The UK ETS was launched on January 1, 2021, to replace the UK’s participation in the EU Emissions Trading System after Brexit. The UK government sought to maintain a carbon pricing mechanism that would:

• Ensure continuity in emissions regulation post-EU exit,
• Provide a domestic tool aligned with UK-specific climate ambitions,
• Support the transition to a low-emissions economy through market incentives.

The principles underpinning the UK ETS are closely aligned with those of the EU ETS. While the UK ETS currently operates in isolation, future linkage with the EU ETS remains under consideration as both jurisdictions pursue ambitious emissions reduction goals.