The deal seeks to prevent a mass selloff in the carbon market if British companies suddenly find themselves out of it. Britain is the EU’s second-largest emitter of greenhouse gases and its utilities are among the largest buyers of carbon permits.
Under the EU’s Emission Trading System (ETS), which charges power plants and factories for the carbon dioxide they emit, the EU would void permits issued by a country leaving the bloc from January 2018 onward.
But having had a say in how the ETS is shaped, most analysts believe Britain will remain part of the system, following a similar path to Norway. Despite not being an EU member, Norway has companies that participate in the scheme.
Slow progress in Brexit talks has increased the possibility of a messy break-up that could leave British businesses with little legal clarity on emissions.
“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,” said Peter Liese, a lawmaker from the European’s Parliament’s biggest center-right group the European People’s Party, who helped to steer the process.
The International Emissions Trading Association (IETA), which represents global participants in emissions trading schemes such as banks, utilities and industrials, said its preferred scenario would be for Britain and the EU to agree on continued participation by UK companies in the ETS until the end of 2020 at a minimum.
”A hard Brexit scenario poses a risk of approximately 220 million allowances issued by the United Kingdom to be offloaded onto the market between 1 January 2018 and 29 March 2019,” the lobby group said.
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