The government has set the reserve price for carbon emissions at £22 in the first auction in the new UK Emissions Trading Scheme. Auctioning will start no later than Q2 2021. The government said that reserve price would be fixed until “it is likely withdrawn as the UK ETS matures.
The government will consult on its intent to withdraw the reserve price as part of the planned consultation to appropriately align the UK ETS cap with a net zero trajectory which will be launched later this year.
The UK scheme has been set up following Brext and the UK’s departure from the EU Emissions Trading Scheme. Participants will receive a free allocation, and new allowances will be used to introduce allowances into the market. Participants will also be able to trade UK ETS emissions allowances on a secondary market. An auction calendar is due to be published this quarter.