It seems that nothing can escape the claw-like grasp of Brexit: it is now the turn of the European carbon market to be roiled by Britain’s stuttering attempts to leave the EU. Prices for the allowances traded under the EU Emissions Trading System hit a 10-year high above €27 a tonne last week, in a move partly attributed to the receding chance of the UK leaving the bloc under a no-deal Brexit. But why is the carbon market, which is designed to increase the cost of burning highly polluting fuels, now keeping such a close eye on the UK’s political fate? If the UK were to crash out of the EU under a no-deal scenario, its membership of the EU ETS scheme would also end overnight. While the UK has said it would implement a second carbon tax to keep the cost of polluting high, the EU allowances British companies hold would no longer be needed.
FT 16th April 2019 read more »