May 13, 2025
BP supports a 12-year extension of the UK ETS in its response to the consultation.
BP has backed extending the UK Emissions Trading System (ETS) beyond 2030, advocating for the inclusion of carbon removals in the compliance market and the creation of links with the EU ETS.
In its response to a UK ETS Authority consultation released on May 12, BP stated that a 12-year phase from 2031 to 2042 is the preferable option for Phase II of the UK ETS.
The current phase of the cap-and-trade system operates from 2021 to 2030, as per the 2020 greenhouse gas emissions trading scheme order, and a second phase would necessitate new legislation.
This extension aims to "ensure ongoing trading of emissions allowances and maintain incentives for sectors to invest in low-carbon technologies," while offering participants long-term regulatory stability.
BP also expressed a desire for specific elements in Phase II to "improve the scheme's effectiveness and alignment with wider UK objectives, such as the inclusion of removals, a UK-EU link, and flexibility to recognize global initiatives."
UK carbon values have risen as the UK government seeks to align its compliance market with the EU ETS, driving UK carbon prices to several-month highs.
Recent statements from several energy companies and trade groups suggest that integrating both ETSs would "reduce decarbonization costs, build market confidence, and expedite clean energy development."
UK and EU carbon prices diverged significantly in 2023 and 2024, with UK Allowances trading at a substantial discount to EU Allowances.
However, UK Allowance prices have surged due to the potential EU ETS link, with the UKA December 2025 contract reaching an 11-month high in early May.
Platts, part of S&P Global Commodity Insights, last assessed UKAs at GBP51.34/mtCO2e ($67.78/mtCO2e) on May 9, while EUAs were priced at Eur70.32/mtCO2e ($78.22/mtCO2e) on the same date.
The consultation also addresses the possibility of allowing the banking of allowances between the current phase and post-2030, a policy BP supports. Banking means buying a UK Allowance in one year for use in later years, a practice permitted in Phase I of the UK ETS.
In its response to a UK ETS Authority consultation released on May 12, BP stated that a 12-year phase from 2031 to 2042 is the preferable option for Phase II of the UK ETS.
The current phase of the cap-and-trade system operates from 2021 to 2030, as per the 2020 greenhouse gas emissions trading scheme order, and a second phase would necessitate new legislation.
This extension aims to "ensure ongoing trading of emissions allowances and maintain incentives for sectors to invest in low-carbon technologies," while offering participants long-term regulatory stability.
BP also expressed a desire for specific elements in Phase II to "improve the scheme's effectiveness and alignment with wider UK objectives, such as the inclusion of removals, a UK-EU link, and flexibility to recognize global initiatives."
UK carbon values have risen as the UK government seeks to align its compliance market with the EU ETS, driving UK carbon prices to several-month highs.
Recent statements from several energy companies and trade groups suggest that integrating both ETSs would "reduce decarbonization costs, build market confidence, and expedite clean energy development."
UK and EU carbon prices diverged significantly in 2023 and 2024, with UK Allowances trading at a substantial discount to EU Allowances.
However, UK Allowance prices have surged due to the potential EU ETS link, with the UKA December 2025 contract reaching an 11-month high in early May.
Platts, part of S&P Global Commodity Insights, last assessed UKAs at GBP51.34/mtCO2e ($67.78/mtCO2e) on May 9, while EUAs were priced at Eur70.32/mtCO2e ($78.22/mtCO2e) on the same date.
The consultation also addresses the possibility of allowing the banking of allowances between the current phase and post-2030, a policy BP supports. Banking means buying a UK Allowance in one year for use in later years, a practice permitted in Phase I of the UK ETS.