Emission trading to begin early

DEFRA has indicated that the first CO2 emission reduction allowances will begin being auctioned late next February, ahead of the trading scheme’s official April launch but slightly behind the proposed auction schedule.


The UK is leading the world in putting in place a fully-developed CO2 emissions trading scheme, but companies wanting more time to prepare for the scheme have asked for the auctions to be delayed, according to Henry Derwent, director of emissions trading at DEFRA.

Britain announced its emissions trading scheme last August as part of its drive to cut greenhouse gas pollution. Under the voluntary scheme, companies can either reduce their emissions in-house or will be allowed to buy the ‘right to pollute’ from companies that have exceeded their targets.

Companies have until the end of the year to agree voluntary caps on their greenhouse gas emissions and to submit bids for a share of a £30 million Government incentive to participate in the scheme. Once emission caps have been agreed, the scheme will allocate greenhouse gas emissions ‘credits’ to companies, which can then be traded. There will be a target level for emissions, with under-performers buying ‘carbon credits’ and over-performers having credits to sell to the market.

There is also work under way at the British Standards Institute (BSI) on accreditation and design of these incentives, and on the reporting of emission reductions. The companies that pledge to cut the most pollution will gain a cash incentive taken from a £215 million government incentive spread over five years starting in 2003-2004.

The government has set a target to reduce CO2 emissions to 20% below 1990 levels by 2010, well beyond its Kyoto Protocol commitment of 12.5%. Emissions trading will form part of the government’s wider Climate Change Programme. Government figures estimate CO2 emissions for 2000 will be around 150 million tonnes of carbon equivalent.

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