phase IV—Directive 2003/87/EC • EU Emissions trading system—outline • EU Emissions Trading System (ETS) for aviation • EU Emissions Trading System (ETS) for maritime transport • EU Emissions Trading System (ETS II) for buildings, road transport, and additional sectors • Carbon markets—basic principles and future developments • Carbon markets—carbon trading agreements • Carbon markets—price of Carbon • Carbon

Since the end of the Brexit transition period on 31 December 2020 (IP completion day), the UK no longer participates in the Emissions Trading System (ETS) of the EU. The EU ETS seeks to limit the total amount of certain greenhouse gases (GHG) emitted by factories, power plants and other installations in the system through a scheme of allowance trading on the cap and trade principle. It commenced with Phase I in 2005 and is based on Directive 2003/87/EC (later amended by Directive 2009/29/EC). Phase III of EU ETS commenced in January 2013 and ended in 2020. Phase IV runs from 2021–30. For more details on the EU ETS and carbon trading, see Practice Notes: • EU Emissions Trading System (ETS) Phase IV—Directive 2003/87/EC • EU Emissions trading system—outline • EU Emissions Trading System (ETS) for aviation • EU Emissions Trading System (ETS) for maritime transport • EU Emissions Trading System (ETS II) for buildings, road transport, and additional sectors • Carbon markets—basic principles and future developments • Carbon markets—carbon trading agreements

Since the end of the Brexit transition period (IP completion day) on 31 December 2020, the UK no longer participates in the Emissions Trading System (ETS) of the EU. The EU ETS seeks to limit the total amount of certain greenhouse gases (GHG) emitted by factories, power plants and other installations in the system through a scheme of allowance trading on the cap and trade principle. It commenced with Phase I in 2005 and is based on Directive 2003/87/EC (later amended by Directive 2009/29/EC). Phase III of EU ETS commenced in January 2013 and ended in 2020. Phase IV runs from 2021–30. For more details on the EU ETS and carbon trading, see Practice Notes: • EU Emissions Trading System (ETS) Phase IV—Directive 2003/87/EC • EU Emissions trading system—outline • EU Emissions Trading System (ETS) for aviation • EU Emissions Trading System (ETS) for maritime transport • EU Emissions Trading System (ETS II) for buildings, road transport, and additional sectors • Carbon markets—basic principles and future developments • Carbon markets—carbon trading agreements

A European Economic Interest Grouping (EEIG) is an association between companies or other entities from different EU member states who want to operate together across national frontiers. The statutory basis for the EEIG is Council Regulation (EEC) No 2137/85 (EU Regulation), which was implemented in the UK (before Brexit) via the European Economic Interest Grouping Regulations 1989 (SI 1989/638) (1989 Regs). As a result of the UK leaving the EU, any EEIGs that were registered in the UK immediately before the end of the transition period are automatically converted into ‘UK Economic Interest Groupings’ or ‘UKEIGs’. The European Economic Interest Grouping (Amendment) (EU Exit) Regulations 2018 (SI 2018/1299) (Exit Regs) also make provision in respect of ‘EEIG establishments’, namely, establishments in the UK of European Economic Interest Groupings that are registered in an EU Member State. The Exit Regs preserve the EEIG framework, unchanged as far as possible and appropriate, for the affected companies on a UK only basis (ie there is no ability to transfer a registered office to another Member State) and the ability for new registrations under the framework is removed.

ARCHIVED: This Practice Note has been archived and is no longer maintained. It considers the law and regulation relating to the corporate structure known as a UK Economic Interest Grouping (UKEIG). A UKEIG derives from the European Economic Interest Grouping structure, which, since the UK left the EU, is no longer available within the UK. It is included for background information only. What is a UKEIG? In its guidance UK economic interest groupings (UKEIG) and European economic interest groupings (EEIG), the government neatly states what a UKEIG is: ‘The UKEIG is a form of association between companies or other legal bodies, firms or individuals from different countries (either within the EU or the UK) who need to operate together across national frontiers. It carries out particular tasks for its member-owners and is quite separate from its owners’ businesses. Its aim is to facilitate or develop the economic activities of its members. A UKEIG’s official address must be in the UK. It can also enter into arrangements with organisations outside the EU, although these organisations