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    Efet Urges MEPs to Reconsider EU ETS Amendment


Energy trading lobby group, Efet, has warned that an amendment voted on by the EU Parliament could disrupt trading in EU carbon allowances.

by: Mark Smedley

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Efet Urges MEPs to Reconsider EU ETS Amendment

The European Federation of Energy Traders (Efet) warned September 14 that an amendment voted on by the EU Parliament, which meant to protect existing trading arrangements post-Brexit, could significantly disrupt trade in EU carbon allowances (EUAs).

The lobby group said the amendment means that all EUAs issued by a country, that is leaving the European Economic Area (EEA) after January 1 2018, might not be accepted within the EEA. It acknowledges that the amendment was meant to protect the EU Emission Trading System (ETS), post-Brexit.

Although the amendment requires the EU Commission to activate it through implementing measures, Efet says that realistically, future UK EUAs will always be at risk of becoming void under the ETS, as their validity cannot be confirmed until the EU-27 and the UK reach an agreement before March 2019, either to arrange a transition involving continued British inclusion in the ETS, or to make alternative arrangements for inter-tradability of EU and UK permits.

“We understand the European Parliament's noble intention to mitigate the adverse impact of hard Brexit on the EU ETS,” said Efet: “But the proposed measure is of great concern, because it will split the European carbon market until it is known if a ‘hard Brexit’ can be avoided, regardless of EU Commission implementing measures; it will cause confusion in the market, reducing the appetite for UK EUAs while encouraging over-subscription to 'EU-27' EUAs; and as a consequence, it will create considerable contractual and trading risks of a type which seems to not have been acknowledged by lawmakers.”

Efet board member and its electricity committee chair Peter Styles said: “We call for reconsideration of this amendment: its passage would be premature at this stage of Brexit negotiations and stakeholders should be involved in the process to ensure a smooth transition.” At the least, lawmakers should consider Efet’s points.

Styles said his organisation wants the UK to give a clear signal of its intention to continue issuance of EUA permits or their equivalents post-March 2019 and to mandate obligatory participation of UK based installations in a scheme qualifying for inclusion within the EU ETS.

UK 'won't water down post-Brexit nuclear safeguards'

Efet’s intervention came as UK industry and energy secretary Greg Clark promised that a new post-Brexit nuclear safeguards regime – including for civil nuclear energy – to be run by existing UK regulator, Office for Nuclear Regulation, would be “as comprehensive and robust as that currently provided by Euratom.”

To that end, Clark said: “The government has therefore decided that it will be establishing a domestic regime which will deliver to existing Euratom standards and exceeds the standard that the international community would require from the UK as a member of the International Atomic Energy Agency.

His announcement though shows just how the rest of post-Brexit UK energy regulation and trade policy – including for natural gas – remains yet to be settled, under negotiations with the EU-led team under former commissioner Michel Barnier in the remaining 18 months until the UK leaves the EU.

UK government officials have spoken of a two-year transition period during which the country remains in the EU's Single Market, including for energy. But EU negotiators have not agreed this – and first want other matters settled such as: rights of EU citizens residing in Britain, inter-Irish border arrangements, and a ‘divorce settlement’ under which the UK might be asked to pay a one-off €60bn-€100bn to the EU, according to Brussels officials. UK politicians have suggested a payment of nil to €25bn could be open to discussion, with some saying that until they know what the other terms are, agreeing a divorce settlement would be premature.


Mark Smedley