The EU Emission Trading Scheme (EU ETS)

Information about government measures intended to tackle climate change and encourage UK businesses to save energy and reduce carbon dioxide emissions

Emissions trading in the UK

Please note that a UK Emissions Trading Scheme (UK ETS) has replaced the EU Emissions Trading Scheme from 1 January 2021.

All new applicants should refer to the UK Emissions Trading Scheme.

All existing permit holders should:

  • refer to the UK Emissions Trading Scheme for information on the UK ETS and
  • continue to comply with your existing permit conditions and obligations in the EU ETS up until 30 April 2021

EU ETS and Brexit/EU Exit

Transition arrangements were in place following the UK leaving the EU on 31 January 2020 as part of the Withdrawal Agreement that ensured that the UK continued to be a part of the EU ETS until 31 December 2020 which was the end of Phase III. 

During this period, participating installations were required to continue to monitor their emissions and to comply with the conditions of their permit.

In the first quarter of 2021 operators are required to collate their emissions data and have their emissions independently verified and completed in ETSWAP by 31 March 2021.

Opt out installations are also required to collate their emissions data but are not required to have their emissions independently verified.

Operators are also required to ensure they have enough allowances to cover their installation's emissions and surrender sufficient allowances to cover their emissions by 30 April 2021.

Find the latest information on EU ETS and the implications of Brexit on GOV.UK.

Further guidance for installations is available on GOV.UK.

Further guidance for aircraft operators is available on GOV.UK.

How the EU ETS works 

The EU ETS works on the 'cap and trade' principle.

A 'cap' is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system that is reduced over time so that total emissions fall.

Within the cap, companies receive or buy emission allowances, which they can trade with one another as needed. They can also buy limited amounts of international credits from emission-saving projects around the world. The limit on the total number of allowances available ensures that they have a value.

After each year a company must surrender enough allowances to cover all its emissions, otherwise heavy fines are imposed. If a company reduces its emissions, it can keep the spare allowances to cover its future needs or else sell them to another company that is short of allowances. 

Read more about ETS and carbon markets on GOV.UK.

Read more about determinations of the EU ETS carbon price on GOV.UK.

Read more about EU ETS: legislation and research publications on GOV.UK.

Buying and selling emission allowances 

Installations have the flexibility to buy additional allowances on top of any free allocation, or to sell any surplus allowances generated from reducing their emissions. Within limits, they can also buy credits from certain types of approved emission-saving projects around the world. 

Find out more about EU ETS: allowances on GOV.UK.

What the allowances represent 

Each allowance gives the holder the right to emit one tonne of CO2, the main greenhouse gas, or the equivalent amount of two more significant greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).

Requirements for EU ETS participants 

In each compliance year an installation participating in the EU ETS needs to:

  • monitor emissions stipulated within their greenhouse permit throughout the calendar year
  • submit an emissions report for previous reporting year via ETSWAP by 31 March
  • surrender emission allowances equal to the total emissions within the report by 30 April

EU ETS participants in Wales should continue to use ETSWAP on the Environment Agency’s website to manage compliance activities. 

Find out more about EU ETS monitoring and reporting on GOV.UK.

UK's competent authority

The UK is the member state for compliance within the EU ETS, and the Department for Business, Energy & Industrial Strategy (BEIS) is the UK competent authority. BEIS also sets the UK’s policy, working in partnership with the devolved administrations and other government departments. Responsibility for implementation and regulation of the EU ETS is largely geographically based. 

Role of the Environment Agency 

The Environment Agency is the UK administrator on behalf of the UK environment agencies (SEPA, NIEA and NRW) and they maintain ETSWAP.

Natural Resources Wales

Natural Resources Wales is responsible for all regulation, compliance, enforcement, auditing and permitting activities (including new permits, variations, surrenders, transfers, revocations, notifications, activity/capacity changes and new entrants reserve applications) relating to installations in Wales. We are also responsible for responding to technical enquires raised by Welsh participants. 

Read guidance on EU ETS notifying us of changes to your operations on GOV.UK.

Managing system participation 

All permit applications, variations, notifications and submissions of reports are managed through the online greenhouse gas emissions planning, reporting and management tool Emissions Trading System Workflow Automation Program (ETSWAP). 

New applicants, excluding off-shore installations, need to go to ETSWAP and register a new installation under the UK ETS that replaced the EU ETS from 1 January 2021. 

Operators of installation that have had a change in capacity or activity levels may need to tell us and submit information using the ‘New Entrants and Closures’ spreadsheet.

Please contact us at GHGHelp@naturalresourceswales.gov.uk to request the latest version of the spreadsheet.

Read more about EU ETS accounts and applications on GOV.UK.

How to apply for a greenhouse gas emissions permit for the UK ETS

It is a legal obligation for the operator of any stationary installation or aviation activity in Wales that carries out an activity listed in Annex I of EU DIRECTIVE 2003/87/EC resulting in the emission of carbon dioxide to hold and comply with a greenhouse gas emissions permit issued by NRW. This also applies to emissions of the additional greenhouse gases: methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

Applications for new or amendments to existing greenhouse gas emissions permits must be made using the Emissions Trading System Workflow Automation Programme (ETSWAP).

Stationary installations 

Installations such as power stations, oil refineries, offshore platforms as well as industries producing iron and steel, cement and lime, paper, glass, ceramics and chemicals are classed as stationary installations. 

EU Emissions Trading Scheme charges 

Please be aware that these charges only apply to charges in the EU ETS.  

If you have any queries relating to charges then contact us on: ghghelp@naturalresourceswales.gov.uk ​

Applying for a new permit 

When you apply for a new permit, you must pay a charge based on your emissions. The charge also covers the cost of opening an account in the Union registry. 

New applications  

Current charges 

Cat A and opt outs - emitting less than 50kt per year 

£1,372 

Cat B - emitting at least 50kt per year and no more than 500kt per year 

£2,560 

Cat C - emitting more than 500kt per year 

£6,113 

We will estimate your likely annual emissions unless you can provide a verified, annual emissions figure. 

Applications for changes to existing permits

These charges apply when we need to carry out a technical assessment of your application to vary your permit. 

Permit changes 

Current charges 

Permit variations where a fee is paid with an application 

£440 

Permit variation without application 

£440 

Permit variation (termination of excluded status) 

£440 

Increase emissions target

If you are an excluded operator and you apply to increase your emissions target after an increase in capacity, you are required to pay a charge which covers the cost of your permit variation. 

£1,147 

Permit transfer

This is payable by either the transferrer or the transferee (but not both). 

£440 

Permit surrender

If you apply to surrender your permit or we serve a notice that we are revoking your permit, you will need to pay a surrender or revocation charge.

£686 

Permit revocation 

£686 

New entrant reserve 

£1,147 

If the information you send in with your application is incorrect or incomplete, you may have to pay a further charge if we need to make another amendment to your target.

Not all permit variations incur a charge. If we think that the variation is only an administrative change, you will not need to pay a charge. If you aren’t sure whether you need to pay a variation charge, please email GHGHelp@naturalresourceswales.gov.uk 

Subsistence charge for stationary installations

The subsistence charge is payable annually and is based on your emissions. It covers the costs of:

  • maintaining your permit
  • maintaining your use of the Union Registry
  • processing notifications
  • dealing with administrative or minor variations to monitoring plans
  • compliance inspections
  • providing a help desk
  • compliance audit activities if you are an excluded installation

If your annual emissions are: 

Subsistence categories 

Current charges 

Less than 50kt per year 

£2,611 

At least 50kt and no more than 500kt per year 

£3,400

More than 500kt per year 

£4,178

Opt out/non-emitter (NEW CATEGORY)

A non-emitter charge applies to a limited number of installations that don’t emit greenhouse gases from that part of the regulated activity carried out at the installation. It doesn’t apply to those that report zero emissions due to burning or use of biomass source streams.

£1,004

If you join EU ETS part way through a year, you will be charged a portion of the subsistence charge according to the number of days left in the year. The calculation will start from the date your permit is granted or transferred.

If you surrender your permit, or it’s revoked, and this happens part way through a year, we will refund a portion of the annual subsistence charge you have paid. The calculation will be based on the number of days left in the year.

Permit applications and variations for aviation operators 

Charges for permit applications and variations for aviation operators are: 

Applications 

Current charges 

Application for an emissions plan 

£768 

Emissions plan variationThis charge may also be incurred if we have served you a variation notice. 

£440 

Application for a benchmarking plan 

£850 

Application for Special Reserve

This also covers the cost of your application for your benchmarking plan. 

£1,147 

Not all emissions plan variations incur a charge. If we think that the variation is only an administrative change, you will not need to pay a charge. If you aren’t sure whether you need to pay a variation charge, please email GHGHelp@naturalresourceswales.gov.uk 

Subsistence charge for aviation operators 

The subsistence charge is payable annually and is based on your emissions. It covers the costs of: 

  • maintaining you as an aircraft operator in the EU ETS 
  • processing notifications 
  • maintaining your use of the Union Registry 
  • dealing with administrative or minor variations to plans 
  • compliance auditing 
  • providing a help desk and resolving issues 

The subsistence charge is made up of two parts. It has a fixed charge element called a base charge. You pay this if you are carrying out aviation activities for any part of the compliance year. The base charge is dependent on your emissions: 

Aviation subsistence charge 

Current base charges 

Less than 50kt per year (Base Charge) 

£1,966 

At least 50kt and no more than 500kt per year (Base Charge) 

£2,550 

More than 500kt per year (Base Charge) 

£3,133 

You also need to pay a variable charge that depends upon the length of time you have had an emissions plan in place during a compliance year. 

If you qualify as a UK aircraft operator part way through a compliance year, you will be charged a pro-rata fee based on the number of days remaining in the year. The charge will start from the date on your emissions plan, not from the date you applied for the plan. 

Within any one calendar year, if your emissions plan is suspended and then restarted again mid-year, the variable part of your charge will not be adjusted. 

 The variable charges are: 

Aviation subsistence charge 

Current variable charges 

Less than 50kt per year (Variable/b) 

£645 

At least 50kt and no more than 500kt per year (Variable/b) 

£850 

More than 500kt per year (Variable/b) 

£1,044 

Determining emissions charges for both stationary and aviation operators 

In some circumstances, for example if you don’t submit your annual emissions report, we will charge £125 per hour to estimate your reportable annual emissions. We will send you an invoice for any costs incurred. 

Union Registry charges 

The cost of opening a new Operator Holding account (OHA) or Aircraft Operator Holding account (AOHA) is included in the application charge for a new permit or emissions plan. 

 Registry categories 

Current Charge 

Opening a registry account 

£195 

Annual registry subsistence charge 

£389 per annum 

Open a Verifier account 

£195 

You need to pay the full year’s subsistence charge even if you have only held an account for part of a year.

Change or nominate Authorised Representatives

Operators with an Operator Holding Account (OHA) or Aircraft Operator Holding Account (AOHA) don’t need to pay to change an Authorised Representative (AR) or Additional Authorised Representative (AAR). 

If you are another type of account holder (either a person holding account or a trading account), you don’t pay for the first 2 ARs required at account application, but any additional or replacement ARs and AARs will incur a charge of £55.

External trading platforms 

External trading platforms can be connected to the Union Registry to facilitate the trading of allowances and Kyoto units between several third parties. 

The Environment Agency charges £125 per hour to assess applications for external trading platform accounts. The cost of work carried out by third parties like IT consultants will be passed on to the owners of those external trading platforms.

How to pay for your permit

Electronic transfer 

If you want to pay for your permit or licence application by electronic transfer please use the information below to make your payment.  

Company name: Natural Resources Wales
Company address: Income Department, PO Box 663, Cardiff, CF24 0TP
Bank: RBS
Address: National Westminster Bank Plc., 2 1/2 Devonshire Square, London, EC2M 4BA
Sort code: 60-70-80
Account number: 10014438

You must include your company name.

You should include the BACS payment reference on the application form itself. If you do not quote your payment reference number, there may be a delay in processing your payment and application.

Pay for your permit by telephone

Call us on 0300 065 3000 (Mon-Fri, 9am-5pm)

Email enquiries@naturalresourceswales.gov.uk