October 31, 2017 / 4:15 PM / a year ago

Scottish ministers demand clarity from UK govt on EU ETS future

LONDON (Reuters) - Uncertainty over Britain’s participation in the European Union’s carbon market after Brexit is unacceptable and clarity is needed to avoid risks to business, two Scottish ministers said in a letter to the UK government on Tuesday.

EU lawmakers and member states have agreed on ways to safeguard the EU’s Emissions Trading System (ETS) from a mass sell-off of carbon permits if UK businesses suddenly find themselves outside the scheme.

The ETS makes big polluters such as power companies and industrial firms pay for their carbon dioxide emissions by buying carbon permits called EU Allowances.

Britain is the EU’s second-largest emitter of greenhouse gases and its utilities are among the largest buyers of carbon permits. However, the EU has decided to void permits issued by any country leaving the bloc from January 2018 onwards.

Having had a say in how the ETS is shaped, most analysts believe Britain will remain part of the system. But 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.

Two Scottish ministers - Roseanna Cunningham, Scotland’s climate change secretary, and Michael Russell, minister for UK negotiations on Scotland’s place in Europe - asked the UK government for “immediate discussions” on the future of Britain’s involvement in the ETS.

In the letter, they said the lack of clarity was “unacceptable”.

“Moreover, the EU amendment presents significant and immediate risks to business in Scotland in terms of additional costs of compliance if UK allowances can no longer be freely allocated,” they added.

A UK government spokesperson said the government recognizes the need for clarity on how the future UK-EU partnership might affect the EU ETS and is considering options for its future participation.

Reporting by Nina Chestney; Editing by Dale Hudson

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