UK Emissions Trading Scheme consultation

08 July 2022

Net zero
A village in the Peak District with sheep grazing in the foreground

The government's Emissions Trading Scheme has significance for agriculture. Follow the progress of the consultation.

8 July 2022

Comment from UK farming unions

In their separate responses to the consultation, the four UK farming unions reiterated their commitment to playing their part in meeting climate change ambitions, while also feeding a growing population.

They stressed that farmers’ desire to act provides an unprecedented opportunity for the UK government and devolved administrations to step up and support the industry’s ambitions.

Opportunities

As both a source and a sink of GHG (greenhouse gas) emissions, agriculture is in a unique position, but farmers cannot do this on their own.

The unions also emphasised agriculture’s role in aiding the transition from a fossil fuel based economy towards a more circular bioeconomy. But it is vital that this transition is underpinned by a robust framework that both supports and protects the needs of agriculture and domestic food production.

Challenges

The unions collectively highlighted the significant risk of widespread changes in land use and land ownership.

The current lack of governance over the voluntary carbon market is already driving the loss of productive agricultural land. This risks undermining the UK’s food security and domestic food system and raises the possibility of carbon leakage by displacing domestic agricultural produce with imports – exporting environmental and climate impacts to global trading partners.

Fairness across the UK

There is a need for transparent and robust data and standards, and equality and fairness for the different farming systems across the UK for functioning markets and across supply chains.

NFU comment

NFU Deputy Tom Bradshaw

NFU Deputy President Tom Bradshaw said: “Farmers want to know where they’re starting from so it is incredibly frustrating that on-farm greenhouse gas calculators can provide wildly different results. 

“There is an urgent demand for a more standardised audit process to allow farm businesses to better address the challenge of greenhouse gas emissions reduction and removal. Building confidence in GHG calculations is absolutely crucial and the government has a central role to play in this.”

NFU Cymru comment

NFU Cymru President Aled Jones said: “For individual farmers determining the starting point or carbon baseline is, in itself, a difficult process. 

“We believe there is an unprecedented opportunity for the Welsh Government to provide incentives and support to embed data collection, GHG auditing and mitigation practices at pace and scale to maximise the contribution of agriculture to a net zero economy.”

NFU Scotland comment

NFU Scotland President Martin Kennedy said: “In the long term, the UK ETS could be used as a mechanism for the regulation of trading in nature-based greenhouse gas removals (GGRs) but that would fail to address the significant interest and ongoing investment from the private sector in carbon trading that is happening now. 

“The current lack of regulation around carbon offsets is leading to the loss of land suitable for food production, driving up land prices to unaffordable levels for the farming sector, putting our food security and domestic food system at risk.

“A carbon market must work alongside, and not undermine, the production of sustainable food in Scotland. It must ensure there is protection against inappropriate long term land use change which takes agricultural land out of food production, reduce the risk of ‘carbon leakage’ and prevent ‘greenwashing’ of emissions from other sectors. 

“That is why, in the short to medium term, there is an urgent need for the regulation of carbon trading on land in Scotland which focuses on both reducing agricultural emissions and increasing on farm carbon sequestration. This would be supported by investment and improvements in carbon auditing tools.”

Ulster Farmers' Union comment

UFU President David Brown stated: “While carbon sequestration will be an important element in reaching climate change targets and presents opportunities for agriculture, it is vital that delivering more carbon storage does not result in displacing food production. 

“The UK is on average only around 60% self-sufficient in food. There is a real risk to UK food security and a significant risk of carbon leakage if this issue is not treated cautiously and sensitively.”

21 June 2022

NFU publishes consultation response

The NFU responded to the consultation on behalf of farmers and growers.

You can download and read it in full here: NFU response to consultation on the UK Emissions Trading Scheme

Our response looks at:

  • Biomass, thresholds, energy from waste 
  • Greenhouse Gas Removals (GGRs) including nature-based solutions
  • Monitoring Reporting and Verification (MRV) of agriculture and land use emissions

17 June 2022

Consultation closes

The consultation closed on Friday 17 June at 11.45pm.

24 May 2022

NFU shares draft response with members

You can download and read our draft response to the consultation.

It covers our views and recommendations on:

  • Biomass, thresholds, energy from waste 
  • Greenhouse Gas Removals (GGRs) including nature-based solutions
  • Monitoring Reporting and Verification (MRV) of agriculture and land use emissions

Read it here: NFU draft response to UK Emissions Trading Scheme consultation

This draft response was available until 1 June 2022 for NFU members' comments.

6 May 2022

Call for views

Now that the UK Emissions Trading Scheme (ETS) is established, the UK Government, Scottish Government, Welsh Government and Northern Ireland Executive want to further develop the scheme and to make it the world’s first net zero consistent 'cap and trade' market, and have launched a consultation: Developing the UK Emissions Trading Scheme (UK ETS).

Relevance to agriculture

While the consultation is clear that there is no proposal to expand the UK ETS to agriculture at this time, there are many aspects of the consultation which are very relevant to our sector.

For example, it asks whether the UK ETS could become a market for carbon storage on farms and what the barriers are to farmers and growers using GHG calculators.

Share your views

This BEIS consultation asked for stakeholder views to ensure that the UK ETS leads to workable GHG emission reductions and continues to demonstrate the UK’s leadership on carbon pricing.

You could answer any of the questions yourself using the online survey. The consultation closed on Friday 17 June at 11.45pm.

The government is particularly interested in hearing from individual farmers on questions 165 to 168.

  • Q165. Are you currently using carbon audit tools? If so which one(s) and what have you changed? If no, what has prevented you from using these tools?
  • Q166. What are the barriers to implementing robust Monitoring, Reporting and Verification of greenhouse gas emissions, and how can we improve record-keeping?
  • Q167. Remote sensing technologies and earth observation could be used to complement carbon reporting tools. Do you have any concerns about utilising this technology and what could reassure you?
  • Q168. How can carbon audit and reporting tools be used in conjunction with other business planning mechanisms?

‘Cap and trade’

In January 2021 the UK Emissions Trading Scheme (ETS) was launched to replace the UK’s participation in the EU ETS. You can read the government's consultation document on Developing the UK Emissions Trading Scheme (UK ETS) at Gov.uk

The UK ETS works on the ‘cap and trade’ principle where a cap is set on the total amount of certain GHGs that can be emitted by sectors covered by the scheme. This limits the total amount of carbon (or its equivalent) that can be emitted.

As the cap decreases over time it provides a signal to decarbonise at the pace and scale required to keep emissions at or below the cap. Participants in the UK ETS have to obtain allowances equivalent to their annual emissions under the scheme.

Aspects relevant to our sector

Whilst the consultation is clear that there is no proposal to expand the UK ETS to agriculture at this time there many aspects of the consultation which are very relevant to our sector.

In particular, Chapter 8 of the consultation document calls for evidence on how:

i. The UK ETS could become a market for carbon storage on farms (Nature-based Solutions) and for engineered Greenhouse Gas Removals (GGRs); how to monitor and report on the carbon stored, and how to deal with the fact that carbon storage may not be permanent; how the UK ETS as a compliance market might fit with the voluntary carbon market and other markets for wider ecosystem services e.g. biodiversity, flood management, water quality. See pages 125-133.

ii. Emissions from agriculture and land use can be suitably measured, reported and verified. The consultation recognises the GHG footprinting challenges which farmers and growers currently face, and so it wants to know (see pages 134-142):

  • Whether farmers are currently using a GHG calculator; what the barriers are; what the risks and opportunities are for technology to help with monitoring etc?
  • How monitoring, reporting and verification in agriculture can identify opportunities and attract investment to reduce emissions and store carbon; should farms only be able to trade carbon storage if an acceptable level of GHG reduction has been achieved; which sectors need a GHG
    footprint baseline as a priority; and what should the government’s role be?

Other relevant chapters include:

  • Chapter 2 asks about combined Heat and Power (CHP) plants and electricity generator definition.
  • Chapter 5 on aviation has some questions about Sustainable Aviation Fuels and the sustainability criteria of the Renewable Transport Fuel Obligation (RTFO).
  • Chapter 6 is consulting on sustainability criteria for biomass including solid biomass like forestry by-products or energy crops; other wastes, sewage sludge, slurries etc that can be processed through AD. It also calls for evidence on the 20MWth threshold and 3MW aggregation threshold.
  • Chapter 7 is a call for evidence on expanding the UK ETS to include waste incineration and energy from waste.

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Summary

  • The UK ETS (UK Emissions Trading Scheme) replaced the UK's participation in the EU ETS.
  • The scheme was established to increase the climate ambition of the UK’s carbon pricing policy.
  • The UK, Scottish and Welsh Governments and Northern Ireland Executive want to further develop the scheme.
  • Aspects of the consultation are relevant to agriculture.