Proposed Negative
Published: 11 December 2018
Sift end date: 10 January 2019
In the event of a disorderly (‘No Deal’) exit from the European Union, the UK would not have an agreement in place to continue participating in the EU Emissions Trading Scheme (EU ETS). The UK would therefore leave the EU ETS on exit day, making the existing legislation inoperable. The instrument revokes certain provisions that will cease to apply on exit day and amends others so that they will continue to be operable after exit day. This will ensure legal certainty for existing UK participants to the EU ETS in the event of a 'No Deal' exit from the EU. No substantive policy changes have been made in this instrument (this is in line with the powers of section 8 of the EU (Withdrawal) Act 2018).
The instrument maintains, and makes technical fixes to, the elements which will continue to be operable, namely the Monitoring, Reporting and Verification (MRV) of greenhouse gas emissions. As well as ensuring transparency over greenhouse gas emissions, MRV will also provide information to allow the implementation of HM Treasury’s ‘Carbon Emissions Tax’ (announced in the 2018 Autumn Budget). The Tax will temporarily replace the lost EU ETS carbon price in a 'No Deal’ scenario, maintaining a carbon pricing policy for industry in an interim period (i.e. from exit day until a long - term alternative is established). However, the substance of this interim carbon pricing policy will be included in a power under the Finance Bill 2018 - 19, which will be debated by Parliament separately, and does not form part of this instrument.
The interim policy is without prejudice to any final decision on the UK’s future approach to carbon pricing; the UK is considering a range of options, including continuing to participate in the EU ETS, a UK ETS (linked or standalone) or a carbon tax.
This instrument applies to environmental issues which are a transferred matter for Northern Ireland under the Northern Ireland Act 1998.
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