Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026

On 4 February 2026, MPs approved the Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026, a statutory instrument (a form of secondary legislation that does not require a full bill) by 392 votes to 116. The order makes changes to the UK Emissions Trading Scheme, most notably by beginning to phase out free carbon allowances given to energy-intensive industries such as steel and cement, as part of the transition to a Carbon Border Adjustment Mechanism. The practical effect of the order is to reduce the number of free allowances that domestic producers in sectors at risk of carbon leakage receive, and to replace that protection with border tariffs on imported goods. Supporters argued this maintains a level playing field between UK producers and overseas competitors while advancing decarbonisation. Critics argued it raises the carbon tax burden on British businesses and, through cost pass-through, on consumers, pointing to the Government's own impact assessment as evidence that prices could rise. The vote divided sharply along party lines. Labour, the Liberal Democrats, the SNP, Plaid Cymru, and the Greens all voted in favour; the Conservatives and Reform UK voted against, as did the Democratic Unionist Party. There were no Conservative ayes and no Labour noes. The result reflects the Government's majority and its stated commitment to net zero, set against an opposition that has framed carbon pricing reform as an additional cost on households already under financial pressure.