Operators wishing to create a sign-in for the UK Emissions Trading Registry and applying to open a UK Emissions Trading Scheme (UK ETS) Trading Account can do so from today; all other operators can register from 4 May 2021. Updated guidance on the timetable and process for opening Emissions Trading Registry Accounts under the UK ETS (the Guidance) was published by the Department for Business, Energy and Industrial Strategy (BEIS) on 10 March 2021.

The UK ETS replaced the UK’s participation in the EU ETS on 1 January 2021, following the UK’s leaving of the EU at the end of the transition period (see more on the UK ETS after Brexit in our recent blog). Operators must however continue to comply with their EU ETS obligations in relation to the 2020 scheme year, which ends on 30 April 2021. From 1 January 2021, operators no longer have access to the Kyoto Protocol National Registry within the Consolidated System of European Registries and if wishing to hold on to allowances, such operators had been advised to open trading accounts with an EU member state in the interim period between losing access to the EU Registry and the opening of the UK Registry.

UK ETS Guidance

The newly published Guidance does not alter the scope of the UK ETS, which will continue to apply to energy intensive industries, the power generation sector and aviation, but provides further information in relation to the practical implementation of the UK ETS, under which the first trading accounts will be created from 6 April 2021. The accounts that will be available in the UK Registry include:

  • Operator Holding Accounts, which operators will be required to have in order to acquire and surrender allowances;
  • Under the UK ETS, specific accounts for aircraft operators;
  • Trading accounts, not related to UK ETS compliance, but will enable the user to hold and trade UK allowances; and
  • Person Holding Accounts – the Registry will be used to host the UK Kyoto Protocol Registry.

Timetable

From 6 April 2021: Operators can register for and then apply to open, a UK ETS trading account. The Guidance notes that operators who wish to participate in auctions from 19 May 2021 need to register with ICE Futures Europe for further information on the dates and times of auctions, as well as the number of allowances available at each auction.

From 4 May 2021: Account holders with UK Kyoto Protocol Person Holding Accounts in the EU Registry will have their accounts and units migrated to the UK Registry. These account holders, as well as operators and aircraft operators, will be contacted by the registry administrator and asked to:

  • provide details of a primary contact (a person authorised to give instructions on behalf of the account holder or operator to the registry); and
  • nominate authorised representatives to manage the relevant registry account.

From late May 2021: The Registry will begin to accept applications for new UK Kyoto Protocol Person Holding Accounts, although the exact date for this is yet to be confirmed.

Process

On 31 March 2021, BEIS published further detail regarding the documents required to register (available here). Corporate entities will be required to provide a letter of authority from the account holder nominating a primary contact who will operate the account, as well as a criminal records check covering the preceding five years of residence for the directors who signed the letter of authority. All authorised representatives will be required to provide a number of documents, including proof of name and permanent residential address, as well as a criminal records check covering the preceding five years of residence for each nominated authorised representative.

The registry administrator may request further information in relation to both the account holder and its authorised representatives. Further information could include proof of incorporation, details of the corporate group and/or the latest set of audited accounts.

Looking ahead

The Guidance provides a degree of clarity for operators in relation to the implementation mechanics of the UK ETS, particularly in relation to the role of the registry administrator and the relevant timelines. However, it does not address the complexities faced by operators in Northern Ireland (where industrial installations are subject to the UK ETS, but electricity generators remain part of the EU ETS) or aircraft operators (outbound flights from the UK to the European Economic Area are subject to the UK ETS, but inbound flights are subject to the EU ETS). More clarity on these areas is awaited – watch this space!

Contacts

Silke Goldberg
Silke Goldberg
Partner, London
+44 20 7466 2612
Jannis Bille
Jannis Bille
Associate, London
+44 20 7466 6314