Currently the EU ETS is in phase 3 which ends in 2020.
CARBON TAX FREE
It applies to large emitters of greenhouse gases in the EU and includes rules determining how many free EUAs participants are allocated each year. The EU ETS, which was introduced in 2005, is a ‘cap and trade’ scheme designed to set a price for carbon emissions to encourage their reduction. The total carbon price is designed to provide an incentive to invest in low-carbon power generation. The government currently sets a total carbon price, created by the price of allowances from the EU ETS and the Carbon Price Support rate per tonne of carbon dioxide which tops up the EU ETS price for electricity generators. This measure was announced at Budget 2018. It would also aim to replace the revenue lost from the auctioning of EUAs which would result from the UK leaving the EU ETS. The new tax would maintain a stable carbon price for those stationary emitters currently covered by the EU ETS, providing stability for businesses and supporting the UK to meet its legally binding carbon reduction targets, which would be unaffected by leaving the EU. Consultation would take place during 2019 on the detailed provisions to inform a statutory instrument or instruments that would be laid in early 2020. All emissions that exceed the annual allowance would be taxed on a carbon equivalent basis at a rate for 2019 of £16 per tonne.Ī technical document is being be published alongside Budget 2018 setting out more details on how the tax would operate.
CARBON TAX VERIFICATION
Installations would continue to report their activities annually under the existing Monitoring, Reporting and Verification ( MRV) scheme and, as at present, this information would establish how many tonnes of greenhouse gases they emit during the reporting period. For permit holders outside the simplified reporting scheme this would be based on the allocation of free EU Allowances ( EUAs) that would have been allocated to installations under Phase 3 of the EU ETS.For those in the simplified reporting scheme, agreed emissions targets. The tax would be known as Carbon Emissions Tax and collected by HMRC annually, with the first payment due in 2020.Īll current participants in the EU ETS who are UK permit holders operating stationary installations currently in the EU ETS would be set an annual emissions allowancefor the purposes of the tax. The new tax will be introduced from 1 April 2019, with the first tax period ending on 31 December 2019. This measure would introduce a tax on carbon dioxide emissions (and other greenhouse gas emissions on a carbon equivalent basis) produced by UK stationary installations currently in the EU ETS. In a ‘no deal’ scenario, the UK would cease to participate in the EU ETS from exit day. This measure will take effect only if the UK leaves the EU without an agreement. This includes: power generators certain large industrial premises and manufacturers, including food processing plants certain public sector facilities and those small emitters and hospitals that are subject to simplified reporting arrangements. Permit holders of stationary installations currently covered by the EU Emissions Trading System ( EU ETS).
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