The European Parliament has adopted draft reform of carbon market post-2020, but it is not clear if the UK will continue to be involved.

The reforms are necessary because the European Union’s emission trading system (ETS), a cap-and-trade permit system to regulate industry pollution, has suffered from excess supply since the 2008 financial crisis, depressing prices.

The surplus of EU ETS allowances has resulted in very low prices on the European carbon market – currently less than €5 per tonne of carbon dioxide (/tCO2).

This has, in turn, led to a large gulf between the carbon price in Britain and the rest of the EU following the instruction of a carbon price floor in the UK in 2013. The carbon price floor is currently set to rise to £32/tCO2 in 2020 and £75/tCO2 in 2030.

In March 2014, the government responded to the disparity by capping the rate of the carbon price support – the levy on fossil fuels which makes up the difference between the EU ETS price and the carbon price floor – at £18/tCO2 from 2016/17 to 2019/20.

The chancellor Philip Hammond recently announced that the cap will remain in place until 2020/21 in his autumn statement in November but gave no indication as to what would happen beyond then.

It also remains unclear whether the government wants to stay part of the EU ETS following the UK’s departure from the EU.

The draft European reforms, adopted by 379-263 votes, rejected a more environmentally ambitious proposal for the faster removal of surplus carbon permits from the ETS – sparking criticism from climate campaigners.

Instead, it sticks with the EU executive’s proposal for the cap on emissions to fall by 2.2 percent per year – the so-called linear reduction factor – until at least 2024.

The Climate Action Network said it “betrayed the spirit” of the Paris accord to slow global warming, while Dutch green lawmaker Bas Eickhout said provisions to protect the cement and other industries showed “the lobbyists have won out in the end.”

MEPs will now enter into negotiations with the president of the European Council on the final shape of the legislation before it is returned to the parliament.

The New Economics Foundation (NEF) argues that leaving the EU ETS would be a mistake. According to the think-tank, “a new scheme would take time to develop, and in the fight against climate change, time is not on our side – a point made clearly in the recent House of Lords paper on the complications posed by Brexit.

Submissions to the House of Lords inquiry were near unanimous in their support for the UK staying a part of the EU ETS. As 20-25% of UK emission reductions are currently met through ETS allowances, it has been estimated that leaving the EU ETS would increase the cost of the UK reducing emissions by 40%.

Brexit risks jeopardising years of domestic progress, but such commentary misses an important point: reducing UK emissions is not the primary objective of climate policy; warding off global climate change is.

The EU ETS is the largest carbon market in the world and the UK could assume a leading role in pushing for genuine reforms to tackle climate change, as is currently the case.

Brexit threatens to isolate us from our closest allies at the very time we need each other most. On big international issues, we only stand a chance of making change when we stand together.”