Green groups call for clarity on ETS timeframes and long-duration storage rollouts

Industry calls for aligned ETS rules and storage definitions

Green groups and industry organisations are pressing UK and European policymakers to set clearer timelines for emissions trading systems and align regulatory frameworks for long-duration energy storage and carbon capture. The campaign centres on a fundamental investment problem: developers need predictable policy signals to commit capital, yet fragmented definitions and uncertain long-term rules continue to stall deployment across both technologies.

The calls come as the European Union Emissions Trading System enters the later years of its fourth phase, which runs from 2021 to 2030. Stakeholders argue that the absence of post-2030 clarity creates late-stage uncertainty precisely when carbon capture projects need long-term commitments. Meanwhile, long-duration storage faces a different but related challenge. Definitions vary across jurisdictions, making it difficult to establish consistent market design, procurement targets, and revenue frameworks.

This is not an abstract policy debate. Both carbon capture and long-duration storage require large upfront investment and extended build timelines. Without coordinated rules, developers risk exposure to fragmented markets and regulatory mismatches that erode project economics. For UK businesses weighing infrastructure decisions, the lack of cross-border alignment adds another layer of uncertainty to already complex capital planning.

What counts as long-duration storage depends on who regulates it

Long-duration energy storage is increasingly recognised as essential infrastructure for power systems with high renewable penetration. However, there is no universal definition of what qualifies as long-duration. European industry sources describe it as storage capable of holding energy for more than eight hours. Other policy frameworks use thresholds of ten hours or longer, while some jurisdictions define multi-day categories separately.

This variation matters because classification determines access to support mechanisms, grid services contracts, and capacity markets. Storage assets designed to operate for eight hours may be excluded from programs that require ten-hour capability, even if the underlying technology performs similar grid functions. Consequently, investors must navigate a patchwork of national definitions when planning projects intended to serve interconnected markets.

California treats long-duration storage as systems capable of twelve hours or more. New York and Massachusetts apply different thresholds and create distinct categories within their regulatory structures. The result is a fragmented international landscape where identical storage technologies face different treatment depending on jurisdiction. For businesses operating across borders, this inconsistency complicates standardisation, procurement, and commercial planning.

The classification problem extends beyond technical definitions. Market design features such as capacity payments, ancillary services, and renewable integration contracts all depend on how regulators categorise storage. Therefore, alignment is not merely administrative. It directly affects revenue streams, project bankability, and the pace at which storage assets can be deployed at scale.

ETS uncertainty affects carbon capture investment decisions

The European Union Emissions Trading System is the world’s first international emissions trading system. It operates in defined phases that set caps on total emissions and allow participants to trade allowances. The current fourth phase runs until 2030, establishing a clear regulatory horizon for the next six years. However, stakeholders involved in carbon capture and storage projects argue that this timeline is insufficient for technologies with development cycles stretching beyond a decade.

Carbon capture projects typically require five to ten years from initial planning to operation. These projects rely on capturing emissions and storing them permanently, often in geological formations. The economic case depends on the value of carbon credits under emissions trading rules, yet post-2030 policy remains undefined. As a result, project sponsors face uncertainty about the long-term value of captured carbon precisely when they need to lock in financing and engineering commitments.

This timing mismatch creates a commercial dilemma. Developers must forecast carbon prices and regulatory frameworks beyond the current ETS phase to justify capital expenditure. Without clarity on cap levels, allowance allocation, or compliance obligations after 2030, financial models rely on assumptions that investors may view as speculative. Consequently, projects that could deliver emissions reductions in the late 2020s struggle to secure final investment decisions today.

The situation is compounded by cross-border considerations. Carbon capture projects in the UK may interact with European markets, supply chains, and infrastructure networks. If UK and EU ETS rules diverge after 2030, operators could face mismatched compliance obligations, valuation differences, and regulatory friction. For businesses planning infrastructure that operates across multiple jurisdictions, this adds another dimension of complexity to already demanding project economics.

Why fragmented rules delay deployment and increase costs

Fragmented policy frameworks impose direct costs on developers and operators. Companies working across multiple jurisdictions must adapt project designs, financing structures, and commercial agreements to meet differing regulatory requirements. This increases legal, engineering, and administrative overhead. Moreover, it reduces the economies of scale that come from standardising technology and procurement across larger markets.

For manufacturers of storage systems or carbon capture equipment, regulatory inconsistency limits production runs and complicates certification processes. A storage unit designed to meet UK specifications may require modifications for European markets if definitions and grid codes differ. Similarly, carbon capture technologies optimised for one ETS framework may face different compliance regimes elsewhere. These frictions slow innovation and raise unit costs.

Investors typically value regulatory predictability. Projects subject to uncertain or divergent rules face higher risk premiums, which translate into higher financing costs and reduced returns. In capital-intensive sectors such as energy storage and carbon capture, even small increases in the cost of capital can render projects unviable. Therefore, regulatory alignment is not just a matter of administrative convenience. It directly influences whether projects proceed.

Market fragmentation also limits liquidity. A unified framework allows developers, financiers, and equipment suppliers to operate at greater scale, pooling expertise and sharing infrastructure. Conversely, fragmented markets create smaller, isolated ecosystems where participants must duplicate effort and absorb higher transaction costs. For UK businesses, this means fewer opportunities to leverage European supply chains, financing networks, and technical partnerships.

Seven points UK businesses should understand

• The EU Emissions Trading System fourth phase runs until 2030, but post-2030 rules remain undefined, creating uncertainty for carbon capture projects with long development timelines.
• Long-duration energy storage lacks a universal definition, with thresholds ranging from eight hours to multi-day durations depending on jurisdiction.
• Classification differences affect access to capacity markets, grid services contracts, and revenue support, directly influencing project economics.
• Carbon capture projects require five to ten years from planning to operation, yet depend on carbon price forecasts and regulatory frameworks that extend beyond current policy horizons.
• Regulatory fragmentation between the UK and EU increases costs, limits economies of scale, and complicates cross-border infrastructure planning.
• Investors apply higher risk premiums to projects facing uncertain or divergent regulatory treatment, raising financing costs and reducing viability.
• Industry groups argue that coordinated ETS timelines and aligned storage definitions would accelerate deployment and improve market liquidity for both technologies.

Commercial implications for planning and procurement

UK businesses considering investments in energy infrastructure face a planning environment shaped by regulatory uncertainty. Companies evaluating long-duration storage must determine which definition their projects should target, knowing that regulatory changes could shift eligibility criteria for support mechanisms. Similarly, businesses exploring carbon capture must forecast policy frameworks and carbon prices beyond the current ETS phase, often with limited official guidance.

This uncertainty affects procurement decisions. Businesses tendering for storage or capture projects may struggle to compare bids if suppliers reference different regulatory assumptions or jurisdictional standards. For example, a storage proposal designed for an eight-hour threshold may not satisfy a procurement requirement calibrated to ten hours, even if the underlying technology could be adapted. Consequently, procurement teams must build flexibility into specifications or accept the risk of mismatched requirements.

Supply chain considerations add further complexity. Companies sourcing equipment or services across UK and European markets must account for potential regulatory divergence. A supplier optimised for EU standards may require additional certification or modification to meet UK requirements, and vice versa. This increases lead times, costs, and the risk of contract disputes if regulatory changes occur mid-project.

For businesses involved in public sector supply chains, regulatory alignment has additional importance. Government procurement increasingly incorporates carbon reduction targets and sustainability criteria. Suppliers must demonstrate compliance with relevant frameworks, yet fragmented definitions make it harder to establish clear, comparable metrics. As a result, businesses face the dual challenge of meeting current requirements while anticipating future policy shifts that could redefine compliance standards.

Financial planning is equally affected. Project finance models for storage and carbon capture typically span ten to twenty years, yet regulatory visibility extends only to 2030 under current ETS rules. Finance directors must therefore decide whether to proceed with incomplete information or delay investment until policy clarity improves. Both choices carry risk: proceeding exposes the business to regulatory change, while delaying may result in missed opportunities or competitive disadvantage.

Operational businesses with existing energy assets also face decisions. Companies with industrial emissions may need to evaluate carbon capture retrofits, but the business case depends on post-2030 carbon pricing and compliance obligations. Similarly, businesses with on-site generation or flexibility requirements must assess whether long-duration storage investments align with evolving market design. In both cases, the absence of regulatory certainty complicates internal approvals and board-level decision-making.

How regulatory alignment would support market development

Coordinated policy frameworks would address several investment barriers simultaneously. First, a common definition for long-duration storage would allow manufacturers to design equipment for a unified market, reducing production costs and certification complexity. Second, aligned ETS timelines would give carbon capture developers a clearer view of long-term carbon prices, improving financial modelling and access to capital.

Alignment would also support cross-border infrastructure development. Energy storage projects often serve interconnected grids where electricity flows between jurisdictions. If regulatory definitions and market rules align, developers can design projects to serve multiple markets without duplicating compliance processes. This increases revenue potential and project viability, particularly for assets located near interconnectors or serving regional balancing functions.

For carbon capture, coordinated rules would enable shared infrastructure such as pipelines and storage sites. These assets typically serve multiple industrial sources and may cross national borders. Regulatory alignment simplifies permitting, ownership structures, and commercial agreements, making it easier to develop the shared infrastructure networks that reduce per-unit capture costs.

Market liquidity would also improve. A unified regulatory framework allows greater participation from investors, equipment suppliers, and project developers, creating deeper markets with more competitive pricing. This benefits businesses on both the supply and demand sides, reducing costs and improving access to technology and services.

From a policy perspective, alignment supports climate objectives. Both long-duration storage and carbon capture are recognised as necessary technologies for achieving net-zero targets, yet deployment remains well behind the pace required. Regulatory fragmentation is not the only barrier, but it is one that policymakers can address through coordination. Therefore, industry calls for alignment reflect not only commercial interests but also the practical requirements for scaling decarbonisation infrastructure.

Businesses seeking to understand how these regulatory discussions may affect their operations can review compliance frameworks for carbon reporting and emissions management. Companies preparing for post-2030 policy shifts may also benefit from structured support for carbon reduction programs and regulatory planning.

Where to find current policy information

Businesses monitoring ETS developments should consult the European Commission’s climate action resources, which provide updates on emissions trading policy and phase timelines. The UK government’s Department for Energy Security and Net Zero publishes guidance on UK carbon pricing and climate policy, including consultations on future regulatory frameworks.

For information on energy storage definitions and market design, the UK’s energy regulator Ofgem maintains resources on grid services, capacity markets, and flexibility mechanisms. Industry bodies such as the Institution of Engineering and Technology and the Energy Storage Network offer sector-specific analysis and policy commentary.

International comparisons are available through sources such as the International Energy Agency, which tracks global policy developments on storage and carbon capture. Additionally, the UK’s Climate Change Committee publishes assessments of technology deployment pathways and policy recommendations relevant to both storage and capture infrastructure.