UK Emissions Trading Scheme

A market-based approach designed to help the United Kingdom achieve its greenhouse gas emissions reduction targets. Launched in January 2021, following the UK's exit from the European Union, the UK ETS sets a cap on the total amount of greenhouse gases that can be emitted by participating industries. Companies covered by the scheme receive or purchase allowances, each representing the right to emit one tonne of CO₂ or its equivalent. These allowances can be traded, providing flexibility for companies to reduce emissions in the most cost-effective manner.