Bringing forward EU Emissions Trading System 2018 compliance deadlines in the UK

This consultation seeks views on a proposal to bring forward the 2018 compliance deadlines for UK operators in the EU ETS to before the date of Brexit. These changes are intended to:

• Provide clarity to EU ETS participants on the UK’s 2018 compliance obligations during the UK’s withdrawal from the EU.
• Alleviate the negative impacts of an amendment to the EU ETS Directive, recently agreed by the European Parliament and Council, which stipulates that aviation and stationary operators will not be able to use allowances issued by a Member State in respect of which there are obligations lapsing. The stated objective of the amendment to the Directive is to protect the environmental integrity of the EU ETS in the event of a UK departure from the System in March 2019. This would mean that allowances issued by the UK in 2018 could not be used for compliance. However, bringing forward the 2018 compliance deadlines would mean that obligations for 2018 compliance would not be lapsing and it would therefore not be necessary to implement a measure which would have negative and disruptive effects on the smooth operation of the carbon market and on EU ETS participants.

The consultation is being conducted by the UK government in its responsibilities as the member state, for negotiating on the EU ETS with the EU. Policy responsibility for emissions trading within the UK is a devolved matter, and the UK government will work with the Northern Ireland Executive, the Scottish Government and the Welsh Government to inform them of stakeholders’ views on this consultation, and consider our collective response.

We welcome responses from any organisation or individual but this consultation will be of particular interest to all UK-regulated EU ETS operators with obligations to comply in the power, aviation and industrial sectors.

Subject to responses to the consultation, we propose to lay legislation before Parliament in December with the intention that the changes take effect from 1 January 2018.

The measures proposed in this consultation are without prejudice to future decisions on the UK’s future relationship with the EU on the EU ETS.