Tighter emissions limit for power sector, energy and aviation industries

A tighter emissions limit has been introduced for the power sector, energy and aviation industries, as part of a 2024 package of reforms from the UK Emissions Trading Scheme authority (UK ETS).

The reforms will also cover domestic maritime transport from 2026 and waste from 2028, while rolling out a phased removal of free carbon allowances for the aviation industry in 2026 and supporting investment in new greenhouse gas removal technologies.

IUK ETS ministers said that rising energy prices mean it is more important than ever that the industry “accelerates the transition away from costly fossil fuels, towards greener and more secure energy.”

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The scheme – which has been in place since 2021 – puts a limit on the total amount of greenhouse gases aviation, power and other energy-intensive industries can legally emit.

It also incentivises decarbonisation through a process of buying and selling emissions allowances, which companies must obtain for every tonne of emissions they produce each year.

Companies that are successful in reducing their emissions can sell their unused allowances to other firms.

“Our UK Emissions Trading Scheme, along with other interventions, forms part of a wider strategy to provide a long-term framework to incentivise UK industries to decarbonise, seizing the huge opportunities that are arising from a rapidly expanding clean energy sector, and providing the certainty that industries need to invest in new green technologies,” the statement added.

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