This will affect your business if you are:

• a UK operator of installations (for example power stations, oil refineries)
• a UK-administered aircraft operator that currently participates in the EU Emissions Trading System (ETS)
• engaged in any energy sector activities (for example oil and gas exploration and production operations)
• a researcher or a research organisation in the field of nuclear fission research
• a supplier, installer or generator of electricity, renewable energy or certain microgeneration technologies
• working in the civil nuclear sector
• the owner of a large industrial facility
• an organisation currently registered on the UK’s Kyoto Protocol National Registry

What will stay the same

• the Industrial Strategy, including the Grand Challenges and Sector Deals
• the Climate Change Act, which will continue to apply across the whole of the UK
• trading practices and enforcement standards on eco-design and energy labelling
• the legislative regime for hydrocarbon licensing and environmental protection
• electricity supplier Guarantees of Origin issued in all EU countries will continue to be recognised in the UK
• microgeneration technology installer certificates issued by EEA states will also continue to be recognised in the UK
• civil nuclear trade and cooperation will continue with the EU and third countries, including (where necessary) under bilateral agreements the UK has concluded
• all requirements under both the Feed-in Tariffs Scheme and Contracts for Difference schemes and the Renewables Obligation
• regulations for the monitoring, reporting and verification of greenhouse gases

What your business should consider

• EU Emissions Trading System (EU ETS)
• UK electricity market
• Single Electricity Market in Northern Ireland
• nuclear
• oil stocking
• Guarantees of Origin, trading, importing and exporting, and standards

EU Emissions Trading System (EU ETS)

The EU ETS will continue for the 2019 and 2020 compliance years during the transition period from 1 February 2020 to 1 January 2021.

Provisions which enable UK participation in the full 2020 EU ETS compliance period are set out in Article 96 of the Withdrawal Agreement. These provisions provide that, from 1 January 2021, the UK will have the obligation and retain the ability to enforce the EU ETS 2020 allowance surrender obligation on 30 April 2021. Access to UK-administered accounts in the Union Registry will be retained to facilitate this. The temporary suspension by the European Commission on the processes relating to the UK registry will be lifted on Monday 3 February 2020 and the UK will be able to start the processes of issuing 2019 free allocation and, with appropriate market notification, resuming auctions. In accordance with EU regulations, UK participants entitled to 2020 free allocation can expect to receive these allowances before 28 February. The UK will remain a full participant during this period, and UK Regulators will enforce compliance obligations in line with the Greenhouse Gas Emissions Trading System Regulations (2012) for the 2019 and 2020 EU ETS scheme years.

All UK operators of installations and UK-administered aircraft operators that currently participate in the EU ETS should comply with their EU ETS obligations for 2019 and 2020 scheme years, including submitting verified emissions reports and surrendering allowances. The deadlines for UK operators participating in the EU ETS during the transition period are:

• report verified 2019 emissions – 31 March 2020
• surrender allowances for 2019 emissions – 30 April 2020
• report verified 2020 emissions – 31 March 2021
• surrender allowances for 2020 emissions – 30 April 2021

As the UK will remain in the EU ETS until the end of 2020, the Carbon Emissions Tax (CET), which would have replaced the EU ETS in a no deal scenario, will not be commenced on 4 February 2020.

Read the guidance on meeting climate change requirements from 1 January 2021 and the Carbon Emissions Tax policy paper.

The UK electricity market

The UK will no longer be able to trade with the European Union in the way it does today and there will be changes to the legal and regulatory framework, including the approach to monitoring the market.

UK market participants will need to register under the Regulation on Energy Market Integrity and Transparency (REMIT) with an EU regulatory authority for the purposes of market monitoring to avoid disruption. The majority of the existing REMIT regime will be maintained in Great Britain with minimal changes. Ofgem published an open letter with steps for market participants in Great Britain to take.

Alternative trading arrangements across gas and electricity interconnectors will need to be developed. The UK government, Ofgem and where appropriate, the Northern Ireland Utility Regulator, are working to ensure new access rules are approved in Great Britain and are providing support to interconnectors engaging with EU member state authorities. Market participants will need to make use of the alternative arrangements developed for purchase and sale of power cross-border.

Read further guidance on trading electricity from 1 January 2021.

The Single Electricity Market in Northern Ireland

We expect the Single Electricity Market (SEM) to continue to operate as it does today. The government will take all possible measures to maintain the Single Electricity Market and continue to work with the Irish Government and European Commission to seek agreement that the Single Electricity Market will continue. Northern Ireland electricity market participants should continue using the Single Electricity Market processes and arrangements. However, market participants should be aware of the risk that the Single Electricity Market may not be able to continue, in which case government and the Northern Ireland Utility Regulator will take action to seek to ensure continued security of supply and market stability.

Nuclear

A new UK domestic nuclear safeguards regime will come into force. It will be run by the Office for Nuclear Regulation (ONR), which already regulates nuclear safety and nuclear security in the UK. If you are an operator in the UK civil nuclear sector, you will need to comply with this. These requirements are set out in the Nuclear Safeguards Regulations, which will be administered by ONR and published on its website.

The UK would also cease to be a member of the Euratom Research & Training Programme of Fusion for Energy. This would mean that UK organisations could no longer bid for International Thermonuclear Experimental Reactor contracts through Fusion for Energy.

In November 2018 the ITER Council confirmed that:

• the contracts of current UK nationals directly employed by the ITER organisation will be considered valid until their contractually agreed end date
• signed contracts/agreements with UK operators (including private companies, institutes and universities) will be considered valid until their contractually agreed end date

If you wish to continue to import nuclear material from the EU, you will need to get an import licence.

You may also need to seek re-approval from the Euratom Supply Agency for supply contracts for nuclear material, depending on when the contract was, or is due to be, concluded.

More information is available in the guidance on civil nuclear regulation guidance.

Oil stocking

UK oil stocks will no longer count towards EU obligations. You may need to consider purchasing tickets from EU countries to meet UK oil stocking obligations.

Guarantees of Origin, trading, importing and exporting, and standards

Renewable Guarantees of Origin and Guarantees of Origin for combined heat and power issued in EU countries will continue to be recognised in the UK from 1 January 2021.

However, UK-issued Renewable Guarantees of Origin and Guarantees of Origin for combined heat and power will no longer be recognised in the EU. If an existing contract with an EU countries’ electricity supplier or trader requires an EU-recognised Guarantee of Origin, it is possible that the contract could be compromised. This is a highly unlikely situation, but you may wish to check your existing contracts regardless.