UK to Integrate Carbon Removal into Emissions Trading Scheme by 2029

In July 2025, the UK Government-alongside Scotland, Wales and Northern Ireland-announced a landmark climate policy: by 2029, the UK Emissions Trading Scheme (UK ETS) will formally accept verified greenhouse gas removals (GGRs).

This move marks a strategic shift from a market solely focused on emissions reductions toward one that also monetizes high-integrity carbon removal, thereby bolstering market credibility, supporting net‑zero objectives, and enabling cost-efficient decarbonisation across hard‑to‑abate sectors such as aviation and heavy industry.

The planned integration involves key design features to ensure robust and trustworthy implementation. Removal credits will only be issued after sequestration is verified, and projects must ensure carbon storage for at least 200 years, backed by liability and buffer‑pool mechanisms.

The total allowance cap of the UK ETS will remain unchanged: for every new removal credit issued, one fewer regular allowance will be granted, preserving the integrity of the emissions ceiling. Initially, eligibility is limited to domestic UK removal projects.

Market actors and carbon removal developers have largely welcomed the announcement, particularly the proposed removal auctions, which could provide a reliable route to revenue. However, questions remain around which specific removal technologies and credit types will qualify, leading to calls for further clarification.

In addition to supporting engineered removals like Direct Air Capture (DAC) and Bioenergy with Carbon Capture and Storage (BECCS), the government is still evaluating whether high‑quality nature‑based solutions such as woodland removals should be included in the UK ETS, pending further stakeholder consultations later in the year.

Bringing carbon removals into the UK ETS is one of the more consequential moves in carbon-market design - it starts to route high-integrity removals into compliance markets at scale, which materially changes both credit demand and project economics. Our climate-action and responsible-investment teams help clients evaluate carbon-removal opportunities against ETS-integration timelines and voluntary-market credibility.