The UK-wide ETS, which will put a cost on carbon pollution to encourage companies to reduce the greenhouse gases they emit, includes plans to cut the emissions cap by 5%, the government said.
The ETS is part of Britainâ€™s plan to reach a net zero carbon emissions target by 2050.
Unlike the European scheme the British ETS would have a fixed auction reserve price, set at 15 pounds a tonne of carbon dioxide.
The British ETS will also include a cost containment mechanism to prevent price spikes.
â€œIn years one and two of a UK ETS the Cost Containment Mechanism will have lower price and time triggers, providing a mechanism by which the UK Government can decide whether to intervene sooner should very high prices occur,â€ a government document said.
The benchmark price of carbon permits CFI2Zc1 in the EU ETS is around 21.00 euros ($23.38)a tonne but has traded as high as 25.90 euros and as low as 14.34 euros.
About one-third of UK emissions and nearly 1,000 UK factories and plants are currently covered by the EU ETS and will continue to be covered by the UK system, the document said.
The British government said on Monday (1 June) it would be open to considering a link between a UK ETS and the EU ETS â€œif it suits both sidesâ€™ interestsâ€.
â€œThis is subject to the ongoing trade negotiations between the UK and EU,â€ the government said.
($1 = Â£0.7986)
($1 = â‚¬0.8983)