EU to cut Britain from emissions trading system in no-deal Brexit

FILE PHOTO: A British and a European flag are pictured ahead of the European Union leaders summit in Brussels, Belgium October 17, 2018. REUTERS/Yves Herman

BRUSSELS (Reuters) - Britain will be excluded from the European Union’s Emissions Trading System (ETS) and all other legislation to help limit the impact of climate change, if it leaves the bloc in March 2019 without a deal, the EU executive said on Tuesday.

In order to safeguard the cap-and-trade system, the European Commission said it may temporarily suspend permit auctions and free allocation linked to the UK market.

The measures are part of the bloc’s contingency measures to minimize the worst disruption in key areas in case of a no-deal Brexit.

It said the quantities of fluorinated greenhouse gases, used in air conditioning and in domestic, supermarket and industrial refrigeration, emitted in Britain should no longer be factored into the allocation of 2019 annual quotas.

“As the date of the United Kingdom’s withdrawal is approaching, it is now necessary to move forward with preparations for all possible outcomes,” the Commission said, calling on EU bodies to work swiftly to implement such plans if needed.

Last month, the UK government said it would that in a no-deal scenario, the country would next year switch to meeting its carbon pricing commitments via a tax system.

The European ETS charges power plants and factories for every tonne of carbon dioxide they emit.

Britain has said that if there is a Brexit deal, the country plans to remain in the ETS until at least the end of its third trading phase running from 2013-2020.

As the second largest emitters of carbon dioxide in Europe, British utilities are among the largest buyers of carbon permits in the ETS. Carbon analysts have said Britain’s exit from the scheme would likely have a bearish impact on prices.

Reporting by Alissa de Carbonnel