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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

  • relevant domestic voyages and in-port activities

UK ETS authority guidance

For further information on activities that apply to your installation or operation refer to the relevant guidance on GOV.UK:

The UK ETS Authority provides a service for stakeholders to receive direct updates. Subscribers will get notifications on guidance, templates, legislation, policy, and consultations.

Regulation of UK ETS

SEPA is responsible for regulating:

  • installations based in Scotland

  • aircraft operators and maritime operators who have their office registered in Scotland

Other regulators include the Environment Agency (England), Natural Resources Wales, the Northern Ireland Environment Agency and the Offshore Petroleum Regulator for Environment and Decommissioning  (Offshore installations).

How to participate in the UK ETS

Each installation requires a Greenhouse Gas Permit or Hospital and Small Emitter Permit. Aircraft and maritime operators are required to hold an Emissions Monitoring Plan. Operators must monitor and report applicable greenhouse gas emissions every year.

You can find more information about participation in the scheme on the UK ETS site.

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 the 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, if you would like to be involved please email emission.trading@sepa.org.uk.

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 guidance (pdf 340kB) to help you review your MMP and understand what is required.

We have also produced specific guidance on measurable heat (pdf 363kB) and how it 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.

UK ETS hospital and small emitter and ultra-small emitter schemes

The UK ETS offers a scheme for hospital, small emitters, and ultra-small emitters. This includes adjusted requirements placed on them.

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 1 January 2021. An installation under the UK ETS is a hospital or smaller emitter for the scheme years in the 2021-2025 allocation period if the installation is included in the list.

For the 2026-2030 allocation period an installation under the UK ETS is a hospital or small emitter for the scheme years in the 2026-2030 allocation period if the installation is included in the list published by the UK ETS Authority.

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).

For the 2026-2030 allocation period an installation under the UK ETS is an ultra-small emitter for 2026-2030, if the installation is included in the list published by the UK ETS Authority. 

Unreasonable costs

If you are seeking to demonstrate Unreasonable Costs under either Article 18 of the Monitoring Reporting Regulations or Annex VII - 4.2 of the Free Allocation Regulations, then please email emission.trading@sepa.org.uk for a copy of our Emissions monitoring reporting or Activity level reporting. 

Maritime operators

As of 1 July 2026, the UK ETS applies to ships of 5000 gross tonnage (GT) and above, regardless of flag state, in respect of emissions of carbon dioxide, nitrous oxide and methane from:

  • domestic voyages, meaning voyages beginning and ending in ports of call in the UK, including voyages beginning and ending at the same port of call

  • in-port activities, meaning both emissions at berth in ports of call in the UK and movements within ports of call in the UK

Maritime operators covered by the scheme will have an obligation under the UK ETS, unless their ships or activities are exempted in a given scheme year under paragraph 5, or paragraph 8 of Schedule 2A of the Order, respectively. 

Offshore ships, as defined in the Order, will be in scope from 1 January 2027.

If you are a Maritime Operator whose registered office is in Scotland, then SEPA is your regulator.

To incentivise the use of sustainable fuels, the UK ETS allows for eligible fuels to be assigned an emission factor of zero, following a successful emissions reduction claim by a maritime operator. The following direction from Scottish Ministers to SEPA define which fuels are eligible, including the requirements for certification under a recognised voluntary scheme and the relevant sustainability and greenhouse gas emissions saving criteria:

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 failed to surrender sufficient allowances equal to its verified emissions for the 2021 and 2022 scheme years. Civil penalties were initially imposed by SEPA and subsequently varied by the Scottish Land Court, which found the breach was unintentional and significantly reduced the penalties by 80% to £15,708 (2021) and £11,876 (2022). – Penalty £27,584.00.

Published June 2026.

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 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)

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

Operators with questions relating to specific installation in Scotland and the UKs opt out schemes, please email emission.trading@sepa.org.uk.