Air Pollution Control Equipment Services, Emissions

UK announces next steps on EU emissions trading scheme

14 March 2005 – The UK Government said on Friday that it intends to issue allowances as soon as possible to allow operators of UK installations to participate in the EU Emissions Trading Scheme (EU ETS), while initiating legal proceedings against the European Commission.

Emissions trading is a key component of UK and wider European action to tackle climate change. It gives industry an incentive to reduce carbon emissions, whilst enabling them to do so at least cost.

In order to enable the operators of UK installations covered by the Scheme to start participating fully, the Government intends to issue allowances as soon as possible. This allocation will be on the basis of the provisional total of 736 million allowances which the European Commission has already approved and will take place as soon as operators’ comments on figures published in February have been assimilated. It is envisaged that this work will be completed in late April or early May.

The Government will also be launching legal proceedings against the Commission. The Government announced on 14 February how allowances would be allocated at installation level in line with the proposed National Allocation Plan (NAP) amendment notified to the Commission last November. Since then the Government has continued to press its case for the revised allocation. However, the Commission has made it clear that it does not consider that the provisional total of 736 million allowances notified to them in April last year can be exceeded. It is therefore not prepared to consider the substance of the amendment submitted in November. The Government is disappointed at this reaction, as it was made clear that the figures in the April NAP were subject to change. The Government also considers that the proposed amendment notified to the Commission is compatible with the relevant Community legislation.

The legal proceedings will seek to require the Commission to consider the substance of the amendment, which proposed to set the total quantity of allowances to be allocated to installations in the UK at 756 million.