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UK will exit EU carbon market in March 2019 in case of no-deal Brexit

The British government has announced that it will be excluded from the European Union’s (EU) Emissions Trading System (ETS) system if Brexit negotiators fail to strike a proper agreement before the end of March 2019. In that case, the country would switch to achieving its carbon pricing commitments via a domestic economy-wide tax system. The tax, whose level would be set by an independent body, would apply to imports and domestic production. The government will publish more details of its proposed carbon pricing method under a "no deal" scenario to include it in the Finance Bill 2018-2019.



However, if an agreement is signed with the European Union, the United Kingdom will remain a member of the EU’s ETS scheme until at least 2021. The government would then introduce a carbon tax set at the level of the ETS and would increase it steadily in future years.



The EU ETS system is meant to mitigate climate change by reducing emissions from more than 11,000 installations in the EU power sector and energy-intensive industries, involving a market-based cap and trade system forcing companies to buy allowances in order to emit carbon.

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