According to Reuters, EU lawmakers and member states have come to an agreement on how to safeguard the carbon market, if Britain leaves the EU Emissions Trading Scheme (ETS) due to Brexit.

Safeguarding carbon market after Brexit

The drive behind this deal is to avert a mass selloff in the carbon market if British businesses suddenly found themselves outside of the scheme. Under the EU ETS, the EU will invalidate permits issued by a country leaving the bloc from January 2018 onward. The slow headway being made in Brexit negotiations and the possibility of a “messy break-up” has increased, meaning British companies could be left with very little legal clarity on emissions.

Peter Liese, a lawmaker from the European People’s Party, who has helped steer the process, said: “We very much hope that we find a good agreement with the British government and especially in climate and energy policy, for us, it would be the preferred option that the UK continues participation in EU policies.”

The International Emissions Trading Association similarly said its ideal scenario would be for Britain and the EU to agree UK companies continue to participate in the EU ETS until the end of 2020 at least. It cautioned a “hard Brexit” could see around 220mn allowances issued by the UK offloaded onto the market between 1 January 2018 and 29 March 2019.

You can take a look at our monthly market report for more information about the carbon market and how Brexit is affecting the energy market for UK business.

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