The EU is to move to ensure that Brexit does not damage its carbon market, driven by concerns that a sudden UK exit could crash the price of carbon.
The EU ETS is a cap and trade system. It limits the overall volume of greenhouse gases that can be emitted by power plants, heavy industry, and the aviation sector, then allowing companies to trade emissions allowances on an open market.
The Financial Times reported on 10 September that the European Parliament was preparing to amend legislation governing the EU’s carbon trading scheme (EU ETS) over concerns of an abrupt UK exit from the EU. Peter Liese, an MEP behind the initiative, told the FT it would prevent a situation where UK companies, liberated from having to hold emissions allowances under the scheme could move to sell them in one large chunk.
Liese said: “We hope for an agreement [on the UK-EU divorce] but unfortunately we need to take care about what happens if there is a hard Brexit. People still hope that Britain stays in the ETS after Brexit — the UK has very much supported the initiative over the years [but] we need to take care that there is no undue advantage to the UK and no undue disadvantage to the rest of Europe.”