The Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025
The Order amends the UK Emissions Trading Scheme to revise how installation closures are handled and their impact on free allocation of emissions allowances.
It introduces new definitions for operational cessation, mandatory notification requirements, and regulator powers to determine permanent closures.
The amendments also create special provisions for installations undertaking decarbonization projects and modify reporting requirements for installations receiving free allowances.
These changes aim to improve scheme administration while supporting industrial transition to lower-carbon operations.
Arguments For
Provides clearer definitions and processes for determining when installations have permanently ceased operations, improving regulatory certainty
Introduces new notification requirements that help regulators better track installation status and prevent misallocation of free allowances
Creates a specific mechanism for handling decarbonization projects, supporting industrial transition while maintaining production levels
Strengthens reporting requirements to ensure more accurate allocation of free allowances based on actual activity levels
Streamlines administrative processes around installation closure and permit surrender
Arguments Against
Adds new compliance obligations for operators through additional notification requirements and reporting duties
May create uncertainty for operators during temporary shutdowns about whether their cessation will be deemed permanent
Could potentially impact operational flexibility by requiring detailed justification for production pauses
Introduces complex criteria for qualifying under the decarbonization provisions that may be challenging to demonstrate
May increase administrative burden on both operators and regulators through new reporting and assessment processes
Made - - - - 5th February 2025 Coming into force in accordance with article 2 At the Court at Buckingham Palace, the 5th day of February 2025 Present, The King's Most Excellent Majesty in Council
The amendment order received royal assent on February 5th, 2025 at Buckingham Palace with King Charles III present.
Implementation dates vary by provision as specified in Article 2.
This Order is made in exercise of the powers conferred by sections 44, 54 and 90 of, and Schedule 2 and paragraph 9 of Schedule 3 to, the Climate Change Act 2008.
In accordance with paragraph 10 of Schedule 3 to that Act, before the recommendation to His Majesty in Council to make this Order was made- 1. (a) the advice of the Committee on Climate Change was obtained and taken into account; and 2. (b) such persons likely to be affected by the Order as the Secretary of State, the Department of Agriculture, Environment and Rural Affairs, the Scottish Ministers and the Welsh Ministers considered appropriate were consulted.
The legal authority for the amendments comes from the Climate Change Act 2008.
Before recommending the changes, the government consulted the Committee on Climate Change and affected stakeholders across all UK nations.
The amendment required approval from Westminster Parliament, Northern Ireland Assembly, Scottish Parliament and Welsh Senedd.
Articles 8(b)(i), (c) and and 13 come into force on 1st January 2026. The rest of this Order comes into force on the day after the day on which it is made. This Order extends to the whole of the United Kingdom.
Most provisions take effect immediately after royal assent, while specific sections around installation operations and appeals take effect from January 1st, 2026.
The amendments apply throughout the United Kingdom.
For the purposes of this Order, an installation has ceased operation if all regulated activities have permanently ceased to be carried out at the installation (see paragraph 10A of Schedule 6 (installation to be treated as ceasing operation: regulator's notice) for circumstances in which an installation must be treated as having ceased operation).
Redefines when an installation is considered to have ceased operations, focusing on permanent cessation of regulated activities.
The definition links to new regulatory powers for determining permanent closure status.