On 30 January 2019, the Financial Markets Law Committee published a paper on issues of legal uncertainty arising from Brexit in the context of emissions allowances.

In the event that a version of the Government’s draft Withdrawal Agreement is passed at UK and EU level (with provisions on the EU emissions trading scheme (ETS) remaining unaltered to the draft of 14 November 2018), then the UK will remain a participant of the ETS until the end of 2020.

The Government has indicated, in the event of a hard Brexit, that the UK will cease to be part of the ETS from exit day. The FMLC paper examines the legal complexities which will arise from the UK’s withdrawal from the ETS in the event that no agreement is reached regarding its future participation beyond March 2019 or the current Phase III of the ETS ending on 2020. The FMLC suggests mitigants to identified issues in section 5 of the paper.