EU Emissions Trading Scheme
The EU Emissions Trading Scheme (EU ETS) is a Europe-wide scheme, aimed at reducing industrial carbon dioxide emissions and combating climate change. The EU ETS effectively puts a price on carbon and follows a ‘cap and trade’ principle. The scheme has been in place since 2005, and is the first scheme of its kind in the world.
Factories or installations covered by the scheme, including BLA lime installations are required to monitor and annually report their CO2 emissions. Companies receive an emissions allowance each year and must give back enough allowances to cover their emissions at the end of every year. If they have received more allowances than they require, they can sell them to another company who needs them. If they require more allowances to cover their emissions they have to purchase them at market value.
2013 and beyond: Phase III
Phase III of the EU ETS began in 2013 and aims to deliver two-thirds of the EU’s unilateral 20% emissions reduction target on 1990 levels by 2020. In December 2011, the UK submitted its National Implementation Measures (NIMS) to the European Commission, which details the levels of free allocation of allowances for each installation between 2013 and 2020.
The scheme plans to implement a further EU-wide cap on emissions, increase auctioning of allowances and restrict the availability of free project credits sourced from outside of the EU, to further improve the effectiveness of the scheme.
The UK lime industry has been recognised as being at risk of carbon leakage, which is where production facilities relocate to countries where climate change policies are less stringent and costs are reduced. Fortunately, the EU ETS scheme has acknowledged the importance of maintaining international competitiveness.