September 24, 2021

Volume XI, Number 267

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UK Government Publishes Guidance on Supply of Emissions Allowances in UK ETS

On May 10, the UK Government published its guidance on the supply of emissions allowances in the UK Emissions Trading Scheme (UK ETS). The UK ETS was introduced on January 1, replacing the United Kingdom’s participation in the EU Emission Trading System following the end of the post-Brexit transition period.

The guidance set forth by the UK Government includes:

  • hosting UK ETS auctions every two weeks from May 19;

  • announcing the first trade date on the secondary market: the UK Allowance Futures Contract is May 19, and the UK Allowance Daily Futures is May 21;

  • announcing that the 2022 auction calendar will be published by July 15;

  • publishing the allocation table setting out stationary installations’ entitlement to free allowances for 2021-25. The aviation allocation table will be published in June and will set out the entitlement for aircraft operators. Free allocations will follow after the publication of the tables. Free allocations for 2022 will be issued by February 28, 2022 for both stationary and aircraft operators; and

  • managing the UK ETS through an auction reserve price (the minimum price for bids is set at £22) and using the cost containment mechanism (CCM) to mitigate sustained high prices. For the CCM to be triggered, the average December 2021 futures contract price as traded on the Intercontinental Exchange would need to remain above £46 for three consecutive months.

The UK Government guidance on UK ETS.

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume XI, Number 134
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About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

44-0-20-7776-7666
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