There's No Smoke If Money Is Concerned; Clean Air: UK's Emissions Market Launches to Help Companies Reduce Pollution
Byline: Neil Chatterjee
British firms are hoping to make money out of cutting the greenhouse gases that contribute to global warming, as Britain's fledgling emissions trading market gets its official launch today. Emissions trading has been embraced by Britain, Denmark, Norway and the European Union as a way of helping companies to reduce pollution as part of the UN Kyoto Protocol.
The UK target is to cut greenhouse gas emissions by 23 per cent on 1990 levels by 2010, well above the average of 5.2 per cent that industrialised countries are committed to by the protocol.
Certain companies have voluntarily agreed individual targets with the Government, for which they can gain a cash incentive or tax rebates.
If a company reduces its emissions by more than its target or invests in renewable energy it gains credits or allowances, which it can sell. Companies that do not make their targets can buythese allowances to offset their emissions, either directly or through brokers.
'It's been free to pollute, now it costs to pollute,' one of the new breed of emissions traders said. Though Britain's scheme is is starting only now, forward trades under the UK regulatory system began last September.
Market prices for UK emissions credits or allowances are at pounds 3 to pounds 6 per tonne of carbon dioxide, brokers and traders said. 'This is the range of prices, it's not a hugely liquid market yet but it has potential,' said Albrecht Von Ruffer, broker at emissions trader Natsource.
Recent weeks have seen a handful of trades, though details remain confidential, said Mr Von Ruffer.
Emissions trading was one of the means set out by the Kyoto Protocol to reduce pollution. Globally there have been more than 65 trades totalling 50 million to 70 million tonnes over the past five years, according to a report released this month by the US environmental group The Pew Centre.
However the world's biggest polluter, the United States, pulled out of the deal last year and has rejected a national emissions trading system for carbon dioxide, saying it would hurt economic growth.
The protocol could lead to a global market in greenhouse gas emissions from 2008. The UK is keen to kick start the process.
'We think this gives British companies experience of trading and a first advantage - and it's a good way of reducing emissions,' said a Government spokesman. …