UK Climate Change Programme 2006 - JNCC - Defra

Business
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47. In November 2004, six leading companies restated
their commitment to the UK ETS by offering an
additional 2.4 MtC emissions reductions relative to
their baselines by 2006. This helped to reduce the
overall surplus of allowances in the market and to
keep the scheme on track. In considering the
future policy mix (see paragraphs 11 and 53) the
Government will take full account of the
experience gained from the voluntary UK scheme.
48. Site closures and other changes of operation are
factored into annually amended baselines. Figure
1 shows planned and actual emissions reductions
due to the scheme.
Direct Participants’ planned and delivered reductions in
emissions levels
Reduction in emissions levels due to
the Scheme (MtCO 2e
)
7
6
5
4
3
2
1
0
2002 2002-
2003
Actual
2002-
2004
2002-
2005
Planned
2002-
2006
49. Participants have gained valuable experience in
developing emissions reduction strategies as well
as learning about the mechanics of trading and
how to monitor, report and verify their emissions.
The Government has also learnt valuable lessons
from the development of the scheme, notably the
importance of incorporating emissions projections
into baseline setting, to ensure “real and
additional” emissions reductions, and the fact
that trading has delivered more emissions
reductions than expected.
50. The UK ETS has given UK business a ‘first-mover
advantage’ on the global carbon trading market.
Companies providing emissions trading services,
such as brokerage and verification, have gained
experience that places them in a strong position
as EU and international emissions trading
develop. In addition, the UK Emissions Trading
Registry (ETR) has been adapted for use in the EU
scheme and the UK’s EU/UN registry has now
been licensed to 16 other countries.
51. In the Pre-Budget Report 2004, the Chancellor
announced that Defra and HM Treasury would
jointly sponsor a review into innovation in energy
efficiency. The purpose of the review was to
examine how a step-change in energy efficiency
in the domestic, business and public sectors in
the UK could be delivered cost-effectively and
how energy efficiency improvement could be
embedded into decision making across the
economy. A summary of the principal conclusions
of the review was published alongside the Pre-
Budget report in December 2005. The Carbon
Trust and the Energy Saving Trust published
detailed, independent reports to Government at
the same time.
52. The Carbon Trust concluded that there is
significant scope for cost-effective energy
efficiency and emissions reductions in large nonenergy
intensive businesses and public sector
organisations. It put forward a proposal for a
new, mandatory auction based UK emissions
trading scheme, which would not be linked to
the existing voluntary market, that would target
energy use by large non-energy intensive
businesses and public sector organisations not
covered by the EU emissions trading scheme or
climate change agreements.
53. The Government is considering the proposal,
which raises some important issues, and will
decide in due course whether to take it forward.
As well as exploring the potential environmental
benefits of such a scheme, we will also examine
the impact of such a scheme on different sectors,
including implications for regulatory burden and
competitiveness. We will also consider whether it
would be consistent with the Government’s
Better Regulation principles.
Small and medium-sized businesses
54. The Carbon Trust launched a pilot Energy
Efficiency Loan scheme for SMEs in 2002. It