The UK government has announced that its post-Brexit carbon trading scheme will commence in May, marking a significant milestone in the country’s commitment to achieving a net-zero economy by 2050. Designed to replace the previous EU counterpart, the UK emissions trading programme sets emission limits for heavy polluters and mandates the purchase of carbon credits to offset their greenhouse gas output.
With the conclusion of the Brexit transition period in 2020, companies, particularly power providers, have eagerly awaited details about the UK scheme. The government’s recently unveiled plans indicate that the first auctions under the new system will be held on May 19, pending regulatory approval.
While uncertainties remain regarding the potential linkage between the UK and EU carbon trading schemes, market experts anticipate that UK allowances are unlikely to initially trade below EU allowances. The power sector has called for clarity from the government on crucial aspects of the post-Brexit system.
Negotiations on linking the UK and EU carbon trading schemes have not yet commenced, according to the European Commission. The development of the UK’s independent carbon trading scheme signifies a decisive step towards achieving its ambitious climate goals.
