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UK emissions scheme sees 7mln T CO2 change hands

Date: 14-May-03
Country: UK

"These are impressive figures for this fledgling market - UK business has gained valuable experience of trading in environmental markets," said environment minister Michael Meacher in a statement.

The scheme, started in April 2002, was the world's first economy-wide national emissions trading market.

Emissions trading enables companies that cut greenhouse gas emissions above government agreed targets to sell allowances to those unable to meet the reductions. The emissions are seen by many scientists as contributing to global warming.

The British government kickstarted the scheme with cash incentives for 32 organisations, including Shell, BP, DuPont and British Airways, of which 31 met their targets.

Another 5,000 firms risked losing hefty tax rebates on energy use if they missed their targets, of which 866 entered trading, mostly as buyers. Thirty-five other players also traded, the government said.

The government said last month that these 5,000 firms had slashed emissions of carbon dioxide by 13.5 million tonnes in 2002, or by more than three times its target of a 3.5 million tonne cut.

It said it had allocated around 31.5 million emissions allowances to companies, over 7.2 million of which had been exchanged in about 2,000 transfers in the scheme's first year. These transfers could be between buyers and sellers or within a company, it said.

The government hoped for an large uptake to help meet its commitments under the United Nations Kyoto Protocol on climate change, ahead of mandatory European trading from 2005 and possible global trading.

"I am sure we will continue to maintain our lead and establish the UK as a centre for greenhouse gas emissions trading as we move towards international trading systems," Meacher said.

The U.N. said last week that Britain was well on course to meet its emissions goal under the Protocol of a 12.5 percent cut on 1990 levels by 2010.

Industry analysts said last month the scheme had failed to balloon into a busy market in its first year as the companies risking losing tax rebates had not bought as much as expected, though firms had learned to set up trading mechanisms.

Meanwhile they said some companies had made easy money from the scheme by receiving government cash for committing to easily achievable targets and then by selling the allowances on the market.

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Reuters
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