The EU Emissions Trading System (EU ETS) and the UK Emissions Trading Scheme (UK ETS) are market-based climate policies, designed to reduce greenhouse gas emissions from energy-intensive sectors.
Both systems place a price on carbon. This means that companies operating in regulated sectors must purchase and surrender allowances for each tonne of carbon they emit.
For businesses covered by these systems, carbon becomes a direct and variable operating cost, making emissions exposure an increasingly important consideration.
Both the EU ETS and the UK ETS cover sectors with high energy consumption and installations above a specified threshold (20 megawatts of thermal input capacity).
Covered industrial activities usually include: the production of refined oil products, steel, iron, aluminium, other metals, cement, lime, glass, ceramics, pulp, paper, cardboard, acids and bulk organic chemicals.
Aviation
The EU ETS also covers aviation within the European Economic Area and departing flights to Switzerland and the UK. The UK ETS covers emissions from UK domestic flights and flights departing the UK to EEA states.
Shipping
From January 2025, the EU ETS was expanded to include maritime transport, covering ships of 5,000 gross tonnage and above, calling at EU/EEA ports regardless of their flag.
Under the UK ETS, maritime emissions are not yet fully included, however, from July 2026 the UK government has confirmed plans to extend the scheme to domestic maritime activity for ships above 5,000 gross tonnage threshold. International maritime coverage is also under consideration.
ETS 2
ETS 2 is due to start in the EU in 2028, covering emissions from the buildings and road transport sectors.
Businesses covered by the UK or EU ETS can manage their obligations through a combination of compliance planning, emissions reduction and market strategy. This can include:
Redshaw Advisors helps clients to navigate these processes by providing expert market intelligence, strategic advice, and specialist procurement support.
Businesses covered by the UK or EU ETS can manage their obligations through a combination of compliance planning, emissions reduction and market strategy. This can include:
Redshaw Advisors helps clients to navigate these processes by providing expert market intelligence, strategic advice, and specialist procurement support.
