Shell launches its own emissions trading scheme

The Royal Dutch/Shell Group has launched an internal emissions trading system that will commit members of the group to reducing carbon emissions by two percent over the next three years.

Members of the Shell Group will be issued with permits each worth 100 tonnes of carbon dioxide or its methane equivalent. These permits will amount to 98 percent of the emissions Shell Group members made in 1998 (the most recent data available), thereby committing them to make a two percent reduction over the next three years.

The scheme, known as Shell Tradeable Emission Permit System (STEPS), will operate via an internal website managed by Shell Energy, the Group’s European energy trading unit.

STEPS will cover 30% of the Group’s total emissions. Chemicals, refining and exploration and production businesses, from North America, Europe and Australia are all represented in the system.

The participants can achieve their target in two ways: either by buying permits or by investing in their businesses to reduce emissions and then selling off their surplus permits. As there are a limited number of permits, it is not possible for emissions to increase overall.

The company intends to make an overall 10 percent reduction in its greenhouse gas emissions, compared with its 1990 levels, by 2002. Participants in STEPS will use the permit trading systems as a method to achieve their contribution to the overall Group target.

Most oil companies prefer the use of market mechanisms to reduce greenhouse gas emissions, and Shell hopes to use the experience derived with STEPS to persuade governments that national emission trading systems are workable. “We are trying to create something that we feel fits in with the schemes being looked at internationally,” a Shell spokesperson told edie. “We will be monitoring it, and other businesses within Shell will be joining, so it’s evolving all the time. We hope that the experience will be useful.”

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