UK companies that have to take part in the EU Emissions Trading Scheme (EU ETS) have until 11 March to report on emissions in 2018 and until 15 March to surrender allowances for the year.

The compressed deadlines – brought forward from 31 March and 30 April, respectively – were agreed because the original deadlines fell after the UK’s exit date from the EU. That would have disrupted the market in the event of a hard Brexit, creating a potential two-tier system where UK allowances could not be used to meet companies’ ETS obligations, with knock-on effects on allowance prices.

However, questions remain over carbon taxes in the event of a no-deal Brexit. ETS participants do not know at this stage whether they will have to have allowances for the first part of 2019 (as would apply in the event of a deal and continued engagement with the EU ETS). Although the government has indicated that it would institute a £16/t tax on carbon emissions in the event of a no-deal Brexit, it is not clear how that tax level has been calculated, and market participants want understanding of whether and how it would be adjusted over time.