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UK Emissions Trading Scheme

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The UK Emissions Trading Scheme (UK ETS) is a key policy introduced by the UK to reduce greenhouse gas emissions. UK ETS will also contribute to delivering Scotland's goal of a 75% CO2 reduction by 2030 and net zero emissions by 2045. This webpage provides information and guidance for operators managing carbon emissions within the UK ETS.

Do the regulations apply to me?

The UK ETS applies to installations and aircraft operators who carry out activities listed in Schedule 2 of the Greenhouse Gas Emissions Trading Scheme Order 2020. These activities include:

  • Burning fuel (combustion)
  • Making or processing metals
  • Producing chemicals
  • Working in mineral industries
  • Making paper or pulp
  • Capturing or storing carbon
  • Operating flights in and out of the UK

If any of these activities apply to your installation and you need more information, we have produced guidance on how to comply with UK ETS (pdf 422kB).

The UK Emissions Trading Scheme Authority is launching a service for stakeholders to receive direct updates on the UK ETS. Subscribers will get notifications on guidance, templates, legislation, policy, and consultations.

How to participate in the UK ETS

SEPA is responsible for regulating installations and aircraft operators based in Scotland. Other regulators include the Environment Agency (England), Natural Resources Wales, the Northern Ireland Environment Agency and Department of Energy and Climate Change (Offshore installations).

Each installation requires a Greenhouse Gas Permit and aircraft operators are required to hold an Emissions Plan. Operators must monitor and report CO2 emissions every year.

More information for installation operators on how to comply with the UK ETS from the Department for Energy Security and Net Zero.

Charges for participating in the UK ETS are payable to SEPA. More details on the charging scheme can be found on the current charging schemes page.

Manage your UK Emissions Trading Scheme System (METS)

METS is an official UK Government online service used by operators, regulators, and verifiers to manage their responsibilities under the UK ETS and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

METS can be used to:

  • Apply for emissions monitoring plans or permits
  • Manage and update monitoring plans and permits
  • Submit annual emissions reports
  • Regulators use it to assess applications and reports
  • Verifiers use it to verify submitted reports

It also supports installations in Northern Ireland that are still part of the EU Emissions Trading System (EU ETS).

For more information on setting up and using your METS account, please read the SEPA METS Operator user guidance (pdf 1.2MB). The Department for Energy Security and Net Zero have also produce several YouTube video tutorials for using METS including:

METS continues to be developed and improved. We welcome operator involvement in METS user testing for future functionality, please get in touch with the Emissions Trading team below.

Reporting and monitoring for installations in receipt of free allocation

If your installation receives free allowances, you should have two key documents to support your annual activity level change report:

  1. Baseline data report
  2. Monitoring Methodology Plan (MMP)

Your MMP should set out how you will keep track of your installation's current and future activity levels. We've published an interim guidance (pdf 340kB) note to help you review your MMP and understand what is required.

We have also produced specific guidance on measurable heat (pdf 363kB) and how is relates to your MMP. In addition, you may find it helpful to refer to the UK ETS Authority’s wider guidance on free allocation, which covers a range of related topics.

The following unreasonable cost tool's developed by SEPA may help you for your:

UK ETS opt-out Schemes

The UK ETS offers an opt-out scheme for hospital, small emitters, and ultra-small emitters. This allows them to take part in the UK ETS without needing to join allowance auctions. You can find more information about participation in this scheme on Gov.UK site Participating in the UK Emissions Trading Scheme (UK ETS) from 1 January 2021.

Hospitals and small emitters

SEPA published the hospital and small emitter list for 2021 - 2025 (pdf 285kB) of all UK installations to be excluded from the EU ETS under Article 27 of the Directive from 1st January 2021.

An installation under the UK ETS is a hospital or small emitter for the scheme years in the 2021-2025 allocation period if the installation is included in the list. We have produced additional guidance for hospitals and small emitters (pdf 326kB) on how to comply with UK ETS.

Ultra-small emitters

The UK ETS also has an opt-out scheme for ultra small emitters. Installations that emit less than 2,500 tonnes of CO2 equivalent per year (excluding biomass emissions) can opt out from the main scheme. Under Schedule 8 of the Greenhouse Gas Emissions Trading Scheme Order 2020, an installation qualifies as an ultra-small emitter for 2021 – 2025 if it is listed in the Installations to be excluded under Article 27 scheme (pdf 285kB).

Civil Penalties

We may issue civil penalties to operators who fail to meet their legal duties under the UK ETS. This includes not reporting emissions accurately or failing to surrender enough allowances.

To ensure a consistent approach across the UK, Scottish Ministers have issued directions to SEPA on how to apply civil penalties under Article 50 and Article 60 of the Greenhouse Gas Emissions Trading Scheme Order 2020.

Below is a list of penalties issued, including the reason for each and the amount fined.

Contrary to Article 52(2) of The Greenhouse Gas Emissions Trading Scheme Order 2020 (SI 2020, No. 1265), the operator of Tullos Test Facility, failed to surrender sufficient allowances equal to its annual emissions for the 2023 scheme year by 30 April 2024. - Penalty £44,400.00 (published August 2024)

Contrary to Regulation 54(1) of the Greenhouse Gas Emission Trading Regulations 2012 (SI 2012, No. 3038), aviation operator, British Midland Regional Limited (in administration), failed to surrender allowances equal to its aviation emissions for the 2018 calendar year by 30 April 2019. - Penalty £10,381,319.06 (published January 2024)

Contrary to Regulation 54(1) of the Greenhouse Gas Emission Trading Regulations 2012 (SI 2012, No. 3038), aviation operator, British Midland Regional Limited (in administration), failed to surrender allowances equal to its aviation emissions for the 2019 calendar year by 30 April 2020. - Penalty £1,279,429.01 (published January 2024)

Failure to comply with condition 4 of a Greenhouse Gas Emissions Permit. The operator did not surrender sufficient allowances to cover its annual reportable emissions from the 2022 reporting year by 30 April 2023. - Penalty £2,545,800.00 (published January 2024)

Failure to return sufficient allowances in the UK Registry as required by a ‘Notice to Return Allowances’ issued, under article 34V of The Greenhouse Gas Emissions Trading Scheme Order. - Penalty £20,000.00 (published January 2024)

Failure to comply with Regulation 9 of the Greenhouse Gas Emissions Trading Regulations 2012. A regulated activity was carried out at the Roseisle Complex, Elgin, Moray from 1 January 2013 to 23 July 2019 without a permit. - Penalty £507,624.78 (published September 2022)

Failure to comply with Regulation 9 of the Greenhouse Gas Emissions Trading Regulations 2012. A regulated activity was carried out at the Glen Ord Distillery and Maltings, Muir of Ord, Inverness from 1 January 2013 to 23 July 2019 without a permit. - Penalty £358,611.92 (published September 2022)

Failure to comply with Regulation 9 of the Greenhouse Gas Emissions Trading Regulations 2012. A regulated activity was carried out at the Burghead Maltings, King Street, Elgin from 1 January 2013 to 04 July 2019 without a permit. - Penalty £346,153.08 (published September 2022)

Failure to comply with Regulation 9 of the Greenhouse Gas Emissions Trading Regulations 2012. A regulated activity was carried out at Greenwell Place, East Tullos from 1 January 2013 to 22 October 2018 without a permit. - Penalty £133,098.15

Failure to comply with condition 2 and 4 of a Greenhouse Gas Emissions Permit. The operator did not accurately report emissions from the reporting year 2018 from the installation at Fife NGL Plant by 31 March 2019 or surrender sufficient allowances to cover all emissions by 30 April 2019. - Penalty £4,906.16 (published February 2022)

Failure to comply with condition 2 of a Greenhouse Gas Emissions Permit. The operator did not accurately report emissions from the reporting year 2020 from the installation at St Fergus Gas Plant by 31 March 2021. - Penalty £3,750 (published February 2022)

Further information

Further guidance and information can be found on the UK Government UK ETS Authorities pages:

For any general policy related questions on the UK ETS, you can email the Emissions Trading Scheme team at the Department for Energy Security and Net Zero (DESNZ).

For any questions from operators relating to your specific installation and the UKs opt-out schemes, please contact your regulator:

Contact us

For any questions from operators relating to your specific installation in Scotland and the UKs opt-out schemes, please email the Emissions Trading team.