EU ETS

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The package of measures recognises the need to promote energy security and combat rising costs.

By Michael D. Green and James Bee

Key Points:

  • The Commission has outlined areas of ETS reform, including updated benchmarks for free allocations and a new €30 billion ETS Investment Booster.
  • A medium-term ETS review is expected by July 2026 with the intention to “modernise” the system.

On 11 May 2026, the European Commission (Commission) presented updated EU Emissions Trading System (EU ETS) benchmarks for…

European Union flags at Berlaymont building
  • The EU has adopted methodologies for certifying activities that remove carbon dioxide from the atmosphere and store it.
  • The voluntary EU CRCF framework is intended to build increased trust and transparency for carbon credit methodologies and is expected to influence existing and emerging practices for certification in the
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The triggering of the CCM under the UK ETS and ongoing consultations under UK Reach signal speedbumps in the transition process.

By Paul A. Davies, Michael D. Green, and James Bee

On 30 November 2021, the UK government’s Department of Business, Energy and Industrial Strategy (BEIS) updated its guidance on the UK Emissions Trading Scheme (UK ETS), the UK’s cap-and-trade-based system to reduce the country’s greenhouse gas (GHG) emissions. This update signalled that the cost containment mechanism (CCM) was triggered for December 2021, which is further indicative of the widespread impacts of increasing energy prices.

Under the UK ETS, the UK government sets a cap on the maximum level of emissions across certain sectors of the UK economy and creates allowances for each unit of emission up to the level of the cap. Certain companies are then allocated free allowances, and remaining allowances are auctioned off and can be subsequently traded by market participants. Emitters are required to surrender the amount of allowances equal to their total in scope emissions, meaning that heavy emitters are required to purchase allowances.

In the last few months, the well-documented issues relating to gas supply in Europe have led to certain emitters in the UK switching from gas generation to coal generation. This, among other factors, has increased GHG emissions and boosted demand for allowances under the UK ETS, which, in turn, has resulted in higher prices in the market-based system.

The package aims to deliver on the targets agreed in the European Climate Law and fundamentally transform the EU’s economy and society for a greener future.

By Paul A. Davies, Nicola Higgs, David Little, Elisabetta Righini, JP Sweny, and Michael D. Green

On 14 July 2021, the European Commission (the Commission) unveiled a long-awaited package of proposals that seeks to align the EU’s climate, energy, land use, transport, and taxation policies with the European Green Deal’s emissions reduction target of at least 55% by 2030, compared to 1990 levels. The European Climate Law, which enters into force this month, will enshrine this target into binding legislation.

This blog post outlines the key elements of the package, which aims to fulfil the Commission’s ambition for Europe to be the world’s first climate-neutral continent by 2050. The proposals are interconnected and aim to ensure responsibility is shared evenly across sectors, with measures providing additional financial support where necessary.

A new report shows headway in reducing greenhouse gases and details the latest climate change policy developments.

By Paul A. Davies and Michael D. Green

On 30 November 2020, the European Commission (EC) adopted the EU Climate Action Progress Report Kick-starting the journey towards a climate-neutral Europe by 2050 (the Report). The Report, which is produced annually, details recent developments in EU climate policy and progress made by the EU and its Member States. The EC’s Directorate-General for Climate Action compiles the Report based on data provided by Member States under the Climate Monitoring Mechanism Regulation.