What is the EU ETS and UK ETS?

The EU Emissions Trading System and its UK counterpart are cap-and-trade markets where covered installations must surrender one allowance per tonne of CO2 emitted. Allowances are bought at the prevailing carbon price, so emissions become a direct, rising operating cost.

How is compliance cost calculated?

Compliance cost equals chargeable emissions × carbon price, where chargeable emissions are total covered tonnes minus any free allocation. For example, 50,000 tonnes with 30% free allocation leaves 35,000 chargeable tonnes; at €80/tonne that is €2.8 million per year.

What does the break-even CapEx mean?

It is the largest one-off decarbonisation investment that pays back purely from avoided carbon cost over your chosen horizon, ignoring other savings. It equals annual avoided carbon cost × payback years. If an abatement project costs less than this, the carbon saving alone justifies it.

Why does free allocation matter so much?

Free allocation is shrinking under both schemes as the cap tightens and the EU's CBAM phases in. A high free allocation today can mask large future exposure: as it falls toward zero, your chargeable tonnes — and cost — rise even if emissions stay flat.

Is my data sent anywhere?

No. Every calculation runs locally in your browser. The figures you enter are never transmitted or stored on any server.

Carbon Price Impact on Business Cost Calculator

The Carbon Price Impact Calculator turns your emissions and a carbon-price outlook into hard operating-cost numbers. It shows what compliance costs you today, what it could cost at 2030 and 2035 price scenarios, and how much you can justify spending on decarbonisation to avoid that cost.

How it works

Under an emissions trading scheme you pay for each tonne you emit above your free allocation. The calculator works in three steps:

chargeable tonnes = covered tonnes × (1 − free allocation %)
annual cost       = chargeable tonnes × carbon price

It applies this at the current price and at your 2030 and 2035 projected prices so you can see the cost trajectory. Because free allocation is falling under both the EU and UK schemes, you can also enter a lower future allocation to model that exposure.

For investment decisions it computes the break-even CapEx for abatement:

break-even CapEx = annual avoided carbon cost × payback horizon (years)

This is the most you can spend on a project that eliminates the emissions and still pay back from the avoided carbon cost alone, before counting energy or other co-benefits.

Example and notes

A plant emitting 50,000 tonnes with 30% free allocation has 35,000 chargeable tonnes. At €80/tonne that is 35,000 × 80 = €2.8 million per year. If the price reaches €130 by 2030 and free allocation drops to 10%, chargeable tonnes rise to 45,000 and the cost becomes 45,000 × 130 = €5.85 million — more than double.

With a 5-year payback horizon, avoiding the current €2.8 million justifies up to 2.8M × 5 = €14 million of decarbonisation CapEx. Use the projected figures to stress-test that case: a rising price and shrinking free allocation usually make abatement pay back far faster than the headline number suggests.