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Thursday 5th of September 2019 | Posted In: Generate, Generating energy

How Brexit might impact on EUETS

Whilst there is a lot of ‘small print’, generally, if you have the ability to burn >20MW of fuel on a site then you are likely to have a European Union Emissions Trading Scheme (EUETS) Permit. This is essentially a carbon quota system and with it being an EU scheme it could be affected by Brexit. By coincidence (maybe) the Environment Agency (EA) issued an update on the very day that Parliament voted on blocking no deal. What follows below provides the key points of what will happen if we leave the EU on 31 October 2019.

We will no longer participate in EUETS with immediate effect. However, this is not a nice simple easy win i.e. no carbon to pay for in 2019:

  • Carbon emitted up to this point has to be reported and paid for in the usual EUETS way in early 2020.
  • Carbon emitted from this point forward will still have to be paid for but under a broadly equivalent UK scheme.

The UK Scheme

In the short term at least, it will adopt the same procedure as the EUETS so there will be no mad rush to apply for permits, produce new procedures etc. The cost of carbon for the non-EUETS balance of 2019 was set at £16/t earlier this year which, currently, is significantly less than the cost of EUETS carbon, which is c. £25/t. The price for 2020 has not yet been set but we can only imagine it will be closer to the market rate for EU Allowances (EUAs).

Do you have any EUETS carbon (EUAs) in your EU Registry account?

If you do and we leave the EU, your account will be frozen and your EUAs will become ‘stranded’. Quite if/how/when you will be able to regain access to them, nobody seems to know. So, your options include:

  • Transfer them to an EU account registered via another country.
  • Sell any EUAs that you have before we leave the EU.

Although ‘sell them’ is probably the most straightforward option.

At this moment in time, unless you have some EUAs in your EU Registry account, you don’t need to do anything.

For the GOV.UK documents relating to this go to:

https://www.gov.uk/government/publications/meeting-climate-change-requirements-if-theres-no-brexit-deal/meeting-climate-change-requirements-if-theres-no-brexit-deal

https://www.gov.uk/government/publications/carbon-emissions-tax-technical-note