U.K. Will Go With Carbon Tax If There Is No Deal On Brexit

This article first appeared on the BNEF mobile app and the Bloomberg Terminal.

    • The no-deal carbon tax would be 16 pounds per metric ton
    • All options remain on the table in case of a deal on the EU

The U.K. announced in its budget that it will introduce a carbon tax in ‘the unlikely event’ that the EU and U.K. do not agree on the terms of the country’s exit from the trading bloc. The tax would be set at 16 pounds per metric ton (18 euros), slightly higher than the 16.67 euros EUAs closed at on November 29. The new tax would cover all stationary installations participating in the EU ETS, unlike the current carbon price support. Industrial installations would be allocated an emissions allowance equal to their current free allocation in the carbon market, and would only have to pay the tax for emissions in excess of their allowance. The tax would be a stop-gap measure, and the U.K. government is currently exploring long-term alternatives, and a U.K. ETS is the favored long-term option of several government ministers.

BNEF clients can see the full report in EU Power Weekly: No Perfect Answer for U.K. Carbon Pricing on the Terminal or on web.

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