UK EMISSIONS TRADING SCHEME (UK ETS)

The UK Emissions Trading Scheme (UK ETS) has replaced the UK’s participation in the EU ETS from 1 January 2021. The UK government set the scheme up to increase the climate ambition of the UK’s carbon pricing policy, while protecting the competitiveness of UK businesses.

The UK ETS involves the allocation and trading of greenhouse gas (GHG) emission allowances and is overseen by the UK government and devolved administrations. Allowances are then distributed to each installation covered by the scheme. A tighter annual cap has been proposed, which is approx. 5% lower than the UK’s share of the EU cap that it held before.

UK ETS applies to energy intensive industries, power generation and aviation sectors. If your activities involve combustion of fuels in installations with a total rated thermal output exceeding 20MW (except in installations for the incineration of hazardous or municipal waste), you will need a greenhouse gas emissions permit.

EU ETS still applies for electricity generators in Northern Ireland given the Ireland/NI Protocol.

LRQA’s independent UK ETS Annual Verification service establishes robust, reproducible mechanisms for quantifying, monitoring and reporting your annual GHG emissions.

LRQA supports installation operators who need to meet the UK ETS regulation including those in the chemical, glass, metallurgy, paper and refinery industries; alongside those with fuel combustion of 20MW or greater. Unfortunately, we cannot support the aviation sector with this service currently.

Under UK ETS, operators must submit an annual GHG emissions report, which an accredited body must verify by 31 March the following year. Once verified, operators surrender the equivalent number of allowances by 30 April of that year.

LRQA’s UK ETS BDR Verification service helps organisations obtain free allocations of emission allowances and meet the European FAR regulation (Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 on Free Allocation Rules) through robust, reproducible mechanisms that quantify, monitor and report activity data for each sub-installation.

The initial approach to free allocation in the UK ETS is similar to the EU’s proposed approach for Phase IV of the EU ETS and based upon baseline data (2014–2018) that required verification by an accredited verification body by May 2019. This data submission must be conducted every five years. Under this requirement, operators willing to obtain free allocations must have their free allocation of emission allowances verified by an accredited body at the same periodicity.

New entrants are operators who obtained a GHG permit for the first time. For those operators willing to claim for the free allocation of emission allowances, they can opt for a data submission related to the first full calendar year of operation. Operators who apply under this requirement must have their free allocation of emission allowances verified by an accredited body.

LRQA’s UK ETS ALR Verification service helps incumbent organisations adjusting their free allocations of emission allowances where their activity levels of sub-installations change by + or – 15% compared to the baseline activity level. This ALR submission is to be done once a year, by 31 March and must be verified by an accredited Verification Body. Usually, the UK ETS ALR verification is conducted together with the UK ETS Annual Emissions Report verification as both activities are annual obligations.

Stakeholder confidence

Verification to UK ETS demonstrates that your organisation meets GHG emissions targets and is contributing to the Net Zero 2050 goal.

Reduce costs

You can benefit from selling any surplus credits your organisation no longer needs.

Minimise risk

By identifying deficiencies against UK ETS requirements with a phased verification, you can minimise the risk of non-compliance.

Whether your organisation has experience of EU ETS or is new to UK ETS, LRQA’s independent third-party verification can help you meet your mandatory reporting requirements. LRQA provides annual verification, new entrant reserve applications, closures and rationalisations.

We were one of the first verification bodies to gain accreditation for UK ETS, and our two-stage verification enables us to minimise your risk of non-compliance while reducing disruption to your operations.

Technical expertise

LRQA verifiers are management systems experts, qualified in all aspects of emissions verification guaranteeing a comprehensive audit of your operations.

Unrivalled experience

We assess and verify high-profile clients across the waste management, utilities, metallurgy, oil & gas, nuclear and government sectors with our depth of knowledge being a direct benefit to your organisation.

Impartiality

We maintain our impartiality by proactively managing conflicts of interest across all LRQA businesses including those which may exist between consultancy and third-party certification services.