UK Government Integrates Carbon Removals into National Emissions Trading System

The UK's Emissions Trading Scheme Authority has decided to integrate greenhouse gas removals into the UK ETS, allowing companies to use verified carbon removals to offset hard-to-abate emissions and meet their regulatory allowances. Legislation enabling the integration is targeted for completion by end-2028, with full operationalisation by end-2029.

The integration will focus initially on engineered removals such as Direct Air Capture and bioenergy with carbon capture and storage. Projects must demonstrate a minimum 200-year carbon storage period to qualify, and removal allowances will only be issued after sequestration is verified. Initially, only removals occurring in the UK will be eligible. The ETS Authority plans to maintain the scheme's gross emissions cap by replacing emissions allowances with GGR allowances on a one-for-one basis.

The decision reflects the UK's recognition that reaching net zero by 2050 will require both steep emissions cuts and significant scaling of carbon removal capacity. Hard-to-abate industrial sectors — which currently depend on buying emissions allowances — would gain a new compliance pathway via verified removals, potentially reducing costs and incentivising investment in nascent removal technologies. The government is also exploring inclusion of woodland removals, though no decision has been announced.

The UK becomes one of the first major economies to formally integrate removals into a compliance carbon market. The decision is expected to provide a route to market for Direct Air Capture and BECCS project developers, who have previously lacked a clear domestic revenue mechanism. The ETS Authority plans to offer removal allowance auctions to facilitate market entry. Removal auction design and verification standards will be key implementation challenges in the years ahead.

Key figure — 200-year minimum carbon storage requirement