In this response, we set out the final markets policy decisions agreed by the UK ETS Authority, and a summary of the stakeholder consultation responses.

We have made the following decisions:

• to retain and inflation-proof the Auction Reserve Price (ARP) to maintain its real value, implementing an inflation-based increase since its introduction (that is, from £22 to £28) in 2026 and increase the value yearly by inflation from 2027
• to retain the existing design and operation of the Cost Containment Mechanism (CCM) and retain discretion
• to discount the implementation of a quantity-triggered Supply Adjustment Mechanism (SAM) for a standalone UK ETS

It was announced at the 19 May 2025 UK-EU Summit that the UK and EU have agreed to work towards linking the UK ETS and EU Emissions Trading System (EU ETS) as set out in the Common Understanding.

The decisions in this document set out changes to markets policy for the UK ETS. The decisions do not represent UK positions for the negotiations, and they also do not preclude any changes that may need to be made in the event that the UK and EU agree to link their schemes.

Next steps

Following this response, the Authority will proceed with implementing the changes to the ARP.​ The initial inflation-based increase from £22 to £28 will take place in 2026, and the yearly inflation increase will occur from 1 January 2027.

Before the changes to the ARP take effect in 2026, the legislation will need to be laid and in force. We intend to give the market at least a months’ notice ahead of the ARP changes being implemented ​

The CCM will continue to operate in line with current rules.​

We received 58 responses to this consultation, representing a wide range of stakeholders, including:

• energy companies
• industrial companies
• trade associations
• non-governmental organisations (NGOs)
• think tanks

These stakeholders provided feedback on market risks, markets policy options and the design of market stability mechanisms.