CARBON FORWARD: Brexit doubts leave EU ETS in limbo

Published 13:00 on September 2, 2016  /  Last updated at 22:14 on September 2, 2016  /  Bavardage, Climate Talks, Conversations, Dialogue, EMEA, EU ETS, International  /  No Comments

Britain’s June referendum in favour of exiting the EU had an immediate and sustained effect on EU ETS prices and left hundreds of installations unsure of their future in the scheme.

Britain’s June referendum in favour of exiting the EU had an immediate and sustained effect on EU ETS prices and left hundreds of installations unsure of their future in the scheme.

As the second biggest ETS emitter with just over 10% of the scheme’s total emissions, the fallout of Brexit impacts all companies with exposure to the EU ETS, both in the UK and on the continent.

The Carbon Forward 2016 conference in London on Oct. 12-14 features insights from analysts, politicians, and policy experts on what Brexit will mean for the EU ETS.

This includes a keynote address from UK MEP Ian Duncan, the lead EU parliamentarian on ETS reform who was asked to stay on in the role by colleagues despite offering his resignation in the wake of the Brexit vote.

“There is huge uncertainty about which areas of EU and UK energy and climate policy will be retained by the UK, and whether and how quickly alternative arrangements can be put in place,” said Richard Folland, a consultant who will present on Brexit at Carbon Forward.

His consultancy Inline Policy has set up a specialist Brexit unit focused on understanding the implications of the EU referendum, while Folland has tracked climate policy and regulation for over a decade for bank JP Morgan, the Climate Markets and Investment Association and at the UK foreign ministry.

EU carbon prices are currently languishing near three-year lows at around €4, having immediately fallen 20% after the referendum.

In the wake of Brexit, analysts have slashed their year-end price forecasts 25% on the resulting weaker macroeconomic outlook and uncertainty, according to a Carbon Pulse poll. However, they continue to see EUA prices crossing into double-digit territory by the end of 2020, a level not seen since 2011.

Most expect the UK to opt to continue to participate in the EU ETS, but predict significant volatility up to a likely re-calibration in 2020 as UK installations look to sell off their surpluses or rein in their hedging requirements.

While keeping the UK in the EU ETS hinges on protracted talks on its future in the single market, an ETS without Britain would likely be a much-changed instrument without one of its most progressive backers.

KEY FACTS

  • The Carbon Forward conference and pre-conference EU ETS training day will equip you with everything you need to know about managing risks and opportunities in the EU ETS & global carbon markets, whether you’re a company with ETS exposure, a legislator, a trader, an analyst, or anyone with an interest in emissions trading.
  • Redshaw Advisors has partnered with Carbon Pulse to organise the pre-conference EU ETS training session on Oct. 12.
  • MEP Ian Duncan, the lead lawmaker on post-2020 EU ETS reforms, will deliver a keynote address and hold a townhall-style forum on the opening day on Oct. 13

The event will take place at Greenwich’s Old Royal Naval College in south-east London.

For more information on Carbon Forward 2016 or to book your place, click here

To inquire about sponsorship or speaking opportunities, email us at info@carbon-forward.com

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