The concept of GHG emissions trading stems from the Kyoto
Protocol. The more than 180 countries that signed the Protocol have
committed to reduce their collective greenhouse gas emissions with
at least 5 % compared to the 1990 by 2008-2012. To meet this
target, cuts have to be made by the national industries and
individual large companies. A trading scheme provides
countries, companies, and organisations with the flexibility to
determine the most economic means to reduce emissions.
International trading schemes
In Europe, the European Directive on Emissions Trading (EU ETS)
will enter into force on January 1, 2005. Companies covered by the
scheme will have to limit their CO2-emissions according to
allocated allowances. Companies that fail to meet their emissions
allowance will be penalised while companies who perform below the
target can sell surplus allowances or retain them for later use.
Under the European scheme, CO2- emissions become a liability or an
asset depending on the company’s ability to manage its
emissions.
National trading schemes
Countries like Denmark and the United Kingdom have already
instituted national trading systems. A number of other countries
and the European Union are planning implementation of emissions
trading schemes in the pre-Kyoto Period, i.e. before
2008.
In a national emissions trading scheme, companies can cut their
own emissions by buying compensation credits from companies that
are performing at a level where their emissions are well below the
actual emission allowance.
The various national schemes have different rules and
requirements for how to perform the
transactions. Please contact us for further
information.
Where do I go from here?
- If you operate in Europe within sectors such as energy, metals,
minerals, or pulp and paper, your company may have to comply with
the requirements of the new European emissions trading scheme. If
so, you should continue to read about the European Directive on Emissions Trading
(EU ETS).
- Certain countries have already implemented national trading
schemes. If you operate in the UK, you should begin reading about
the UK Emissions Trading Scheme.
