Source · National Audit Office

UK Emissions Trading Scheme

Published: 30 Jun 2025 Recommendations: 6 Type: Value for Money NAO confirmed: 5 Department: Department for Energy Security and Net Zero

This report reviews the UK Emissions Trading Scheme and its progress to date, as well as reviewing future risks and potential difficulties.

Dept: Department for Energy Security and Net Zero Topics: Climate change and net zeroEnergy and environment nao.org.uk →

Recommendations

6 items

6 accepted 1 implemented 5 in progress

Rec	Recommendation	Addressee	Acceptance	Implementation
1	The Authority should: consider its approach to prioritising the development and introduction of new policies to take account of its own capacity and that of the Scheme participants. It should also consider its approach to working with the other parts of government with responsibilities for the UK?s industrial and energy sector. Ref Page 10, 15a · Implemented Q1 2026-27	Department for Energy Security and Net Zero	Accepted	In progress ✓ NAO
2	The Authority should: collect evidence on the type and value of investment in low-carbon technologies made by the Scheme?s participants, including the extent to which this has been driven by the carbon price. It should use this to help inform its understanding of the future path of emissions reductions under the Scheme and consequently how the Scheme will support emissions reductions in each of the sectors to which it applies. Ref Page 10, 15b · Implemented Q2 2026-27	Department for Energy Security and Net Zero	Accepted	In progress ✓ NAO
3	The Authority should: enhance its existing annual reports on the functioning of the UK ETS carbon market, by including a broader commentary on the Scheme?s performance. Ref Page 10, 15c · Implemented Q3 2026-27	Department for Energy Security and Net Zero	Accepted	In progress
4	The Authority should: improve its communications with the Climate Change Committee to help it anticipate the Committee?s advice, and to support the Committee?s understanding of its modelling. Ref Page 10, 15d	Department for Energy Security and Net Zero	Accepted	In progress ✓ NAO
5	The Authority should: make sure, as it expands the Scheme into new sectors, the monitoring and verification arrangements it is developing reflects those sectors? specific characteristics. Ref Page 10, 15e (i) · Implemented Q4 2025-26	Department for Energy Security and Net Zero	Accepted	Implemented ✓ NAO
6	The Authority should: review the effectiveness of these arrangements as part of its approach to monitoring and evaluation, and take action in response to any limitations identified. Ref Page 10, 15e (ii)	Department for Energy Security and Net Zero	Accepted	In progress ✓ NAO