Carbon Trading and the Carbon Tax
Carbon Trading
is an integral part of the Kyoto Protocol and a direct result of
the Kyoto summit on climate change in 1997. The UK has the world’s
first economy-wide ‘Green House Gas trading system’.
UK organisations can be amongst the first to obtain vital experience
of trading in emissions, in short, it is designed for countries
to buy and sell their quotas for CO2 emissions.
The current market is in its infancy. Basically, if a company ensures
that it can reduce its emissions of greenhouse gases, it will be
rewarded financially.
Single or multi-site organisations, such as energy companies, water
utilities, industrial producers of gas and the retail and commerce
centre are all eligible. They are such because they are large companies,
and are responsible for Green House gas outputs within the UK.
Who is eligible for Carbon Trading?
 Defra
(Department for Environment, Food and Rural Affairs) advise that
nearly 1000 companies transferred over 7m tonnes of credits for
CO2 during the opening year of the UK’s voluntary Emissions
Trading Scheme.
Those companies who are already involved in a climate change levy Agreement, and
hence receiving a levy discount, are not directly eligible for Carbon
Trading or carbon tax. Companies who have Climate Change levy Agreements in place
(CCLA's) have current targets which they must meet independently
of the Carbon Trading initiative, in order to maintain discounts
on offer. The scheme can benefit such companies, by the purchase
of emissions allowances which can aid them in reaching their climate change levy-based
targets. They can also sell any over achievement, which can prove
a substantial source of income.
If your company operates a CO2 Reduction project already, it can
be entitled to sell any credits that are a direct result thereof
into the Carbon Trading scheme. This is pending Government approval,
and is still in the primary stages of approval.
Some companies are not in the market for emissions targeting. The
Carbon Trading scheme also offers the possibility to buy and sell
credits/allowances. This is independent of whether or not the Company
concerned emits Greenhouse Gases itself.
In short, if a company has significant energy spend, but cannot
claim a levy discount as described by IPPC, it is eligible for Carbon
Trading.
The obvious incentive is financial:
- Cash injection for direct involvement within Carbon Trading
- Savings from reducing emissions both in the interim and on an ongoing basis.
Carbon Trading, A Voluntary Initiative
The Carbon Trading initiative is completely voluntary – but
the government is currently allocating resource in order to ensure
that the necessary framework is in place for the future implementation
of such a scheme on a mandatory level.
The PR from such a scheme, both internally and externally, is clear
to see. A company could viably demonstrate its environmentally sound
image, both in house, and to its shareholders, as well as to its
peers and more importantly, its market.
Specialist Knowledge of Carbon Trading and the Carbon Tax
BIU has over twenty years’ experience
in Energy Management, with expertise directly related to emissions
reductions. All the elements which make up a reductions programme
are covered within BIU’s areas of expert knowledge.
BIU can also advise on group participation of the carbon tax trading scheme, which
is something the Government are very keen to move forward. “Pooling”
allows a single participant to be responsible for the potential
reduction for a group of organisations – an incentive which
encourages participation by more than one organisation through the
means of another. The advantages to this are clear to see, in Public
Relations, and market opinion for instance.
BIU promises to deliver a five-year reduction programme which will
ensure all targets for emissions are successfully reached.
Not sure where to start?
Let BIU do the thinking for you, and provide a series of options
on entry to the Carbon Trading scheme and associated reductions
in use of energy – or provide a turn key solution –
whichever you prefer.
Trading Scheme:
BIU can help implement systems within the Carbon Trading scheme:
- Cap-and-trade system in which allowances to emit carbon dioxide
are traded
- Other systems, such as cap-and-trade in which rights to emit
are exchanged for other things, like proof of carbon sequestration
or of avoided carbon emissions(more hypothetical than actual reductions)
- Baseline and credit systems
What risk is there?
In addition to the common risks associated with any new market,
there is the major risk of market collapse due to the lack of a
robust and deliverable commodity to trade.
BIU are aware of this risk and are in a position to pre-empt it
and safeguard against any negative impact.
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