OSLO (Reuters) – Britain is proposing to extend by one year the current system of allocating free allowances under its national emissions trading scheme to align it with a planned introduction of a carbon border tax, it said on Thursday.
Britain, which has a target of reaching net zero emissions by 2050, launched an emissions trading system (ETS) in 2021 to charge power plants, factories and airlines for each tonne of carbon dioxide they emit as part of efforts to meet that goal.
The current system offers free allocation of allowances to eligible participants and aircraft operators who are exposed to international competitors that do not have an extra carbon cost burden.
The initial free allocation period was due to run from 2021 to 2025 but could be extended to 2026 to align with the introduction of the UK Carbon Border Adjustment Mechanism in 2027, the UK ETS Authority, which oversees the scheme, said.
The latter aims to charge a carbon import levy on some products to help to protect businesses against cheaper imports from countries with less strict climate policies.
The proposal is being sent for consultation with a deadline to submit responses set for Oct. 11, the authority said.
The UK ETS Authority is now proposing that reporting under the current period will continue as planned from April 1 to June 30 2025, and applications for the second free allocation period will be made in 2026, it specified.
Updated lists of installations for smaller emitters under the scheme would come into effect from 2026, with the application window for inclusion on these lists open from April 1 to June 30 2025, it added.
Changes to the current rules regarding the electricity generator classification will come into effect in 2026, the authority said.
(Reporting by Nora Buli; Editing by Shri Navaratnam)
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