Meet your annual UK ETS obligations

The UK Emissions Trading Scheme (UK ETS) caps greenhouse gas emissions from heavy industry, power generation, aviation and, from 1 July 2026, domestic shipping. Operators in scope must hold a permit or monitoring plan, report their emissions each year and surrender one allowance for every tonne of carbon dioxide equivalent they emit. Free allowances go to eligible installations, and you buy the rest at auction or on the secondary market.

Check whether you are in scope

An installation is covered if it carries out a listed regulated activity. The most common is burning fuel on a site where the combustion units have a total rated thermal input above 20 megawatts. When you add up the units, leave out any below 3 megawatts and any that burn only biomass. Many industrial processes are listed too when they pass a capacity threshold, among them refining, steelmaking above 2.5 tonnes an hour, cement clinker, lime, glass, ceramics, paper and a range of chemicals. An installation whose main purpose is incinerating hazardous or municipal waste is excluded.

Aircraft operators are covered for UK domestic flights, flights to Gibraltar, and flights departing the UK for the European Economic Area or Switzerland. Ships of 5,000 gross tonnage or more are covered for domestic voyages and in-port emissions from 1 July 2026, with offshore vessels added from 1 January 2027.

Get a permit and a registry account

Apply for a greenhouse gas emissions permit through the Manage your UK ETS reporting service (METS) at least 2 months before you start the activity. The application needs a monitoring plan approved under the Monitoring and Reporting Regulation 2018. The regulator must decide within 2 months unless you agree a longer period. The permit sets your monitoring and reporting conditions, a surrender condition and, if you get free allocation, further conditions on reporting your activity levels.

The registry administrator opens your Operator Holding Account once the permit is issued. The permit fee includes one authorised representative with permission to surrender allowances.

Your regulator depends on where the installation is. The Environment Agency regulates installations in England, and the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) regulates offshore installations.

Follow the annual cycle

The scheme year is the calendar year, and its obligations fall due in the following spring.

Monitor your reportable emissions from 1 January to 31 December under your approved monitoring plan. Apply to vary your permit for a significant change to the plan. Non-significant changes, such as replacing a meter in a way that does not affect the tier, are notified by 31 December of the year you make them. Keep all the data behind your report for at least 10 years, counted from the date you submit it.

Your emissions report must be verified by an independent verifier accredited by the United Kingdom Accreditation Service (UKAS). It can only be submitted with a verification opinion of verified, or verified with comments.

Surrender allowances through your Operator Holding Account. Free allocation rarely covers everything you emit, so buy what you need in good time before the surrender date.

What happens if you miss a deadline

If the regulator finds your reportable emissions exceed the verified figure and you did not surrender the difference by 30 April, you pay £20 for each allowance, rising with inflation, instead of the excess emissions penalty. Operating without a permit carries a penalty of the costs avoided plus the carbon price on the emissions.

The regulator publishes the name of anyone who receives the penalty for not surrendering allowances. If you send no satisfactory report, the regulator can determine your emissions itself and recover its costs from you.