Quarterly Report - March 2019 QR

the most favoured nation tariffs, include ceramic tiles, tableware and kitchenware from China, which have been deemed to be traded unfairly and risk disadvantaging British business. They will be continued (at the EU level) of between 18% and 58% on tableware, pending review. Chemicals regulation in a no-deal Brexit will place new duties on ceramic manufacturers who source materials from the EU. A separate UK REACH system could mean members become regarded as an importer, and will need to apply for authorisations. Consult the HSE’s latest guidance .

However, the direct reference in the Brexit Political Declaration and subsequent comments from BEIS officials and ministers, clearly indicate a UK ETS linked with the EU ETS is the front runner option. Officials have confirmed consultation and stakeholder engagement will take place soon. Meanwhile, work on the raft of EU ETS Phase 4 implementation measures continues. In February 2019, the European Commission adopted a Delegated Decision on the Phase 4 carbon leakage list which, after intensive advocacy by the sector spanning several years, includes all ceramic sectors and subsectors that participate in the scheme. The European Parliament and European Council now have two months to formulate any final objections. If they do not, the delegated act will finally enter into force. Discussions on benchmarks and free allocation adjustments due to production level changes continue. Back in Aug 2018, BEIS and the Environment Agency confirmed that, irrespective of the Brexit outcome, the UK will participate in the 2019 cross-EU data collection exercise to determine the National Implementation Measures (NIMs) for the first allocation period of Phase 4 (2021-25). Following on from this, the Environment Agency has recently published a NIMs-specific newsletter. The key message from this is that eligible installations that wish to apply for free allocation of allowances must submit a completed baseline data report, a validated and complete monitoring methodology plan, and an associated verification report from an accredited verifier by 30 th May 2019. Further information is expected from the Environment Agency imminently and the confederation will issue specific guidance on this matter soon. Stay updated: More than 400 people have signed up to receive the latest political updates in the confedera- tion’s fortnightly newsletter. It also includes the most up to date guidelines from government, funding and export opportunities. If you do not already receive this please subscribe. Brexit: Ceramic Sector Summit: A free event will take place on March 29, at the Potters’ Club in Stoke. The event coincides with the key date, the day when the divorce from the EU should take place. It’s a chance to bring the sector together to meet Government officials to discuss the very latest on the departure from the EU. To book.

Energy and Environment

EU ETS / Post-Brexit

2018 Emissions - Members in the main Phase 3 scheme are reminded, irrespective of the Brexit outcome, that the 2018 compliance deadlines have been brought forward to 11 th Mar 2019 (for reporting and proposing emissions in the Union Registry) and 15 th Mar 2019 (allowance surrender). Meanwhile, members in the small emitter opt-out scheme are reminded the reporting deadline remains unchanged at 31 st Mar 2019. 2019-20 Emissions - It remains unclear how greenhouse gas emissions from industrial installations will be regulated in the UK during 2019 and 2020. Under a Brexit deal scenario, we will remain in the EU ETS until the end of the Phase 3 in 2020. However, in the event of no-deal a temporary Carbon Emissions Tax (CET) will be introduced at £16 / tonne. As this issue has yet to be resolved, Government has confirmed that, regardless of the Brexit outcome, it has suspended issuance of 2019 allowances (free allocation and auctioning) during Q1 2019. This confirms what the confederation had long been flagging that operators will not be able to ‘borrow forward’ from their 2019 free allocation to meet their 2018 surrender obligation. In the event of no-deal, the European Commission has confirmed that UK accounts in the EU Registry will be frozen. Given banked allowances could represent quite valuable assets, we continue to urge members likely to hold surplus EUAs (after meeting their 2018 compliance obligations) to take swift action to avoid losing access to them. 2021-30 Emissions - Government continues to reiterate that all four post-Brexit options (EU ETS Phase 4; UK ETS linked to EU ETS; standalone UK ETS and a longer-term carbon tax) remain ‘on the table’.

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