In a week when the daily volatility in the EUA markets calmed compared to September, discussion surfaced on a ‘non-paper’ (a discussion paper) produced by the EC on the “Brexit clause”. As we have discussed before (see Global Carbon Outlook: Out of Order, September 2017), if the Brexit clause is approved as EU legislation, the EC will need to amend the registry regulation to require a country signifier to be inserted into EUAs released into the market from 2018 onwards. The non-paper which has been circulated also appears to say that, in the absence of an agreement between the EU and the UK on a new trading relationship, EU law will cease to apply to the UK as of 30 March 2019. The paper argues that the installations and aviation operators in the UK would no longer be subject to any obligations as regards the EU ETS from that date. The key new point in the paper is that it suggests the EC (and potentially the EU) will interpret the future lapsing of EU law in the UK as qualifying as a “current lapsing” of UK installations obligations under the EU ETS—even though EU ETS obligations are going to remain on UK installations as they are enshrined in UK law (assuming approval of the “Great Repeal Bill”). It then argues that 2018 EUAs issued by the UK could no longer be used for compliance, in effect being invalid from the point of issue. There is now potential for a situation whereby UK installations will have compliance obligations under UK law to submit EUAs for 2018 compliance while EU law will be “voiding” UK EUAs. This suggests that UK EUAs held in the UK registry will retain legal validity in the UK, while being unusable (and non-transferable) outside of the UK. If a subsequent wider Brexit agreement is reached, then UK installations could re-enter the ETS and UK EUAs would again be fungible with other EUAs.