The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025
On February 12, 2025, the UK government introduced a new amendment to the Greenhouse Gas Emissions Trading Scheme (GHGETS). This amendment, known as the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025, aims to strengthen and expand the existing emissions trading scheme to accelerate the UK’s progress towards achieving net-zero emissions by 2050.
Key Provisions of the Amendment
The amendment introduces several key changes to the GHGETS:
- Expansion of Sectors Covered: The scheme will now cover a broader range of industries, including aviation, shipping, and the built environment. This expansion aims to reduce emissions from sectors that have historically been difficult to decarbonize.
- Increased Ambition: The amendment sets more ambitious targets for emissions reductions. The cap on greenhouse gas emissions will be lowered more rapidly, requiring businesses to reduce their emissions more aggressively.
- Strengthened Enforcement: The amendment introduces stricter penalties for non-compliance with the scheme. Businesses that fail to surrender sufficient allowances to cover their emissions will face increased fines.
- Introduction of a Carbon Border Adjustment Mechanism (CBAM): The amendment introduces a CBAM, which will impose a charge on imports from countries with weaker climate policies. This aims to prevent carbon leakage and ensure that UK businesses are not disadvantaged by competitors with lower environmental standards.
Impact of the Amendment
The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 is expected to have a significant impact on businesses and the UK economy. Businesses will need to invest heavily in decarbonization technologies to comply with the stricter emissions targets. This is likely to lead to increased costs for goods and services.
However, the amendment is also expected to drive innovation and create new opportunities for businesses that develop low-carbon technologies and solutions. The UK government has also announced support measures to help businesses transition to a low-carbon economy, such as funding for research and development.
Reaction to the Amendment
The amendment has been welcomed by environmental groups, who see it as a necessary step to accelerate emissions reductions and address the climate crisis. However, some businesses have expressed concerns about the potential impact on their operations and competitiveness.
Conclusion
The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 is a significant step towards achieving the UK’s net-zero emissions target by 2050. It will drive emissions reductions across a wider range of sectors, strengthen enforcement, and introduce a Carbon Border Adjustment Mechanism to mitigate carbon leakage. While the amendment may pose challenges for businesses, it is also expected to foster innovation and create opportunities for those who embrace the transition to a low-carbon economy.
The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025
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