This paper assesses the impact of the EU ETS as a driver for carbon reduction initiatives adopted in the grocery retail sector. Both qualitative and quantitative approaches have been applied to forecast the total CO2 emissions from the UK leading retailer between the periods of 2008 and 2020. The System Dynamics methodology was selected to undertake the research. The research demonstrates that EU ETS is not a dominant carbon reduction driver in the grocery sector. This paper has developed and simulated a system dynamics model that could guide future research in this topic area.