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UK veto of EU ETS reform deal narrowly avoided

20 Nov 2017, 7.15 pm GMT

UK rejection of EU ETS reform deal narrowly avoided

London, 20 November (Argus) — A potential UK rejection of a post-2020 EU emissions trading scheme (EU ETS) reform deal looks set to be narrowly avoided after the European Commission amended draft regulation aimed at protecting the scheme against an UK exit.

It was widely expected that EU ambassadors on the committee of permanent representatives would on 22 November endorse the deal on EU ETS phase four (2021-30) reform provisionally agreed between EU member states and the European Parliament earlier this month.

But over the weekend of 18-19 November reports emerged that the UK was threatening to reject the deal because it objected to a move by the EU council and parliament to invalidate UK issued allowances to protect the scheme against an untimely UK departure.

In response, the commission prepared a proposal to amend EU ETS registry rules so that allowances can be identifiable by a country code from 2018, enabling the invalidation of UK-issued allowances.

The UK sought to avoid this outcome by proposing that the EU ETS compliance deadline for 2018 should be moved forward to a date earlier than the UK's scheduled 29 March 2019 departure from the EU. Earlier this month, the UK launched a consultation to obtain the views of EU ETS covered entities registered in the UK on the proposal.

On 17 November, the commission was left "very worried" after a meeting with UK environment secretary Claire Perry at the UN climate summit in Bonn, Germany, during which it emerged that the UK may reject the EU ETS reform deal, an EU source told Argus today.

But also today, it transpired that the commission has revised its original EU ETS registry proposal to incorporate the UK's preferred course of action, a parliament source told Argus today. The revised proposal is a technical measure that can be implemented under EU comitology rules. This means that the commission can do so with support from EU member state representatives, but without needing parliament's backing.

The move makes it likely that the UK will back the EU ETS reform deal on 22 November, which improves the chances that it will obtain the EU member states' qualified majority support needed for its final endorsement.

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