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Lesley Griffiths MS, Minister for Energy, Environment and Rural Affairs

First published:
15 December 2020
Last updated:

This was published under the 2016 to 2021 administration of the Welsh Government

Yesterday, the UK Government published its decision to proceed with establishing a UK Emissions Trading Scheme (UK ETS) and cease progress on the alternative Carbon Emissions Tax. This is an important step and I welcome the clarity it gives to scheme participants, regulators and verifiers.  The scheme will be governed as a common framework and, therefore, Welsh Ministers and the Senedd will have a formal role in delivering this important policy.

The UK ETS will be the most environmentally ambitious carbon market in the world, having a cap 5% lower than the EU system.  However, this is a two-step process and having received advice from the Climate Change Committee, we will be consulting next year on a revised cap aligned to our net zero ambitions.

The Greenhouse Gas Emissions Trading Scheme Order 2020, which came into force on 12 November, establishes the trading scheme in law and regulators and scheme participants can now make the necessary arrangements to implement the scheme from 1 January 2021.  I intend to lay further legislation before the Senedd on 17 December, under the negative procedure, to include provisions regarding the registry and free allocation of allowances.

Unfortunately, there remains uncertainty related to the prospects of linking the UK ETS to the EU ETS.  I continue to press for a linking agreement as part of a wider trade deal as it is clearly in everyone’s best interests.  In the meantime, I will work with my counterparts across the UK to progress with implementing the UK ETS as a standalone system which can be linked in due course.