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EUROPEAN EMISSIONS TRADING SCHEME (EU ETS)

The EU Emissions Trading Scheme (EU ETS) is a Europe wide scheme which aims to reduce emissions of carbon dioxide and combat the serious threat of climate change. EU ETS puts a price on the carbon that businesses produce and has created a marketplace for carbon trading which has been in place since 2005.

The EU ETS works on a “cap and trade” basis. EU Member State governments are required to set emissions limits for all installations in their country covered by the scheme. Each installation is then allocated allowances equal to that cap for the particular phase in question. The allocations of allowances are set out in the National Allocation Plan for the particular period. The first phase of the UK’s EU ETS included approximately 1500 energy intensive operators with a cap and ran from 2005 – 2007; Phase II of the scheme has extended its targets further and runs from 2008 – 2012.

Companies may meet their cap by either reducing emissions to below the cap and selling the surplus, or by letting their emissions remain higher than the cap and buying allowances from other participants in the EU emissions marketplace.

If reduction in the levels of carbon emissions can not be achieved, companies will find that they can be penalised at a cost of up to 100€ per tonne. This can be avoided by buying carbon credits from the marketplace. This Carbon Trading in turn raises carbon prices and enhances the financial case for emission reduction projects.

There are two phases First trading phase (2005-7) was for CO2 with expansion in second phase (2008-12) to cover all greenhouse gases.

PROjEN can offer an advisory service that includes a general insight into the EU wide ETS market, an overview of opportunities for maximising profits and investment advice, ETS risk management advise, and advise / production of ETS paperwork.

CARBON REDUCTION COMMITMENT (CRC)

In addition to the EU ETS scheme, the UK Government has brought out the Carbon Reduction Commitment (CRC) - (As detailed in the Energy White Paper May 2007) This initiative will apply to 5000 non-industrial and smaller organisations that spend approx £500,000 per annum on energy. This cap and trade regime, adopts the formula of Phase I of the EU ETS, with similar penalties for non compliance.

PROjEN will also offer support and services to assist in meeting target allocated from this scheme for qualifying organisations.