The European Commission has decided to temporarily suspend all processes related to the United Kingdom (UK) in the European Union's (EU) registry of the emissions trading system (EU ETS). According to the current legislation, allowances issued by the UK would need to be identified and marked by a proper country code and excluded from surrender from 1 January 2019.
The lack of clarity on whether or not a withdrawal agreement will be ratified by the UK has led to the suspension in order to prevent the temporary issuance and circulation of marked allowances. Consequently, the country will not be able to auction allowances, allocate allowances for free to operators or exchange international credits starting from January 2019 and as long as the suspension remains in place.
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. As per the Brexit process, the UK has to strike a proper agreement with the EU before the end of March 2019 or it will be excluded from the EU ETS system.
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