The Greenhouse Gas Emissions Trading Scheme (Lime Benchmark) (England) Order 2026 was made on 29 May 2026, laid before Parliament on 2 June 2026 and comes into force on 24 June 2026. Made under the Climate Change Act 2008, it is a tightly focused statutory instrument but one with a direct effect on how free allowances are calculated for part of the UK Emissions Trading Scheme. In practical terms, the Order changes a single benchmark used in the free allocation framework for lime production. For policy, legal and compliance teams, that matters because benchmark values feed directly into the annual calculation of free allowances.
The operative change appears in article 3. For the 2027 scheme year, the product benchmark for lime in Annex 8 to the Free Allocation Regulation is to be read as 0.798 rather than 0.725 when calculating the preliminary annual number of allowances for eligible incumbent installations located in England. The amendment applies where allocation is calculated under article 16 of the Free Allocation Regulation or article 3a of the Activity Level Changes Regulation. Its scope is therefore narrow and specific: lime product benchmark sub-installations, incumbent installations and the 2027 allocation year.
According to the Explanatory Note, the UK ETS established by the Greenhouse Gas Emissions Trading Scheme Order 2020 operates with a capped number of tradable allowances held in registry accounts. Operators of covered industrial installations must monitor emissions, submit verified reports and surrender allowances equivalent to their greenhouse gas emissions for each scheme year. The same note explains that the scheme is structured around the 2021 to 2025 allocation period, a standalone 2026 scheme year and the 2027 to 2030 allocation period. Although allowances are sold at auction, some operators receive free allocation each year.
The Order does not rewrite the wider UK ETS framework. It alters one benchmark input for one sector. In UK ETS terms, a product benchmark is intended to reflect the average emissions intensity per unit of output achieved by the most efficient installations in a sector. The Explanatory Note states that the benchmark for lime is being increased for the purpose of calculating free allocation for 2027. The practical effect is clear. Because the benchmark value is an input to the allocation formula, increasing it from 0.725 to 0.798 raises the basis on which 2027 preliminary free allocation will be calculated for the affected lime sub-installations in England. The numerical increase is just over 10 per cent, all else being equal.
The drafting also contains an important territorial and legal point. Although the Order extends to England and Wales, article 3 is framed around incumbent installations located in England. In other words, the territorial extent of the instrument is wider than the immediate operational scope of the benchmark change. Article 2 provides that the Order must be interpreted as if it were part of the 2020 UK ETS Order. For scheme administrators and advisers, that means the amendment sits inside the existing domestic UK ETS architecture rather than creating a separate regime. The domestic versions of the Free Allocation Regulation and the Activity Level Changes Regulation remain in place, but they are to be read with this lime benchmark adjustment for the stated purpose.
The instrument also records the process followed before it was made. It states that the Secretary of State obtained and took into account the advice of the Committee on Climate Change and consulted persons considered likely to be affected. The Order was signed by Chris McDonald, Parliamentary Under-Secretary of State at the Department for Energy Security and Net Zero, on 29 May 2026. For operators in the lime sector, the immediate consequence is not a new monitoring or reporting obligation. The main change is a revised assumption for 2027 free allocation modelling. Installations in scope will need to review how the higher benchmark feeds through their preliminary allowance calculations once the Order takes effect on 24 June 2026, particularly where budgeting, production planning and activity level forecasts for 2027 are already underway.