The EU Greenhouse Gas Emissions Trading Scheme (EU ETS) came into effect at the beginning of 2005, as part of the EU target to reduce carbon emissions by 12.5% by 2010 set by the Kyoto Protocol.
The scheme, which came into its second phase at the beginning of 2008, accounts for around (40%) of the EU’s carbon dioxide, and aims to reduce the UK’s CO2 emissions by 65 million tonnes.
The scheme aims to encourage firms which emit a large amount of carbon dioxide to reduce their emissions by requiring them to meet emissions reduction targets set to them by the government. They can do this by either curbing their emissions or purchasing emissions allowances – or carbon credits – from other trading participants.
How does this affect my business?
Although the EU ETS doesn’t have a direct impact on small businesses, with rocketing fuel prices and rising overheads, there is no doubt that it will eventually affect everyone – from the airlines and aluminium producers to shops and cafés on local high streets.
In its ‘Regulatory Impact of the EU ETS’ report, released in May 2004, the government agreed. “In the long run, most businesses will be affected by the EU ETS in one way or another due to an expected rise in electricity prices,” said the report.
And with electricity prices now predicted to rise by 50% by 2010, the best thing for businesses to do to avoid the charges associated with the scheme is to make sure they reduce their energy consumption as much as possible.