Energy Services


European Emissions Trading Scheme

The EU ETS is one of the policies being introduced across Europe to tackle emissions of carbon dioxide and other greenhouse gases and combat the serious threat of climate change.

The scheme commenced on 1 January 2005. The first phase runs from 2005-2007 and the second phase will run from 2008-2012 to coincide with the first Kyoto Commitment Period. Further five-year periods are expected subsequently.

The scheme will work on a "Cap and Trade" basis. EU Member State governments are required to set an emission cap for all installations covered by the Scheme.

Each installation will then be allocated allowances for the particular commitment period in question. The number of allowances allocated to each installation for any given period, (the number of tradable allowances each installation will receive), will be set down in a document called the National Allocation Plan. (NAP)

Member states must ensure that each installation covered by the Scheme holds a greenhouse gas emissions trading permit (in effect, a licence to operate and to emit carbon dioxide). Each permitted installation will receive an allocation of allowances. The number of allowances allocated to each installation will be based on the Member State's National Allocation Plan.

Member states must allocate allowances to installations by 28 February each year. Member States must ensure that by 30 April each year at the latest, the operator of each installation surrenders a number of allowances equal to the total emissions from that installation during the preceding calendar year. Installations will therefore have to surrender allowances for the first time by 30 April 2006 equal to their emissions during 2005.

Installations will be required to have their annual emissions verified. A verification opinion verifying the amount of emissions for the previous calendar year must be submitted to the relevant Regulator by the end of March each year. Allowances equal to these verified emissions will then be retired.

An Installation will have to purchase extra allowances if the installation has emitted more carbon dioxide than its allowance or can sell surplus allowances once verified if it has not used its full quota.

Installations not surrendering sufficient allowances to cover their emissions will incur penalties that have been set at:-

  • Phase 1 2005-07 at 40EUR per tonne
  • Phase 2 2008-12 at 100EUR per tonne

The UK National Allocation Plan (NAP) identifies in the region of 1,200 installations included in Phase 1.

The installations come mainly from the power generation, offshore exploration, ferrous metals, minerals and paper/board industrial sectors. Another qualifying criterion is any installation that has combustion plant in excess of 20MW thermal input. This affects a number of installations in the public sector such as universities and hospitals as well as other industrial sectors including chemicals, food & drink, and ceramics.

energyTEAM will be pleased to help you in a number of ways:-

  • Awareness days
  • Monitoring and reporting support
  • Verification services