A UK Emissions Trading Scheme (UK ETS) replaced the UK’s participation in the EU ETS on 1st January 2021.
Officials are concerned that prices have been so high during the past four months that make an intervention a considerable step.
For the second month in a row, the so-called Cost Containment Mechanism (CCM) has been triggered to curb costs in Britain’s ETS.
The CCM is a market stability tool that allows for – but does not require – intervention to mitigate sustained high prices if price triggers set in legislation are met.
A government spokesperson told ELN: “The UK ETS Authority is considering whether to take any appropriate action under the CCM and will announce its decision no later than 18th January to provide certainty to the market.”
In the first auction of the scheme in May 2021, the UK carbon price traded at £50 per tonne, making the cost of polluting in Britain higher than that in the EU.