Brexit Preparedness seminar on Climate change Council Working Party (Article 50 Format) 10 January 2019 1
Preparedness measures in relation to climate policies - overview Climate-related acquis has been thoroughly screened; most of it does not raise any Brexit-specific issues EU Emissions Trading System (ETS) Emissions reductions in non-ets sectors Effort Sharing Decision (ESD) Regulation of hydrofluorocarbons and fluorinated gases (HFC gases) 2
EU ETS: the key issue - preserving environmental integrity By 30 April each year, operators must surrender allowances for their emissions of the previous year. Baseline scenario (pre-regulation 2017/2391): If the UK leaves the EU on 29 March 2019 without an agreement, UK operators would not be bound by the obligation to surrender allowances for emissions in 2018, although they would have received free allocation and the UK would have auctioned allowances in 2018. environmental integrity of the EU ETS would be undermined. 3
EU ETS: Action taken at EU level (1) 1) Amendment of the EU ETS Directive (by Regulation 2017/2392 in 2017) No use of allowances issued by a MS in relation to which obligations to surrender allowances for emissions are lapsing (Art. 12) 2) followed by amendment to Regulation 389/2013 (Registry Regulation) Identification of allowances issued by the UK after 1 January 2018 by a country code ( marking ) and marked allowances not valid for compliance purposes; Allowances issued by the UK for 2018 not marked, as the UK ensured compliance with the EU ETS Directive in relation to 2018 emissions in a legally binding manner. 4
EU ETS: Action taken at EU level (2) Legal default: allowances issued by the UK to be marked as from 1 January 2019 Pending the entry into force the withdrawal agreement: following a Commission Decision addressed to the central administrator of the Union Registry, temporary suspension of issuance of allowances by the UK (whether in the form of free allocation, auctioning or exchange of international credits) as from 1 January 2019. If a withdrawal agreement ensuring compliance with the EU ETS Directive as regards emissions occurring in 2019 and 2020 enters into force: following another amendment of the Registry Regulation, NO marking of allowances issued by the UK in 2019 and 2020. 5
EU ETS: additional consequences Accounts held in the Union Registry: after withdrawal, UK can no longer administer and access accounts in the Union Registry and the Union Registry no longer serves as the Kyoto Protocol registry of the UK. UK accreditation of verifiers for EU ETS no longer recognised Verifiers accredited by the UK can no longer certify emission reports for operators (stationary and aviation) after 29 March 2019. Operators to use verifiers accredited by the National Accreditation Body of one of the MS. Verifiers to seek accreditation by the National Accreditation Body of one of the MS. 6
EU ETS aviation: action required Issue: UK will cease to act as Administering Member State (AMS), What is being done: Aircraft operators currently administered by UK have to be reattributed to a different AMS (cf. ETS Directive Art 18a); New attribution list by beginning of February; Member States consulted; collaboration between UK and new AMSs encouraged. Operators should proceed to open accounts in the registries of their new AMSs. What is not being done: Changes to free allocation levels will not be made in 2019. Adjustments to be made from 2020, as 2019 free allocations will already have been issued by the EEA30. 7
Non-ETS sectors - ESD: actions required / no deal scenario (1) Issue: Annual emission allocations (AEAs) for all years 2013-2020 have already been issued to Member States ESD compliance accounts in the Union Registry. Need to prevent the UK from transferring unused AEAs. What is being done: UK can transfer AEAs only from those accounts, for which UK compliance has been checked (2013-2016) until exit. Transfers for compliance years 2017-2020 are not possible before 29 March 2019. What else: No access to UK ESD compliance accounts in the Union Registry after 29 March. This will ensure that the UK cannot transfer any future AEAs. 8
Non-ETS sectors ESD: additional actions required no deal scenario (2) Issue: The Effort Sharing Decision (ESD) distributes the non-ets contribution to the EU 20% GHG emissions reduction target for the year 2020 among the Member States. The UK has one of the most ambitious 2020 targets: -16 %. Will the ESD be re-opened for negotiations, if the UK leaves without an agreement? What is being done: Every year the Commission assesses Member States progress. The latest assessment indicates that even without the UK, the EU should be able to meet its 2020 GHG emission reduction target of 20 % compared to 1990. What is not being done: The Member States 2020 targets agreed in the ESD will not be re-opened for negotiations. 9
F- gases: The key issue - preserving the EU HFC Phase-down approach (1) Regulation (EU) No 517/2014 step-wise reduces the placing on the market of HFCs until 2030, based on over-the-years declining quotas allocations to individual companies. Issue: UK companies will continue to supply HFCs to the EU27 HFC market. To ensure sufficient supply in the EU27, UK companies are invited to take the necessary actions to continue to supply on the same terms as other non-eu quota holders. UK companies, like other non-eu quota holders, will need to appoint a legal representative established in the EU. 10
HFC-gases: Action taken at EU level: HFC Phasedown (2) 1. Amending reference values : In 2017, reference values basis for the yearly quota allocation for 2018-2020 were recalculated on the basis of reported data from 2015 and 2016. In absence of data on intra-eu trade, UK companies were invited to provide data on the supply to the EU27 for 2015 to 2017. The 2017 reference values for UK companies for the period 2018-2020 will be amended, based on their reported supply to the EU27. 2. Reporting separately EU27 UK placing on the market As of 2019 (for the reporting period 2018), companies have to report the amount of HFCs placed on the UK market by including HFCs supplied to the UK market that were previously placed on the EU27 market; but not including HFCs placed on the UK market that are subsequently supplied to the EU27. 11
HFC gases : Kigali Amendment to the Montreal Protocol - Baseline calculation Regulation (EU) No 517/2014 ensures compliance with the Montreal Protocol as amended by the Kigali Amendment, ratified by the EU and its Member States, including the UK. Issue: Baseline data to be reported by 1 April 2019. No reported data on intra-eu trade during the 2011-2013 reference period (neither for the 1989 HCFC share) as excessive administrative burden with no reliable results. EU27 baseline: Aggregated EU28 baseline will be established on the basis of available data. Split for the period after withdrawal according to the EU27 and UK market shares (at substance level) based on the data collected for the recalculation of reference values. 12
HFC-gases: Additional implications: Certification and training attestations Regulation (EU) No 517/2014 requires that certain equipment containing F-gases is installed/serviced and checked for leaks by certified persons / recovery of F-gases from stationary equipment is carried out by certified persons. recovery of F-gases from air-conditioning equipment in cars is carried out by persons with a training attestation. Certificates and training attestations by any Member State are mutually recognised for activities carried out in other EU Member States. As of the withdrawal date, certificates and training attestations issued in the United Kingdom are no longer recognized for activities carried out in the EU-27. 13
HFC-gases- Additional implications: Accreditations of auditors Regulation (EU) No 517/2014 requires verification reports to be submitted to the Commission, to be drawn up by auditors accredited pursuant to Directive 2003/87/EC or by an auditor accredited to verify financial statements in accordance with the legislation of the concerned Member State. (Articles 19 (5) and (6) of Regulation (EU) No 517/2014). As of the withdrawal date, accreditations by the UK National Accreditation Body (UKAS) will no longer be valid in the EU. As of the withdrawal date, auditors accredited by UKAS can no longer draw up verification reports for submission to the Commission. 14
Background and reference information Information on the relevant EU ETS safeguard measures: https://ec.europa.eu/clima/news/update-safeguard-measures-eu-emissions-tradingsystem-due-uks-withdrawal-european-union_en Stakeholders"' notices on EU ETS, F -gases, GHG emissions automotive sector and GHG emissions in the maritime sector in a no deal scenario https://ec.europa.eu/info/brexit/brexit-preparedness/preparedness-notices_en 15
Brexit Preparedness seminar on Environment Council Working Party (Article 50 Format) 10 January 2019
Environment (1) Key issue 1 - Environmental export and import controls - general Import/export procedures will need to be applied to movements to and from UK. What is being done Preparedness notices produced/updated for waste shipment, timber, and CITES (Convention on International Trade in Endangered Species ); EU27 technical expert seminars on waste, timber, CITES, and Prior Informed Consent (PIC); Databases reviewed in preparation of UK withdrawal. What else should/can be done Member State competent authorities to step up efforts to inform stakeholders of the procedures that will apply after Brexit.
Environment (2) Key issue 2 - Waste flows and capacities Waste flows involving the UK need to be reviewed since export bans out of the EU apply to certain waste types. Consent for certain waste shipments may need to be rescinded by Member States; Ship recycling facilities located in the UK will no longer be listed on the European List of ship recycling facilities and thus cannot be used for recycling ships flying a Member State flag. What has been done Preparedness notices on ship recycling and waste shipments; EU27 technical expert seminar on waste; Member States invited to look at their waste flows involving the UK. What else should/can be done UK shipyards to submit requests to be listed as a third country on the European List of ship recycling to preserve capacity; Member States should inform stakeholders with UK contracts of applicable rules under Waste Shipment Regulation.
Environment (3) Key issue 3: International and regional cooperation - general Brexit will affect work of Multilateral Environmental Agreements (MEAs) and Conferences of Parties (COPs) managing them. What is being done EU legislation that contains best efforts cooperation clauses with third parties has been identified. MEA COPs shortly after Brexit are flagged. What else should/can be done External preparedness Commission will notify third parties/mea secretariats when appropriate and will prepare for COPs; Member States could facilitate exchanges with UK via regional or multinational MEAs (e.g. OSPAR).
Environment (4) Preparedness notices: Convention on International Trade in Endangered Species (CITES) Timber Waste Ship recycling https://ec.europa.eu/info/brexit/brexit-preparedness/preparedness-notices_en#env
Brexit Preparedness seminar on ENERGY matters Council Working Party (Article 50 Format) [10/01/2019]
I. Key internal energy market matters (IEM) UK regulators and operators leave EU agencies and bodies ACER; ENTSO-E; ENTSOG Electricity and gas interconnectors can still be used BUT: UK out of IEM platforms - main impact on electricity interconnectors (forward, day-ahead, intraday and balancing platforms) TSOs will need alternative arrangements EU-UK interconnectors are no longer Transmission System Operators in the meaning of EU law TSO certification (if any) will become a national matter 2
What is being done? (IEM) April 2018 Notice to Stakeholders Explained issues and announced to markets May 2018 Directors General meeting at EU27 Discussed MS specific issues Call for coordination by Commission Ongoing technical work with neighbouring MS Ministries NRAs TSOs Other areas (Energy Efficiency, Renewable Energy) March 2018 Notice to Stakeholders Commission proposal to adapt absolute energy efficiency values for 2030 - on track for adoption before Brexit 3
What additional action / communication is required? (IEM) Continue coordinated approach of EU27 vis-à-vis UK Neighbouring countries to pursue appropriate fall-back arrangements for allocating capacities on electricity interconnectors. Commission services pursuing coordination at technical level Commission services will pursue discussions with Ireland on Single Electricity Market 4
II. Key Euratom matters (1) After Brexit the UK will remain an important partner in the nuclear field under the international framework. But no Deal will have an impact on nuclear common supply policy Validity of Euratom Supply Agency s co-signature on existing supply contracts between private parties, in connection with the UK. EU action: Reassessment of relevant contracts by the Euratom Supply Agency in view of giving effect anew to ESA's co-signature. ESA is finalising work and will follow up appropriately. No Member State action is needed. 5
II. Key Euratom matters (2) No Deal will have an impact on nuclear common market Free movement of goods and products, of skilled staff, or of natural or legal persons participating in the construction of nuclear installations will cease to apply between the United Kingdom and the EU- 27. nuclear safeguards Sole UK responsibility for safeguards post Brexit. Member State action: to handle potential higher complexity of transfers of nuclear materials EU-27 MS / UK. Possibly need for «an exchange of notes verbales EU27 MS/UK for specific transports» 6
II. Key Euratom matters (3) No Deal will have an impact on nuclear safety, spent fuel and radioactive waste and radiation protection policy End of UK participation in specific databases, but international fall-back mechanisms. Additional checks on imports of certain products, in particular agricultural products, from the UK. Specific requirements on transfers of radioactive waste and spent fuel. Member State action: Member States to prepare for transfers of radioactive waste and spent fuel, involving the UK, with the aim of disposal and to carry additional checks of imports of certain products. Euratom acquis Limited adaptation to Euratom acquis: Commission is preparing (by implementing act) amendment to Commission Regulation (EC) n 1635/2006 ( Post-Chernobyl ) to include UK in the list of third countries (foreseen for adoption early February 2019). 7
Background and reference information Notice to stakeholders on Internal energy market matters (27 April 2018): https://ec.europa.eu/info/sites/info/files/notice_to_stakeholders_brexit_energy_market_final.pdf Notice to stakeholders on Energy Efficiency/Renewable energy (7 March 2018): https://ec.europa.eu/energy/sites/ener/files/documents/notice_to_stakeholders_brexit_energy_origin_final.pdf. Notice to stakeholders on Euratom matters (28 March 2018, updated 25 September 2018): https://ec.europa.eu/energy/en/topics/nuclear-energy 8
Brexit Preparedness seminar on Fisheries Council Working Party (Article 50 Format) 10 January 2019
Key sectoral issues - overview Fishing activities Control and enforcement Trade IT and finance 2
Key sectoral issues Fishing activities I Legal and economic context UK will be an independent coastal state in full control of activities in its waters. Landings by UK flagged vessels in EU and UK imports into EU will be under different terms than currently. 8 Member States currently have fishing activities in UK waters. Quota swapping between Member States provides for flexibility in implementation of the Common Fisheries Policy 3
Key sectoral issues Fishing activities II Scenario 1: UK continues to grant access to EU vessels for remainder of 2019 (status quo) Remarks by Minister Gove to the House of Lords EU Energy and Environment subcommittee on 17 October 2018 that the UK would honour the commitments entered into in the December Council (quota shares for 2019, access for EU vessels) for the whole of 2019 EU will take all appropriate unilateral measures to ensure that EU vessels can get permission to fish in UK waters and that UK vessels can continue to fish in EU waters 4
Key sectoral issues Fishing activities III Scenario 2: UK does not grant access to EU vessels Risk: interruption of fishing opportunities Loss of catches in UK waters can be partly compensated by shifting catches of available fish stocks from UK to EU waters recuperating current catches by UK in EU waters. Possible mitigation and reconversion support: EMFF State aid 5
Key sectoral issues Control and enforcement Need to ensure sufficient control capacity to monitor and protect EU waters (risk of IUU activities by UK vessels). Action by Member States Action by EFCA Risk of IUU activities by EU vessels Flag state responsibility Actors involved: Member States, Commission, EFCA 6
Key sectoral issues Trade Additional cost of market supply from the UK for the EU processing sector (tariffs, customs/sanitary procedures, IUU certificates, organic certification ) Market actors should ensure they explore potential alternative sources of supply if needed The higher cost for EU producers will be mirrored by the higher cost for UK producers to export to EU Some Autonomous Tariff Quotas (ATQs) may need to be adjusted to reflect UK share of their takeup / risk of UK filling some ATQs quickly and completely, providing preferential market access. Landings of UK flagged vessels in EU27 will be limited to designated ports and will require prior notification. Relevant tariffs and import controls will also apply. 7
Key sectoral issues IT UK access to EU databases and mailing lists UK access will be removed 8