The European Commission today proposed safeguard measures to protect the environmental integrity of the EU Emissions Trading System (EU ETS) when Union law ceases to apply to the UK due to its withdrawal.
The United Kingdom has notified the Union in accordance with Article 50 TEU that it intends to leave the European Union. In its Guidelines following this notification, the European Council was clear that the Union would be constructive and strive to find an agreement, but also that it would prepare itself to be able to handle the situation if the negotiations were to fail.
The Commission has therefore presented today a draft regulation amending the EU ETS Registry Regulation to the Climate Change Committee, in order to ensure the environmental integrity of the EU ETS during the ongoing third trading period (2013-2020). On 18 October, the European Parliament and the Council reached a provisional agreement on a provision in the ETS Directive for that purpose.
The proposed measures are considered necessary because, in the absence of any future agreement between the Union and the United Kingdom, Union law will cease to apply to the UK as of 30 March 2019. As of that moment, the installations and aviation operators in the UK would no longer be subject to any obligations as regards the EU ETS, in particular the obligation to surrender a number of allowances corresponding to the verified emissions during 2018 by 30 April 2019.
The proposed measures would provide for marking and restricting the use of allowances issued by the United Kingdom as of 1 January 2018. Marking allowances issued by the United Kingdom would distinguish them from other allowances. These marked allowances could no longer be surrendered in order to meet compliance obligations under the EU ETS. The proposed measures apply to the auctioning of ETS allowances, the issue of free allocation by the United Kingdom and the exchange of international credits for allowances, as of 1 January 2018.
It is important to underline that the proposed safeguard measures are without prejudice to any future agreement with the United Kingdom that may provide for specific arrangements after the date of withdrawal on 29 March 2019 to enable United Kingdom entities to effectively enforce compliance obligations arising under the EU ETS for the years 2018 and 2019.