EAI and Eurelectric have signed a letter calling for linkage between the UK and EU Emissions Trading Schemes (ETS). The letter, with over 40 signatories, was sent to ministers and relevant civil servants in London and Brussels including UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen on Wednesday 14th of April. Bloomberg have since published an article and the letter has been released to the press.
The letter argues that ETS linkage strengthens confidence in the respective carbon markets and has clear advantages in terms of liquidity, price discovery and the ability to attract abatement from a larger area. Linkage would also create a level playing field and avoid competitive distortions and result in aligned cost implications for industries across the UK and EU. Linkage would also help minimise the risk of carbon leakage.
The letter also outlines the importance of linking the UK and EU ETS ahead of COP26, as linkage shows support for multilateral solutions to climate change. Linkage requires both political will and aligned environmental ambition and given the similarities between UK and EU carbon trading regimes, the letter’s signatories believe linking the two schemes should be straightforward.
ICE Futures Europe published the schedule of new UK ETS auctions in February. The first auction is set to be held on the 19th of May, auctioning 6.1mn allowances.