On 27 February, energy minister Claire Perry presented to members of the parliament the government’s plan to establish a post Brexit domestic carbon emissions trading system (ETS).

The British government intends to stay in the EU ETS until the end of 2020 (the end of the current trading period), if a Brexit agreement will be reached between Britain and the EU. From 2021 (the beginning of the next trading period) a domestic ETS would be the preference for the British government, which they hope to link to the EU ETS. Negotiations on linking between the UK and the EU have not yet started, but Perry expressed confidence an agreement would be reached.

In the event of a no-deal-Brexit, the government plans to introduce a carbon tax, set at GBP 16 per ton CO2, payable as of 1 April 2019 by all British stationary installations currently included in the EU ETS. This would be a short term measure to uphold British carbon pricing commitments and would be eventually replaced by a domestic ETS. The British government considers linking the domestic ETS with the EU ETS less likely in a no-deal-Brexit scenario. Businesses are now being consulted.

In the face of ongoing uncertainty about Brexit and to prepare for the UK’s exit from the EU ETS, the European Commission suspended EU ETS allocation for the United Kingdom in 2019.