European Union Emissions Trading Scheme

European Union Emissions Trading Scheme

Allocated carbon allowances under the EU Emissions Trading System? We can help you report.

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Our EU ETS service will support your entire compliance journey

What is the European Union Emissions Trading Scheme?

The European Union Emissions Trading Scheme (EU ETS) started in 2005 and is the world’s largest carbon-trading scheme. It was introduced to help the EU meet its targets under the Kyoto Protocol which stipulates an 8% reduction in greenhouse gas emissions from 1990 levels. Organisations that meet the qualification criteria – typically large combustion sector and manufacturing processes – are obligated to take part.

The scheme works on a ‘cap and trade’ basis, so there is a ‘cap’ or limit set on the total greenhouse gas emissions allowed by all participants. This cap is converted into tradable emission allowances and provides an incentive for installations to reduce their carbon emissions, giving them the opportunity to sell their surplus allowances.

Participants in the carbon market are allocated traded emissions allowances via a mixture of free allocation and auctions. For each one allowance, the holder has the right to emit one tonne of CO2 (or its equivalent). Those covered by the European Union Emissions Trading Scheme (EU ETS) must monitor and report their emissions each year and surrender enough allowances to cover their annual emissions.

Those who are likely to emit more than their allocation can either take measures to reduce their emissions or buy additional allowances; either from Member State held auctions or the secondary market – companies who hold allowances they do not need.

The scheme is split into phases. Phase III started in 2013 and will run until 2020. The biggest changes in Phase III are:

  1. Design – a centralised EU-wide cap on emissions has been set.
  2. The ‘Cap’ will reduce over time – the ‘cap’ will decline by at least 1.74% a year so that emissions in 2020 will be at least 21% below their level in 2005.
  3. More will be covered – the scheme will include the production of all metals (including aluminium). For some sectors, it will include the emission of other greenhouse gases in addition to carbon dioxide. The scheme was also meant to be extended to the aviation industry from January 2013, covering all flights taking off and landing in the EU, including those originating from or travelling to non-EU countries. However, in November 2012 the European Commission decided to defer the extension of the scheme to extra-EU flights until after the International Civil Aviation Organization (ICAO) General Assembly in Autumn 2013. This was on the expectation that a global agreement on greenhouse gas mitigation from aviation will be reached. The ETS continues to apply to intra-EU flights from January 2013. The latest information on the EU ETS and aviation can be found on gov.uk.
  4. Opt-out – the Department for Energy and Climate Change (DECC) has introduced an opt-out provision for small emitters and hospitals in the UK, allowing them to move to a more “light-touch” scheme with lower administrative costs (which hit disproportionately smaller companies). The opt-out will deliver an equivalent carbon reduction.
  5. Allowances – at least 50% of allowances will be auctioned from 2013 (rather than given to installations). Use of Clean Development Mechanism (CDM) allowances will be more tightly restricted to no more than 50% of the reductions required.

How Utilitywise can help

Utilitywise provides an all-encompassing EU ETS service. From initial meeting right through to improvement reporting, we will support you through your entire compliance journey.

The EU ETS Compliance Management Service from Utilitywise provides you with:

  • A dedicated Carbon Consultant, who will guide you through the process.
  • Advice on the compilation of a clear, accurate and complete audit trail.
  • Energy Legislation compliance.
  • Advice on whether or not you would need to buy allowances.
  • Formal Internal Audit and Report.
  • Advice on further actions required.

Why choose Utilitywise?

Utilitywise has a team of dedicated Carbon Consultants and Data Analysts who are able to offer you this service at the highest level.

Our expert team:

  • Will completely take care of this for you, giving you the time to concentrate on running your business.
  • Provides you with essential guidance and support to make life simpler for you.
  • Interprets the legislation for you to avoid confusion.
  • Informs you on any legislative changes that may affect your organisation.
  • Helps you to become more energy efficient which can reduce your consumption, lower your carbon emissions, and save you money.
  • Provides you with peace of mind and reassurance that your compliance is in safe hands.

Get in touch

Learn more about how we can support your EU ETS compliance efforts.

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