The UK government intends to remain within the EU’s emissions trading system (ETS) until at least 2020, Claire Perry has said.

But the energy and clean growth minister told peers that Brexit opens up future opportunities to develop a more effective carbon pricing regime within the UK.

Giving evidence to the ongoing House of Lords EU energy and environment sub-committee investigation into the impact of Brexit on UK efforts to tackle climate change, Perry said the government is ‘aware of the need to provide certainty” to industry regarding the UK’s participation in the ETS.

Industry nervousness about whether Britain will remain part of the world’s biggest carbon trading market has been compounded by the draft EU-UK transition deal, published on Monday, which shows that it is one of the areas yet to be agreed between Brussels and London.

Perry backed emissions trading, which she described as the ‘least interventionist and most sensible’ way to shift investment from fossil fuel generation to lower emission alternatives.

She said: “The intention is to remain part of the ETS until the end of phase 3.

“At the moment we want to be a good participant.”

Jonathan Holyoak, director: EU Energy and Climate Change at the Business, Energy and Industrial Strategy (BEIS) department, said details on the UK’s allowances still needed to be ironed out during the Brexit transition period.

But while the UK wanted to continue to participate in the ETS, Perry said that the government would explore ways to improve carbon trading within the UK.

“If there is a long-term opportunity to improve carbon pricing signals in the economy by amending or changing the relationship with the ETS, we would be short-sighted not to take that.

“It would be a dereliction of duty not to look at ways of sending stronger carbon pricing signals in the UK.

“We’re not looking to create uncertainty and disruption but we have a duty to see if there is a better and deeper scheme.”

Perry also criticised an attempt last year by the European Parliament to cancel UK ETS allowances issued for 2018 if no post-Brexit trade deal is agreed with the EU.

She said that the bid to cancel emissions allowances, which had been headed off by the European Commission, was not ‘helpful’ to continued co-operation between the EU and the UK on tackling climate change.

But she said UK efforts to cut greenhouse gas emissions would not be hit by the exit from the EU’s climate change framework because many domestic standards are more stringent than those handed down from Brussels.