UK ETS must learn from past mistakes

One among the many consequences of Brexit is the departure of the UK from the EU ETS. The UK will leave the EU’s carbon market in January 2021, and the UK government plans to set up an independent UK Emissions Trading Scheme on that date. Sandbag were asked by the Environment, Climate Change and Land Reform Committee of the Scottish Parliament to comment on the UK government’s proposal for the UK ETS. We found that the proposed scheme risks repeating many of the mistakes of the EU ETS, such as setting a cap which is far above actual emission levels, and relying on free allowances which serve to disincentivise investments in decarbonisation. The UK has an opportunity to set up an ambitious, effective ETS which can drive the decarbonisation of energy and heavy industries by 2050 – but this proposal goes repeatedly in the wrong directions.