ICIS EU carbon portal: Newly launched UK ETS portal
New ICIS EU carbon portal: The UK emission trading scheme
After formally leaving the EU in 2020, the UK is no longer part of the EU’s Emissions Trading System (ETS). Under the system, compliance players from the power and energy-intensive industry sectors have to surrender allowances for every ton of carbon they emit. Consequently, pay a price for every tonnes of greenhouse gases. In the last trading period, 2013-2020, the European system was successfully cutting emissions by overall 29%. In the UK, the decrease has been even more severe, as emissions were cut by 53% in the same period.
Market challenges:
Having left the EU ETS, the UK decided in 2020 to set up its own trading scheme, the UK ETS, as of 2021. With very little time available, even at the beginning of the year many questions relating to the system had been left unanswered.
In the last weeks and months more information became available and the system has now been formally set up, and the first auction of UK allowances (UKAs) will took place on Wednesday 19 May. The same day, trading platform ICE will launch UKA Futures contracts trading, with expiries including three December, and one March contract.
In total, 83m allowances will be auctioned until the end of the year, with another 39m certificates being allocated to market participants free of charge.
How can ICIS help?
To support the key market players in this new trading system, ICIS has set up a new section on our EU Carbon Portal, giving detailed insights into the UK ETS market, and the dynamics that can be expected to emerge. Our analysis covers:
The fundamental balance of the UK ETS
An overview of demand, supply, auctions, and free allocation, and how they will shape the market
Key instruments in the UK ETS
Cost Containment Mechanism, Auction Reserve Price, Carbon Price Support and the UK’s Market Stability Mechanism, and the role they play in the new market.
Market data
Auction results and prices traded on the secondary market, giving full visibility of market developments.
Price forecast
The portal features an annual UKA price forecast out to 2030. A more detailed, quarterly price forecast is available for the next two years
Traded positions
Hedging patterns and trading strategies applied by all market participants. We derive from this the actual demand and supply in the market, determining short and long positions
Qualitative analysis
Market developments in the UK ETS, including expectations towards a potential linkage to the EU ETS, and a potential further tightening of the UK ETS as it aligns with Net Zero, and give our assessment of the market impact of the latest developments.
Speak with ICIS
If you would like to find out more about how we can work together to bring you actionable insight to support quality decisions, get in touch with us today. Fill in your details, submit the form and a member of our team will contact you.
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