Carbon and Energy Newsletter - November 2025

Post Date: 13 November 2025
Read Time: 8 minutes

Orange beech leaves (autumn) against a blue sky

The weather is getting wetter and colder as we leave spooky season and enter the festive period – welcome to the November 2025 edition of your Carbon and Energy Newsletter.

There are some insightful changes that we are excited to share in this month’s update. We will review the latest information on UK ETS, some recently released SBTi trends, announce ESOS deadlines and progress updates to the CCA changes going into the new scheme. We will then conclude with a review on the amendments to CBAM and the likely implications that this will have to companies.

Insight of the month

COP30 is underway this month from Monday 10th to Friday 21st November, and this year it is hosted in the Brazilian city of Belém. COP (Conference of the Parties) is attended by countries that signed the United Nations Framework Convention on Climate Change (UNFCCC). It takes place every year following an agreement made in 1992 to make plans on tackling climate change, with countries making commitments on this. However it has become somewhat watered down since the significant steps made from the 2015 Paris agreement. Due to the location of this year’s COP30, it is expected that a greater focus will be on conservation of the Amazon, but there will also conversations around the progress that countries have made on previous pledges.

UK Emission Trading Scheme (UK ETS)

The interim authority response was released for the waste sector inclusion into UK ETS. It has confirmed that for the first two years of the scheme, reporting will be voluntary to provide sufficient time for operators to put processes in place ahead of reporting in 2028. This will then require reporting from the incineration and combustion of waste and other energy recovery from waste activities. This includes Advanced Thermal Treatment, Advanced Conversion Technology, other related advanced waste treatment activities, and waste-to-fuel activities (including the production of sustainable aviation fuel). It’s also highlighted that there will be no exemptions for the incineration of any type of waste (including hazardous or clinical) from the UK ETS, in order to maintain a level playing field between different waste types and maximise the emissions covered by the UK ETS.

Carbon price

A review of the current trends and costs associated with the UK ETS allowance show that prices are tracking at around £58/tonne. This demonstrates a continued increase from the start of the year where it was as low as £31/tonne in January. The EU allowance follows a similar trend but fluctuates at a higher rate of around €83/tonne. This is a substantial rebound since the carbon cost dipped at the end of February tracking at €52/tonne. Further details on the UK Emissions Trading Scheme markets can be found in the latest policy paper. [1].

Science Based Target initiative (SBTi)

In our July edition of our newsletter,[2] we highlighted that SBTi had opened consultation on a new automotive industry standard to accelerate its net zero transition. This received over 120 responses and the consultation has now closed. Following this, an invite has been extended to automakers and auto parts manufacturers to participate in pilot testing the draft standard during Q4 25 - Q1 26. A second public consultation is then expected to follow before the final guidance is released.

SBTi has also released their latest trend tracker data showcasing the progression of companies opting to commit to science-based targets and the cumulative year on year increase.[3]

It shows that almost 11,000 companies have set or committed to GHG emissions reduction targets and by Q2 2025, the number of companies with validated net zero targets has trebled compared to the end of 2023. At a country level, China was the fastest-growing country for science-based targets, closely followed by Poland, Thailand, and Japan. Although Japan continues to lead in the total number of companies with validated targets at 1,731. In general, Asia is currently demonstrating leadership in climate ambition and commitment which will have a strong impact across supply chains and sectors. It is clear that stakeholder expectation continues to be a strong driver in the wake of global political challenges. Across sectors, industrials, consumer goods, and materials are now among the fastest adopters of science-based targets.

Energy Savings Opportunity Scheme (ESOS)

This is your reminder that the deadline to submit Progress Update 1 (PU1) of your ESOS action plan is less than one month away and should be submitted by the 5th December 2025. Regardless of whether or not you submitted an action plan, all ESOS phase 3 participants are required to login to their MESOS portal and provide an update on the progress of implementing any energy efficiency measures. This can be either stating that nothing has been implemented or alternatively adding more opportunities that have been identified during 2025.

The procedure for updating your action plan has changed slightly as the sign in is now via the GOV.UK One Login. See [4] in the references section to access the MESOS system and by following the login guidance, it will connect the MESOS account to One Login.

The publication of ESOS Phase 3 action plan data was released in the October and provided an insightful review to some of the publicised actions that companies are taking to save energy.[5] Some companies are claiming billions if not trillions in kWh of energy savings are expected to be achieved from their action plan opportunities (which has raised some eyebrows in the SLR office!).

For any companies looking to receive support with their ESOS compliance or action plans, please contact us and we would be happy to help.

Climate Change Agreements (CCA)

As the new Climate Change Agreement scheme comes into effect from 1st January 2026, the final administrative requirements are coming into force. In October, participants have been required to confirm their 2022 base year data and intent to join the new scheme. This is undergoing final queries for submission to the Environment Agency. We then expect that November will bring final confirmation of sector targets along with the publication of underlying agreements for participant’s assent. If all of this goes smoothly, then all sector CCA participants will be in place for the new year.

EU Carbon Border Adjustment Mechanism (CBAM) simplification

The European Parliament and Council have formally adopted a set of simplifications to the CBAM regulation.

One of the most significant changes is the introduction of a single mass-based exemption threshold: importers bringing in less than 50 tonnes per year of CBAM-covered goods will no longer be subject to CBAM obligations. This threshold applies cumulatively across iron and steel, aluminium, fertilisers, and cement, but it excludes electricity and hydrogen, also in scope of CBAM.

According to EU estimates, this change will effectively exempt around 90% of importers - mostly SMEs - from CBAM reporting and compliance. Despite this exemption, the goal of the EU institutions is to ensure that at least 99% of embedded emissions in imported goods remain covered by the mechanism. The exemption will be assessed by the European Commission annually, to ensure this target is effectively achieved.

The simplification also extends to the authorisation process, emissions calculation, verification rules, and financial liability for authorised CBAM declarants. Notably, importers with a pending authorisation as of 31 March 2026 will be permitted to continue importing CBAM goods that exceed the threshold during that year. In addition, the scope of relevant emissions has been aligned with the EU Emissions Trading System (EU ETS) – for example, excluding from calculations the emissions of certain production steps not covered by the ETS.

Other changes to the regulation include the exemption of electricity and hydrogen produced on the continental shelf or in the exclusive economic zone of a Member State.

Conclusions and potential implications

The amendments to the CBAM have already been adopted by both the European Parliament and the Council, therefore it will enter into force after its publication in the Official Journal of the EU, which can be expected in the following weeks.

While this simplification is expected to reduce administrative costs and ease reporting requirements, particularly for SMEs, it also raises questions regarding enforcement and emissions coverage. According to Commission estimates, around 99% of embedded emissions will remain subject to CBAM, though this will depend on how effectively the EU enforces anti-circumvention provisions intended to prevent import fragmentation or strategic sourcing below the threshold. Moreover, the exclusion of electricity and hydrogen from the threshold may lead to uneven treatment across sectors.

Businesses with import volumes near the threshold should closely monitor forthcoming guidance and enforcement practices as authorities assess the regulation’s long-term impact on both trade operations and emissions coverage.

--------------------------