UK Emissions Trading Scheme (UK ETS): policy overview

The role of the UK Emissions Trading Scheme in UK decarbonisation and how the UK ETS Authority is developing the scheme.

From: Department for Energy Security and Net Zero

Published 29 August 2025

Last updated 12 March 2026 — See all updates

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UK Emissions Trading Scheme (UK ETS): a policy overview

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The UK Emissions Trading Scheme (UK ETS) currently covers the heavy industry, power and aviation sectors – approximately 25% of UK territorial emissions.

The scheme incentivises investment in decarbonisation in line with climate targets across the UK, by setting a cap on emissions from these sectors and creating a carbon price.

The UK ETS Authority (consisting of the UK, Scottish, and Welsh Governments, and the Northern Ireland Department of Agriculture, Environment and Rural Affairs) is working to expand and develop the scheme to incentivise additional sectors of the economy.

This sets out:

• the policy aims of the UK ETS
• how it works
• the work the UK ETS Authority is doing to develop it

We will update the content as further policy updates are published.