EU-ETS (EU Emissions Trading Scheme) micro-guide

What is its purpose?

A route to reducing greenhouse gas emissions amongst energy intensive industries. The scheme essentially places a cap on a company’s emissions – go over the cap and face a hefty fine come in under the cap and either keep the surplus for future needs or sell on to another company that is short on their allowances. Allowances are reduced over time to reduce emissions. 

Does it affect me?

Yes if:

You are an energy-intensive industry sector, as defined by the permit regulations, including but not limited to:

Oil refineries (off-shore),  Iron and steel production, aluminum and other metals, Cement and lime manufacturing,  Paper and pulp manufacturing, Food and drinks processing, Glass production, Vehicle manufacturing and Commercial aviation. The list of conditions and sectors for which companies require an EU-ETS permit (Annex I, p. 43) can be found at here.

What do you need to do to comply?

Companies must meet their targets by either reducing emissions below the cap or buying permits to make up the shortfall. Naturally this means that you must monitor and annually report your emissions and a monitoring plan must be proposed when applying for a GHG emissions permit. 

Significant civil penalties could run into the millions.

What are the consequences for not complying?

Significant civil penalties that could run into the millions. The calculations are complex and multi-faceted, an indication of the different elements of a fine and the calculations can be seen in the government guidance here.

What can you do to minimise the impact?

There are two main areas to focus on, firstly is getting it right and ensuring you are complying either by having the right competence in the business or by employing the services of an expert like EEF who can help you with your EU-TS permit, from data collection to identifying energy improvement possibilities and data submission. The second area is to reduce your emissions with an energy strategy that is fit for the needs of the business, an energy management system like ISO50001 would be something to consider.

How can EEF help?

For help and guidance on carbon and energy legislation, call 0808 168 5874.

 See the rest of our microguides and other advice on carbon and energy compliance issues.

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