UK ETS

Helping organisations navigate the UK Emissions Trading Scheme (UK ETS)

What is the UK ETS Scheme?

The UK Emissions Trading Scheme (UK ETS) is designed to help reduce greenhouse gas emissions by setting limits on carbon output for businesses.

It is one of the largest trading systems regulating over 11,000 entities and covering 45% of EU emissions.

The scheme primarily targets energy-intensive industries, including approximately 1,000 sites in the UK, encouraging them to manage and lower their emissions through a system of allowances that can be traded within the EU carbon market.

Get in touch

Speak to our compliance team to determine your UK ETS eligibility and discover how we can support you

Who needs to comply with UK ETS?

The UK ETS scheme applies to large energy users with significant on-site generation assets. It covers three main sectors:

Energy-intensive industries
Power generation
Aviation

Generally, sites where combustion of fuels has a total rated thermal input exceeding 20MW will fall within UKETS. This includes major industries such as oil, steel, and cement production, as well as large data centers with considerable standby generation assets.

How to comply with the UK Emissions Trading Scheme

To participate in the UK ETS, organisations must obtain a Greenhouse Gas (GHG) emissions permit and have a regulator-approved monitoring plan outlining how their emissions will be measured and reported. Each year, emissions must be verified by an independent auditor, and participants must surrender their allowances to cover their emissions for the compliance year.

Allowances can be acquired in several ways, through free allocation, government-run auctions or trading on the open market. Organisations can manage their compliance by either surrendering all or part of their free allocation to cover their emissions, by purchasing additional allowances, or by selling surplus allowances if their emissions remain below their allocation.

Preparing for the next UK ETS allocation window (2026 - 2030)

As the current UK ETS allocation window (2021–2025) draws to a close, organisations must prepare for the next allocation period (2026–2030). Companies within the scheme must submit emissions data to their regulator between 1st April and 30th June 2025. This timeframe is also the application window for Hospital or Small Emitter (HSE) status, which simplifies the route to compliance by setting emission targets instead of requiring allowance surrender.

Eligibility for Hospital or Small Emitter status

Organisations eligible for HSE status include:

Hospitals

Hospitals can apply for HSE status if they generate at least 85% of the heat they use in-house during a scheme year. If a third-party provider generates and supplies at least 85% of the hospital’s heat, the provider would also qualify for HSE status.

Energy-intensive industries

Organisations qualify if they emit less than 25,000 tCO2e annually or have a total rated thermal input under 35MW.

How to apply for HSE status

Applications for HSE status must be submitted between 1st April 2025 and 30th June 2025 to be included in the official list for the 2026–2030 allocation period. Applicants must provide the following to the scheme regulator:

Installation details: Including information on any UK ETS permits in force.
Eligibility evidence: Proof that the installation meets the eligibility criteria, along with any other supporting documentation.

How Equans can help with UK ETS compliance

Navigating UK ETS compliance can be complex, but we simplify the process. Our full administration and monitoring services, ease the burden on your business, helping you ensure compliance while enhancing efficiency and cost savings.

Our services include: