Guidance

UK ETS: Hospital and Small Emitter status

Information for Hospitals and Small Emitters (HSEs) on eligibility and compliance.

From:
Department for Energy Security and Net Zero
Published
1 July 2021
Last updated
15 October 2025 — See all updates

Installations that provide services to hospitals or meet the criteria to be classed as a small emitter can qualify for Hospital and Small Emitter (HSE) status under the UK ETS. HSEs do not need to surrender allowances to cover their emissions and are not entitled to receive any free allocation. They are instead set annual emissions targets for each scheme year.

To qualify for HSE status for the 2026 – 2030 allocation period, installations needed to apply within the baseline data collection window that was open from April - June 2025.

Lists of qualifying HSEs and their targets by allocation period

Eligibility

Installations which primarily provide services to a hospital

An installation could qualify if at least 85% of the heat its produces in a scheme year is used by or supplied to one or more hospitals.

Eligible installations also needed to meet the following conditions to qualify as an HSE for the 2026 – 2030 allocation period:

  • the installation primarily provided services to a hospital in the 2024 scheme year
  • if the installation had not started carrying out a regulated activity when applying to be an HSE, it must:
    • have begun carrying out a regulated activity before 1 November 2025
    • be primarily providing services to a hospital after starting a regulated activity

Installations which do not primarily provide services to a hospital

An installation qualifies as a small emitter if it:

  • emits less than 25,000 tonnes of carbon dioxide equivalent (CO2eq) for each scheme year in the relevant allocation period
  • has a total rated thermal input of less than 35 megawatts (MW) in the relevant period (if applicable)

Eligible installations also needed to meet the following conditions to qualify as an HSE for the 2026 – 2030 allocation period:

If the installation carried out a regulated activity on or before 1 January 2021:

  • the installation’s reportable emissions were 25,000t CO2eq or below in 2021, 2022 and 2023
  • if installation was carrying out combustion activities, the installation’s rated thermal input was below 35MW in 2021, 2022 and 2023

If the installation was not carrying out a regulated activity on or before 1 January 2021:

  • a regulated activity was being carried at the installation on the date of its application, or would be carrying out a regulated activity before 1 November 2025
  • the installation could evidence its reportable emissions were below 25,000t CO2eq for each year after it started operating
  • the installation’s reportable emissions were likely to be below 25,000t CO2eq for each year between 2026 and 2030
  • if combustion activities were being carried out at the installation, the operator could evidence that the installation’s rated thermal input was below 35MW for each year after the installation started operating and was likely to remain below 35MW for each year between 2026 and 2030

Complying with emissions targets as an HSE

For every scheme year that an installation is an HSE, a target is set for the installation’s reportable emissions. Targets are included in the HSE permit based on an installation’s historic emissions, multiplied by the annual reduction factor.

HSE targets for the 2026 to 2030 allocation period for each installation were set in accordance with paragraph 17 of Schedule 7 to the Greenhouse Gas Emissions Trading Scheme Order 2020 (the UK ETS Order).

For all sectors, irrespective of carbon leakage status, subsequent annual targets will reduce each year.

Targets where an HSE does not have a full year of emissions data

If an installation does not have a full year of emissions data when it becomes an HSE, the initial target will be based upon an estimate of forecasted emissions. When a full year of emissions data is available, the regulator will calculate targets for the remainder of the relevant allocation period.

If an HSE emits less than its target

If an HSE’s reportable emissions are less than its target,  the regulator will take account of this by increasing the HSE’s target for the next scheme year by the ‘bankable amount’.

For small emitters, if increasing the emissions target for the next scheme year would result in an emissions target that exceeds 24,999tCO2eq, the emissions target will only be increased to a maximum of 24,999tCO2eq. This does not apply if the HSE primarily provides services to a hospital.

Bankable amounts will only be permitted within allocation periods. Any remaining bankable amounts will not carry over between allocation periods.

If an HSE exceeds its emissions target

If an HSE exceeds its emissions target in any scheme year, it is liable to a civil penalty for those excess emissions. Further civil penalties apply where the civil penalty is not paid by the date specified in the civil penalty notice, usually 1 month from the date of issue.

If you exceed your emissions target, the civil penalty can be calculated using the following formula:

  • (RE - ET) x CP

Where:

  • RE is the installation’s reportable emissions in the scheme year
  • ET is the installation’s emissions target for the scheme year
  • CP is the UK ETS carbon price for the scheme year

Monitoring, reporting and verification

Monitoring and reporting modifications for HSEs

An HSE must comply with all the conditions in its HSE permit, which includes monitoring, reporting and verification requirements.

The HSE must monitor its reportable emissions in each scheme year in accordance with its monitoring plan and the Monitoring and Reporting Regulation 2018 (as given effect and modified by the UK ETS Order).

An HSE must submit an annual emissions report by 31 March of the following year. This report must either be

  • verified as satisfactory in accordance with the Verification Regulation 2018 (as given effect and modified by the UK ETS Order), or
  • accompanied by a declaration stating that:
    • in preparing the emissions report, the HSE has complied with the MRR
    • the HSE has complied with its monitoring plan
    • the emissions report is free from material misstatements.

For the purpose of verifier site visits an HSE will be treated as a category A installation.

Auditing

An initial check and risk assessment will be carried out by the regulator and a proportion of HSEs are audited each year.

When an installation no longer qualifies as an HSE

An HSE cannot voluntarily cease to be an HSE during an allocation period.

An installation will no longer be an HSE for the 2026 to 2030 allocation period if either:

  • the installation ceases to primarily provide services to a hospital
  • the installation’s annual reportable emissions exceed 25,000tCO2 in any of the scheme years 2026 to 2028

Entry to the UK ETS main scheme

If an installation ceases to be an HSE, it must notify the regulator by 31 March of the scheme year and will then enter into the UK ETS main scheme in the following scheme year.

The installation will need to comply with the rules of the UK ETS and will require a registry account. Read more about meeting obligations under the UK ETS.

When the installation enters the UK ETS main scheme it will remain liable for any unpaid penalties and any further sanctions applied for non-payment of those penalties arising from its time as an HSE.

Further information

We are evaluating the UK ETS, in part through a survey of HSE and Ultra-Small Emitter (USE) participants. The HSE/USE survey privacy notice explains how we will use the personal data to contact you to take part in the survey, and what your rights are.

See also:

Updates to this page

Published 1 July 2021
Last updated 15 October 2025 show all updates

  1. Added HSE list 2026-2030.

  2. Link added to baseline data reporting template which can be used to apply for HSE status for the 2026 to 2030 period (application window 1 April 2025 - 30 June 2025).

  3. The application dates for the 2026 to 2030 allocation period will now be from 1 April to 30 June 2025.

  4. Added link to a privacy notice regarding personal data collected to survey HSE/USE emitters.

  5. First published.

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