UK proposes own carbon market to replace EU's

By Ebru Sengul Cevrioglu

IZMIR, Turkey (AA) - The UK Government has proposed a new UK-wide Emissions Trading System (ETS) to replace the EU system, the UK Department of Business, Energy & Industrial Strategy (BEIS) announced Monday.

The system – designed by the UK Government jointly with the Scottish Government, Welsh Government and Northern Ireland Executive – includes plans to reduce the existing emissions cap by 5%, going further than the current EU system, the department said.

It stressed the new scheme would replace the EU ETS, which the UK will leave at the end of this year as the transition period ends for the UK to leave the EU.

However, the UK would be open to considering a link between a UK ETS and the EU ETS, "if it suits both sides’ interests," which is subject to the ongoing trade negotiations between the UK and EU, the department noted.

Once a new system is up and running the government intends to go even further by amending the cap again in line with its net-zero target.

"The UK is a world-leader in tackling climate change, and thanks to the opportunities arising as we exit the transition period, we are now able to go even further, faster," Energy Minister Kwasi Kwarteng, was quoted as saying.

Kwarteng asserted that this new scheme would provide a smooth transition for businesses while reducing the UK's contribution to climate change.

The department noted that elements of the new ETS will be familiar to operators and are designed to ensure a seamless transition at the end of the year.

Around a third of UK emissions and around 1,000 UK factories and plants are currently covered by the EU ETS and will continue to be covered by the UK system.

According to the department, the approach to free allocation of allowances under the new system will be consistent with what operators will expect under the EU ETS.