EU ETS Issue 119 - Impact of Exiting the EU on EU ETS and Related International and UK Climate Policies

As we are all aware, the UK has voted to leave the European Union (EU).  The purpose of the latest BCC Issue 119 is to consider some of the possible impacts of the referendum outcome on the EU Emissions Trading Scheme (EU ETS) and related international and national greenhouse gas (GHG) policies.

In the short-term, the UK will remain a full member of the EU, meaning there will be no immediate impact on UK installations that participate in the EU ETS.  However, in the medium-term the UK’s role in the scheme is highly uncertain.  Various future policy scenarios for UK GHG reductions can be envisaged, including: remaining in the EU ETS, establishing a national UK-based emissions trading scheme (which may or may not be linked to the EU ETS) or choosing a completely different path to emissions trading.  The final outcome will be highly dependent on the future UK-EU trade agreement that will be established over the next few years.  BCC consider future participation in the EU ETS, probably via some form of linkage as highly probable.  Consequently, it is essential that the UK ceramic sector remains a prominent voice in the EU ETS phase 4 reform discussion.  The next six to twelve months will be critical in shaping phase 4.  As a result, EU ETS will remain a mainstay of BCC activity and we will continue to play an active role within Cerame-Unie.  As a matter of urgency, BCC urge all EU ETS members (who have not yet done so) to write to and invite their MPs / MEPs onto site to explain what is at stake.

In parallel, BCC will influence UK policy makers for a more pragmatic, alternative approach. We believe that the referendum outcome represents a golden opportunity for the UK Government to enhance its ‘investment credentials’ by applying an approach offering ‘less stick’ and instead offer ‘more carrot’.  BCC has set out its preliminary thinking, cleared it with the Board and discussed it with key officials within a fortnight of the referendum outcome.

In order to help establish a more detailed sectoral position, BCC would strongly welcome feedback from members as to which of the various options they would like / not like to see progressed.  Irrespective of the avenue that is ultimately adopted, BCC will press for a post-Brexit framework which prevents carbon, production, job and investment leakage to non-UK countries.

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