UK companies use EU to hedge carbon amid post-Brexit uncertainty

LONDON/BRUSSELS (Reuters) by Susanna Twidale and Kate Abnett – Some British companies are still buying permits from the EU carbon market as uncertainty over Britain’s planned domestic carbon market means they can’t yet use it to protect themselves against future price rises. When utilities sell power — often years in advance — they also buy Emissions Trading System (ETS) permits to hedge the carbon price exposure of that future power generation. British emitters were among the biggest buyers of permits in the EU ETS before Britain left the system at the end of 2020 and launched a domestic equivalent. The government has said auctions of UK carbon permits will start no later than the second quarter of 2021. But for now, there are no British permits available. “For all those installations that were previously covered by the EU scheme, what are they subject to now at this moment in time?” said Mark Lewis, Chief Sustainability Strategist at BNP Paribas. Redshaw Advisors and ClearBlue Markets, companies that assist emitters with carbon market compliance, said they have British clients buying EU carbon allowances (EUAs) to hedge their future carbon price exposure. UK-based firms can still buy EU permits and have until end… continue reading

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