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The Government has announced an emissions scheme that will encourage energy-intensive industries to reach their lowest-level of carbon emissions.
The 2024 calendar for the UK's Emissions Trading Scheme will limit the number of carbon allowances for companies to buy in 2024 to 69 million. This is 12.4 per cent fewer than in 2023. By 2027 this figure will fall to around 44m.
Through the scheme's auctions process, companies in industries including manufacturing, power and aviation are required to buy allowances for every unit of carbon they emit. With fewer available to buy, these sectors will need to take further steps to cut their emissions.
The auction calendar published by the Intercontinental Exchange (ICE), on behalf of the UK Emissions Trading Scheme Authority, gives businesses certainty over the next 12 months and sets the scheme on a clear path for decarbonisation for the six years after that.
In a joint statement, the UK Emissions Trading Scheme Authority ministers, including Lord Callanan, Julie James MS, Màiri McAllan MSP and the Exchequer Secretary, Gareth Davies MP, said: "We want to give our industries the confidence to decarbonise, by investing in efficiency measures and moving away from fossil fuels to cleaner, more secure energy.
"The UK Emissions Trading Scheme will cut supply of allowances auctioned, with a 45% reduction by 2027, to help us on our path to net zero.
"The auction calendar for 2024 and introduction of the new net zero consistent cap will help provide certainty for businesses, while spurring investment and helping to grow the economy."
To ease the transition to a net zero cap, a proportion of allowances that went unused between 2021 and 2023 are now being allocated to auctions to be held between 2024 and 2027. This will help taper the reductions needed over that time. Over this period the number of allowances auctioned will fall significantly.
The UK Emissions Trading Scheme Authority has also committed to exploring measures for the future of the carbon allowances market. This would mean that the supply of carbon allowances would be amended in response to market conditions.
