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EMISSIONS TRADING AND F-GASES

​What consequences would an agreement-based Brexit have on the EU ETS?

If the Withdrawal Agreement for UK's exit from the European Union enters into force, a transitional period will begin starting with the withdrawal date and ending on 31 December 2020.

During this transition period, and in terms of participation by the United Kingdom in the EU ETS, all installations located in the United Kingdom and aircraft operators managed by said State, will remain subject to the obligations established by EU legislation, in particular Directive 2003/87/EC of the European Parliament and of the Council, of 13 October 2003, which establishes a system for trading greenhouse gas emissions rights within the EU and which amends Directive 96/61/EC of the Council (hereinafter, the ETS Directive).  Both the owners of installations and aircraft operators managed by the United Kingdom will need to report their emissions, as well as deliver the corresponding emissions rights.

Following the transition period, EU legislation will no longer apply to the United Kingdom. This means that:

  • Installations located in the United Kingdom will no longer be subject to the EU ETS.

  • Flights by aircraft operators between the United Kingdom and any aerodrome located in States of the European Economic Area will not be included under the scope of reduced application of the ETS Directive, meaning that they will not need to report the emissions corresponding to flights operated between the United Kingdom and the aerodromes located in the States of the European Economic Area.

Nonetheless, aircraft operators that make flights within the European Economic Area will still need to report the emissions corresponding to said flights.

In terms of the aircraft operators previously managed by the United Kingdom under the EU ETS, these will be reassigned to other Member States of the European Union and they will need to notify their new managing State of the emissions corresponding to flights included in the EU ETS. To this end, the European Commission will update the list of aircraft operators under Commission Regulation (EC) Nº 748/2009, of 5 August 2009, on the list of aircraft operators which performed an aviation activity listed in Annex I to Directive 2003/87/EC on or after 1 January 2006.

  • Emissions verification reports drawn up by verification bodies accredited by the national accreditation body of the United Kingdom (UKAS) will not be accepted.

  • Emissions rights allocation and auctions in the United Kingdom will cease.

  • Finally, access to the registry accounts housed in the British Area of the Union Registry will continue to be available to their holders and administrators for as long as necessary for compliance with the current obligations of the EU ETS during the transition period, as well as those stemming from the Kyoto Protocol.

What consequences would a no-agreement Brexit have on the EU ETS?

A Brexit scenario without an agreement will imply that starting on the withdrawal date EU law will no longer be applicable in the UK, so the EU regulations on EU ETS will no longer be applicable there.

Regarding the emissions rights markets and the Union Registry, the European Union has taken preventive steps to avoid a negative impact from Brexit on the EU ETS through Commission Regulation (EU) 2018/208 of 12 February 2018, which amends Regulation (EU) Nº 389/2013 establishing a Union Registry.

In addition, the Commission has adopted the Decision of 17 December 2018 on the temporary suspension of allocation, auction and international credit exchange processes for the United Kingdom. As from 1 January 2019, the emissions rights issued by the United Kingdom will not be injected into the EU ETS.

No emission reports received after the withdrawal date will be accepted from verification bodies authorised by the UK National Accreditation Body (UKAS).

Finally, with respect to the reallocation of aircraft operators currently handled by the UK under the EU ETS, the European Commission has adopted Commission Regulation (EU) 2019/225 of 6 February 2019, amending Regulation (EU) No. 748/2009 as regards the aircraft operators for which the United Kingdom is specified as administering Member State. This Regulation, applicable from the withdrawal date, presents a list of new Member States that will administer the EU ETS for these operators.

I am the holder of an open account in the Spanish Area of the Union Registry. To what extent does the suspension of free allocation processes adopted by EU legislation affect me?

The suspension of free emissions rights allocation processes affects installations located in the United Kingdom and the aircraft operators managed by said State, meaning that any installation located in another Member State or aircraft operators managed by another Member State of the European Union will continue to receive the free allocation assigned to it as usual.

I am the holder of an open account in the Spanish Area of the Union Registry. To what extent does the suspension of auction processes adopted by the European Commission decision affect me?

The suspension of emissions rights auction processes affects the auctions conducted by the United Kingdom, meaning that it will still be possible to buy emissions rights on the auction platforms of the European Union.

I am an aircraft operator, currently allocated to the UK as a Member State, responsible for administration in the EU ETS. As a result of a Brexit without agreement scenario, I would be reallocated to Spain as a new Member State of the administration. Do I have to open new account in the Spanish area of the Union Registry?

Currently, the decision on how to determine the administering Member State for aircraft operators subject to the EU ETS is included in Commission Regulation (EU) 2019/226 of 6 February 2019, amending Regulation (EU) No. 748/2009 as regards the aircraft operators that have carried out an aviation activity listed in Annex I of Directive 2003/87/EC of 1 January 2006 or after this date, specifying the Member State responsible for the management of each operator.

In the case of a Brexit without agreement, from the withdrawal date, it would trigger the entry into force of the list included in Commission Regulation (EU) 2019/225 of 6 February 2019, amending Regulation (EU) No. 748/2009 as regards the aircraft operators for which the United Kingdom is specified as administering Member State.

If an aircraft operator currently assigned to the UK on the list in Regulation (EU) 2019/226 is included in the list of Regulation (EU) 209/225 under Spanish administration, the account currently located in the British area of Union Registry will be updated by the European Commission with the new administrator, so that it will finally be located in the Spanish area of the Union Registry, maintaining the rest of its characteristics and balance of emission rights.

What happens to the emissions rights existing in the open accounts of the Spanish Area of the Union Registry? I am an aircraft operator, currently allocated to the UK as a Member State, responsible for administration in the EU ETS. As a result of a Brexit without agreement scenario, I would be reallocated to Spain as a new Member State of the administration. Do I have to open new account in the Spanish area of the Union Registry?

The emissions rights that are currently housed in accounts of the Spanish Area of the Union Registry will not be subject to any limitation other than those rules already established by EU legislation.

As a result, the installations and aircraft operators with compliance obligations under the ETS will have no risk whatsoever of receiving emissions rights containing limitations on annual delivery in compensation for their emissions.

What will happen to the sales made by Spanish companies supplying HFCs to Gibraltar?

These sales will be exempt from the quota system established for the gradual reduction of synthetic hydrofluorocarbon refrigerants gases (HFC) of greenhouse effect, and will need to be declared to the European Commission as exports provided that, in combination with other sales made outside of the European Union, they exceed the annual threshold of 100 tonnes of CO2-eq.

Non official translation