This information is for:

• UK operators of installations (for example, power stations and oil refineries) and UK-administered aircraft operators that currently participate in the EU Emissions Trading System (ETS)
• organisations and individuals with accounts within the UK section of the Consolidated System of European Registries, which also includes the UK’s Kyoto Protocol National Registry
• developers affected by the licensing regime for the geological storage of carbon dioxide
• manufacturers of energy-using products that fall under the ecodesign directive and/or energy labelling regulations

Summary of actions

Actions for businesses:

• affected by EU ETS
• with accounts in the Kyoto Protocol National Registry
• involved in the geological storage of carbon dioxide
• affected by Ecodesign and Energy Labelling standards

Businesses affected by EU ETS

Operators and traders with EU Emissions Trading System Union Registry accounts

All UK operators of installations and UK-administered aircraft operators that currently participate in the EU ETS should comply with their EU ETS obligations for 2019 and 2020 scheme years. Verified annual emissions report for the 12 months of 2019 must be submitted by 31 March 2020 and allowances for 2020 emissions must be surrendered by 30 April 2020.

The temporary suspension by the European Commission on the processes relating to the UK registry will be lifted on Monday 3 February 2020 and the UK will be able to start the processes of issuing 2019 free allocation and, with appropriate market notification, resuming auctions. Once the suspension is lifted, UK operators will also regain the ability to use their entitlement in the Union Registry to exchange international credits for EU ETS allowances. In accordance with EU regulations, UK participants entitled to 2020 free allocation can expect to receive these allowances before 28 February.

Operators, organisations and individuals with accounts within the UK section of the Consolidated System of European Registries will retain access to their accounts and any allowances within to ensure compliance can be completed.

At Budget 2018, government announced its intention to introduce a Carbon Emissions Tax in place of the EU ETS, supported by the monitoring, reporting and verification (MRV) requirements which underpin the EU ETS. This would be applicable to all stationary operators and the rate would be set at £16/tCO2e for 2019. Now that the UK is in the transition period, the UK will remain in the EU ETS until 1 January 2021, the no deal Carbon Emissions Tax (CET), will not be commenced on 4 February 2020.

Energy intensive industry relief schemes participants

Businesses that currently benefit from energy intensive industry relief schemes for the indirect policy costs of carbon pricing should continue to comply with the requirements set out in the government guidance for these schemes.

Businesses with accounts in the Kyoto Protocol National Registry

The UK will continue to have access to its Kyoto Protocol National Registry within the UK section of the Consolidated System of European Registries until 1 January 2021.

Account holders who use their accounts to hold and trade Certified Emission Reductions and Emission Reduction Units will continue to be able to access their accounts within the UK’s Kyoto Protocol National Registry until 1 January 2021.

Clean Development Mechanism project developers can continue to approach the UK’s Designated National Authority for new letters of approval.

Enquiries regarding the UK’s Kyoto Protocol National Registry can be directed to etregistryhelp@environment-agency.gov.uk.

Businesses involved in the geological storage of carbon dioxide

Developers of facilities for geological storage of carbon dioxide in areas where the Oil and Gas Authority is the licensing authority may contact the Oil and Gas Authority for further information about its implementation of changes to the licensing regime, once these changes come into force. Installations do not need to be located inside this area, to access geological storage facilities within this area.

In areas where the Oil and Gas Authority is not the lead licensing authority, developers should contact the relevant devolved administration to confirm when regulatory updates would be implemented.

Businesses affected by Ecodesign and Energy Labelling standards

In terms of the EU product database:

• all consumers will still have access to the ‘open’ section of the database
• however, the UK’s Market Surveillance Authorities will no longer have access to the ‘closed’ compliance section of the database

There will be changes for UK and EU suppliers regarding the EU product database. UK and EU suppliers placing relevant energy-using products:

• on the EU market will have to enter relevant information into the database
• on the UK market will not be required, under domestic law, to enter relevant information into the database, including for those products placed on the market between 1 August 2017 and 1 January 2019 after 1 January 2021

UK and EU suppliers must ensure that relevant energy-using products:

• placed on the UK market comply with minimum UK Ecodesign and Energy Labelling standards
• placed on the EU market comply with minimum EU Ecodesign and Energy Labelling standards

UK and EU retailers must ensure that relevant energy-using products:

• placed on the UK market comply with minimum UK Energy Labelling standards
• placed on the EU market comply with minimum EU Energy Labelling standards

Businesses can create their own energy labels using a range of tools including the EU label generator.

An UK energy label generator is available to UK businesses.

There will be no immediate impact on UK or EU consumers with regard to Ecodesign and Energy Labelling standards.

Climate change regulations and mechanisms

• Before 1 January 2021
• From 1 January 2021
• Implications
• More information

Before 1 January 2021

The UK is a global leader in the fight against climate change. We are proud to have been the first country to set legally binding long-term targets to reduce greenhouse gas emissions, and that, in June 2019, the UK became the first major economy in the world to set a ‘net zero’ greenhouse gas emissions target. We have put clean growth at the centre of our modern Industrial Strategy and our Clean Growth Strategy sets out ambitious policies and proposals that aim to accelerate the pace of clean growth, to deliver increased economic growth and decreased emissions.

The UK is deeply committed to domestic and international efforts to tackle climate change. The UK is a Party, in its own right, as well as through the EU, to international climate change agreements, including the Kyoto Protocol and the Paris Agreement.

EU Emissions Trading System

The EU Emissions Trading System (EU ETS) is an international, greenhouse gas emissions trading system which applies to multiple sectors. There are around 1,000 installations in the UK which participate in the EU ETS, including:

• power stations
• oil refineries
• offshore platforms
• industries that produce iron and steel, cement and lime, paper, glass, ceramics and chemicals.

In addition, approximately 140 UK-administered aircraft operators take part in the EU ETS.

Participating operators are required to develop plans to monitor their emissions in accordance with the European Commission’s Monitoring and Reporting Regulation. They are also required to produce annual emissions reports that are verified independently in accordance with the Accreditation and Verification Regulation.

EU ETS operators hold EU ETS Union Registry accounts which provide them with access to their emissions allowances. At the end of each compliance year, operators must give up from their account one allowance for each tonne of verified carbon dioxide (or equivalent) emitted. Operators who are considered at risk of carbon leakage receive allowances through free allocation (if eligible) from their member state of predetermined amounts agreed by the EU Commission. Other operators buy allowances on the carbon market or via a government administered auction.

Some UK-based operators falling within the scope of the EU Emissions Trading System Directive are excluded from the scheme through their inclusion in the UK Small-Emitter and Hospital Opt-Out Scheme. Instead of receiving and needing to give up allowances these operators are given emissions targets, and these excluded installations pay only for emissions which exceed their target. Targets for excluded installations are set based on the allocation they would receive for free had they remained in the EU ETS. Aircraft operators with total emissions below 25,000t or intra EEA emissions below 3,000t may use a simplified verification procedure.

The Kyoto Protocol

The Kyoto Protocol established 3 market-based mechanisms:

• emissions trading
• the Clean Development Mechanism
• Joint Implementation

The Clean Development Mechanism and Joint Implementation provide for the development of projects which are credited with certified emission reductions and emission reduction units for offsetting greenhouse gas emissions. The UK has established regulatory functions; the Designated National Authority for Clean Development Mechanism projects and Designated Focal Point for Joint Implementation projects, responsible for issuing letters of approval for Clean Development Mechanism and Joint Implementation project activities respectively.

The UK’s National Kyoto Protocol Registry is located within the Consolidated System of European Registries and facilitates the trading of Kyoto Protocol emissions units. Holders of accounts within the Registry include:

• actors who trade in Certified Emission Reductions and Emission Reduction Units generated under Clean Development Mechanism, and Joint Implementation
• project developers who secured approval for Clean Development Mechanism projects from the UK’s Designated National Authority

During the transition period (until 1 January 2021)

EU Emissions Trading System

The UK and the EU have now reached a deal and both the UK Parliament and European Union have ratified the Withdrawal Agreement. This means that the UK will remain in the EU ETS during the implementation period and comply with the 2019 and 2020 scheme year.

Provisions which enable UK participation in the full 2020 EU ETS compliance period are set out in Article 96 of the Withdrawal Agreement. These provisions provide that, from 1 January 2021, the UK will have the obligation and retain the ability to enforce the EU ETS 2020 allowance surrender obligation on 30 April 2021. Access to UK-administered accounts in the Union Registry will be retained to facilitate this. The UK will remain a full participant during this period, and UK Regulators will enforce compliance obligations in line with the Greenhouse Gas Emissions Trading System Regulations (2012) for the 2019 and 2020 EU ETS scheme years.

Implications

UK operators in the EU ETS should comply with their 2019 and 2020 compliance obligations, including submitting verified emissions reports and surrendering allowances. UK regulators will continue to have powers to enforce compliance with EU ETS obligations. The deadlines for UK operators participating in the EU ETS during the transition period are:

• report verified 2019 emissions – 31 March 2020
• surrender allowances for 2019 emissions – 30 April 2020
• report verified 2020 emissions – 31 March 2021
• surrender allowances for 2020 emissions – 31 April 2021

Monitoring, reporting and verification of emissions

Industrial installations and aircraft operators covered by the EU ETS should continue to monitor, report and verify their emissions in line with the Monitoring and Reporting Regulation (MRR) and Accreditation and Verification Regulation (AVR).

In any scenario operators will continue to be required to meet emissions monitoring, reporting and verification obligations for 2021 and beyond.

Free allocation

The temporary suspension by the European Commission on the processes relating to the UK registry will be lifted on Monday 3 February 2020 and the UK will be able to start the processes of issuing 2019 free allocation and, with appropriate market notification, resuming auctions. Once the suspension is lifted UK operators will also regain the ability to use their entitlement in the Union Registry to exchange international credits for EU ETS allowances.

In accordance with EU regulations, UK participants entitled to 2020 free allocation can expect to receive these allowances before 28 February.

UK Auctions

The UK will now be able to resume auctioning EU ETS allowances, with the final auction calendar subject to agreement between the UK and EU Commission.

The UK proposes to commence auctions as soon as possible and intends to auction its 2019 and 2020 allowances throughout 2020. The proposal for aviation allowances is that they should be auctioned across two auctions.

The UK is confident that this approach ensures that allowances are made available in an orderly manner over the coming months, as well as protecting the integrity of the EU ETS.

We expect the first auction of general allowances to take place on 4 March and the first aviation auction to be on 25 March. The final auction calendar will be agreed with the EU Commission and will be published in due course by ICE Futures, the UK’s auction platform.

Registry access in the Union registry

UK operators will retain access to their accounts in the Union Registry and any allowances within it to ensure 2020 compliance can be completed by 30 April 2021.

As of the day following the 2020 surrender deadline, operators and traders with an account in the UK section of the registry should plan for a loss of registry access. Operators and traders should consider taking action to manage the risks this may create. The risk of loss of registry access should similarly be considered in relation to any open futures, options or other derivative contracts and hedging positions for any allowances in the registry.

Registry access to the Kyoto Protocol National Registry

Users with accounts in the Kyoto Protocol National Registry within the Consolidated System of European Registries will retain access until the end of the transition period. The UK government is procuring a new system which we expect to be operational in 2021.

Businesses with accounts in the Kyoto Protocol National Registry should plan for a possible loss of access at the end of the transition period and consider taking action to manage the risks this may create.

Aviation

As the UK will continue to be part of the EU ETS for 2019 and 2020 scheme years, aircraft operators will continue to participate and should comply with their 2019 and 2020 obligations. They should submit their 2019 verified emissions report by 31 March 2020 and surrender the equivalent number of allowances by 30 April 2020.

The temporary suspension by the European Commission of the processes relating to the UK registry will be lifted on Monday, 3 February 2020. The UK will be able to start the process of issuing 2019 free allocation and, with appropriate market notification, resuming auctions. The final auction calendar is subject to agreement with the EU Commission and the proposal for aviation allowances is that they should be auctioned across 2 auctions, with the dates for these auctions to follow in due course. In accordance with EU regulations, UK participants entitled to 2020 free allocation can expect to receive these allowances before 28 February.

In light of the recent EU-Swiss linking agreement the scope of emissions that must be reported on for 2020 has increased. Operators should ensure all emissions on flights between the UK, EEA and Switzerland are included in their 2020 emissions report, and that allowances to cover this increased scope are surrendered by 30 April 2021.

Any no deal contingencies, such as UK-administered operators being transferred to another administering EU member state, will no longer apply for 2019 and 2020 compliance. Arrangements for after the transition period will be confirmed in due course.

From 1 January 2021

Consultation on the Future of UK Carbon Pricing

The UK government issued a consultation on the Future of UK Carbon Pricing in May 2019. A government response to the consultation will be published in due course.

The UK government and the devolved administrations are firmly committed to carbon pricing as an effective tool for achieving our carbon emissions reductions targets for net zero. Any future system will be at least as ambitious as the EU ETS. Leaving the EU will not affect our statutory commitments under the UK’s Climate Change Act, which is domestic legislation. The UK will also remain a Party to international climate change agreements, including the Paris Agreement. Its commitment to them will remain as strong as ever and will be unaffected by leaving the EU.

The Ireland / Northern Ireland Protocol to the Withdrawal Agreement

Article 9 and Annex 4 of the Ireland / Northern Ireland Protocol help to maintain the continued operation of the Single Electricity Market by providing for Northern Ireland power generators to continue to participate in the EU ETS after the transition Period.

More information

BEIS and regulatory authorities will continue to work closely with businesses, trade associations and stakeholders and communicate information and updates online.

Information on the EU Emissions Trading System and Monitoring, Reporting and Verification is available on the European Commission’s website.

Immediate queries on the EU Emissions Trading System sections can be directed to the team at BEIS: eu.ets@beis.gov.uk.

More information on geological storage of carbon dioxide will be made available on GOV.UK.

More information about climate change generally will also be provided on GOV.UK.

Energy related products: ecodesign and energy labelling

• Before 1 January 2021
• From 1 January 2021
• Implications
• More information

Before 1 January 2021

In the UK, the Department for Business, Energy and Industrial Strategy (BEIS) has lead responsibility for improving the sustainability and energy efficiency of energy related products in households and the commercial sector. This is achieved by EU-wide Ecodesign and Energy Labelling measures which are enforced under domestic law (Ecodesign for Energy-related Products Regulation 2010 and Energy Information Regulations 2011).

Each EU member state must appoint a Market Surveillance Authority (MSA) for control and enforcement activities. For Ecodesign, this is the Office for Product Safety and Standards in the UK. For energy labelling, both the Office for Product Safety and Standards and Trading Standards (in GB) and the Department for the Economy (in NI).

The European product database for energy labelling is a new online portal that came into force on 1 January 2019. It has an ‘open’ section for consumers to view product-related information and a ‘closed’ compliance section for Market Surveillance Authorities to view technical product-related information.

Suppliers are required to input relevant information into the database:

• from 1 January 2019 for energy related products placed on the EU market from this date
• by 1 July 2019 for energy related products placed on the EU market (including the UK market) between 1 August 2017 and 1 January 2019

A re-classification of energy labels is scheduled and new labels with A – G energy rating classes (instead of A+++ – G energy rating classes) will be phased in over time as planned.

From 1 January 2021

From 1 January 2021, the UK will uphold common high product standards wherever possible and appropriate, or even exceed them where it is in the UK’s interest to do so.

All EU ecodesign and energy labelling requirements which enter into force and apply before 31 December 2020 will have effect in the UK. Further legislation is being prepared to ensure that all of these requirements continue to function in the UK from 1 January 2021.

Implications

Enforcement activities will continue as normal, carried out by the Office for Product Safety and Standards, Trading Standards and the Department for the Economy (NI) which will maintain their roles as Market Surveillance Authorities.

Stakeholders will be made aware in advance of any necessary actions to take should there be any temporary differences between UK and EU regulatory standards.

More information

For additional information regarding goods, refer to:

• Placing manufactured goods on the UK market
• Placing manufactured goods on the EU internal market

More information on the Office for Product Safety and Standards can be found on its website.

Read the legislation on Ecodesign for Energy-Related Products and Energy Information