Made on 29 May, laid before Parliament on 2 June and due to take effect on 24 June 2026, the new order makes a narrow but important change to the UK Emissions Trading Scheme. For existing lime installations in England, the benchmark used to calculate 2027 free allocation rises to 0.798 from 0.725. That may read like legal housekeeping, but benchmarks shape how much of a plant’s emissions can be covered by free allowances, and the whole point of the system is to limit carbon leakage while still rewarding plants that run closer to best practice. (gov.uk)

This is not a random tweak. In its earlier review of free allocation, the UK ETS Authority said the lime benchmark had become effectively unattainable in UK conditions because it reflected efficiencies linked to biomass access that is not widely available here. That is why ministers previously lifted the lime benchmark by 10%, and the Authority’s main free allocation response then decided to keep current benchmarks in place for the 2027 scheme year before moving, in principle, to updated EU benchmark values from 2028. Read together, this order looks like a bridge: more breathing space now, with wider benchmark reform still on the way. (assets.publishing.service.gov.uk)

In plain English, a higher benchmark means more free allowances for the same volume of qualifying lime output. That matters because free allocation is still the UK ETS’s main defence against carbon leakage, and companies that cut emissions below their allowance level can keep or sell the surplus. But this is not a blank cheque. Benchmarks are meant to preserve an incentive to decarbonise by covering a bigger share of emissions at the most efficient sites than at poorer performers. (gov.uk)

The sector context makes the decision easier to understand. Official UK ETS guidance shows that sectors on the carbon leakage list but outside the UK carbon border adjustment mechanism keep free allocation at 100% of the benchmark level. Lime is classed as carbon leakage exposed, while the UK CBAM starting on 1 January 2027 applies to cement, fertiliser, hydrogen, aluminium, and iron and steel rather than lime. That leaves benchmark design doing more of the heavy lifting for lime producers than it will for sectors that get a border measure backstop from day one. (assets.publishing.service.gov.uk)

None of that removes the decarbonisation task ahead. Defra’s emissions inventory notes that lime is made by heating limestone or dolomite in a kiln, a process that releases carbon dioxide as part of production itself. The Government’s industrial decarbonisation strategy points to fuel switching, electrification and carbon capture as the big tools for hard-to-abate industry, while the Mineral Products Association says lime can cut emissions further through hydrogen or biomass, carbon capture, and the natural reabsorption of some CO2 through carbonation. (uk-air.defra.gov.uk)

That is why this order is best read as a time-buying measure, not the final answer. The Climate Change Committee said in its 2025 progress report that industry helped drive the UK’s emissions fall in 2024, but it also warned that ministers need to move faster on industrial electrification and that progress towards the 2030 industrial CCS target is at significant risk. A fairer lime benchmark can stop policy from penalising UK plants for conditions they cannot yet control; it cannot stand in for cheaper clean electricity, CO2 transport and storage, and dependable investment support. (theccc.org.uk)

There is also a clear sign that this extra headroom may not last long. In the Authority’s final impact assessment, the illustrative lime benchmark from 2028 is 0.712, below the current 0.725 value, and the Authority has said it intends to adopt updated EU benchmark values from 2028 onwards once impacts on UK business have been assessed. For lime producers, that makes 2027 less a comfort zone than a planning window to get lower-carbon kilns, stronger data and credible investment cases in place before the rules tighten again. (assets.publishing.service.gov.uk)