According to the EU power industry association Eurelectric, the outcome of the Brexit negotiations regarding how the UK exit will impact the EU Emissions Trading Schemes (ETS) is still not clear and needs to be clarified as soon as possible.
Eurelectric calls for an agreement by October 2017 and advocates for the UK’s continued participation in the EU ETS until at least the end of Phase III (end of 2020). It intends to support transitional measures in order to resolve technical and jurisdictional issues and also advocates for clarity regarding the UK’s participation in Phase IV (2021-2030) to be agreed by October 2018, giving at least two years time in the event of any potential UK exit from the EU ETS within that period.
The EU's ETS works under the "cap-and-trade" principle and cover 11,000 installations throughout the EU territory (also including Norway and Iceland), of which 1,000 in the UK (about 8-9% of emissions). Taking into account UK's withdrawal, the EU will need to reconsider its capacity to meet the current energy and climate target and assess the impact of the Brexit on the EU ETS. The supply of allowances in the EU ETS will need to be adjusted accordingly.
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