The UK and Switzerland are each planning to launch their own emissions trading systems (ETS), linked with the European Union Emissions Trading System (EU ETS), despite industry calls for a joined-up international approach under ICAO’s Carbon Offsetting and Reduction Scheme (CORSIA).

In May 2019, the UK government launched a consultation on how the UK would manage emissions trading once the UK has exited the EU (Brexit). If the UK failed to take any action, all flights to, from and within the UK would fall outside of the scope of the EU ETS once Brexit takes effect.

The consultation, entitled “The future of UK carbon pricing,” covered England, Wales, Scotland and Northern Ireland, seeking feedback from aviation and other affected industries on the design of the UK’s future ETS. The consultation closed July 12 and initial results were released Oct. 31.

The consultation received 149 responses, including six from the aviation sector. The UK government is now collating that feedback into a policy response that will ultimately be transposed into domestic law.

“This would be what happens in the UK if we leave the EU, so what comes next after the EU ETS,” UK government department for business, energy & industrial strategy senior policy adviser David Saddington told ATW on the sidelines of the Aviation Carbon conference in London on Nov. 4.

“We are now writing the government response. We have looked at what stakeholders have told us in response to those questions and the government response will set out what we feel is the policy now going forward. In terms of timelines, we can’t offer any clarity, given where we are [with Brexit-timing uncertainty].”

Options under consideration include a standalone UK ETS and the UK government’s preferred option of creating a UK ETS that is linked with the EU ETS, in terms of carbon pricing and allowances.

Questions covered by the consultation included what base data should be used, the starting cap, the level of free allocations, exemptions, thresholds and how the new scheme would fit with CORSIA.

“The full package of measures is there for discussion,” Saddington said. “If we design a UK ETS that is able to link to an EU system, there needs to be certain similarities in terms of the compatibility of the markets, but there is flex. We are now in a position where we could design certain features which would improve on [EU] ETS, for example, and we did suggest some of them in the consultation.”

Saddington said the UK plans to maintain “at least” the same level of environmental ambition as the EU.

“There is potential there to go further and faster,” he said. “In our consultation, we did make it clear that CORSIA is not enough in terms of the UK’s ambition in its Clean Growth Strategy. That is why we have the UK ETS in addition to the EU ETS. This is best tackled at international level, but in terms of ambition [CORSIA] doesn’t cut it.”

While timings for the UK ETS will depend on Brexit developments, the consultation foresaw the new scheme entering force by Jan. 1, 2021.

However, Saddington said the UK remains in a period of uncertainty, given the ongoing Brexit developments and the upcoming UK general election. If the UK goes through a change of government, the UK ETS plan could change.

Meanwhile, European Commission DG CLIMA adviser Damien Meadows said Switzerland is also planning to create an ETS linked to the EU system, which is expected to enter force in 2020.

ATW understands that Switzerland collated RTK data for the Swiss ETS in 2018, with a view to launching initial emissions monitoring in 2020.

This could leave airlines like Spanish-owned British Airways having to comply with CORSIA at global level, alongside separate initiatives in the EU, UK and Switzerland.

“Alignment isn’t 100% pure,” BA environment manager Andy Kershaw said, speaking about EU ETS and CORSIA. “There’s still a few elements of that which are not aligned.”

BA believes that CORSIA should be the central reference point, to avoid extending the regulatory patchwork.

“If it all looks very similar and if it all moves towards the way CORSIA looks and feels, that would take away a lot of the burden,” Kershaw said.

Victoria Moores