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If you own or manage a business that has sites in the European Union, you will need to ensure that it is in compliance with the EU Emissions Trading Scheme (EU ETS). Professional Energy Services is here to help your business with its compliance and support you as you reduce your carbon emissions in the most cost-effective way.
It is standard for a business that needs to comply to EU ETS to present a monitoring plan when applying for a greenhouse gas emissions permit.
This monitoring plan including important information about how the business’ emissions will be measured and reported for compliance. The monitoring plan must be completed in accordance with the European Commission’s Monitoring and Reporting Regulation, and will be approved by an EU ETS Regulator. The reporting year runs from 1 January to 31 December annually.
All submitted annual emissions reports and monitoring plan must be verified by an independent EU verifier. They will check for inconsistencies and ensure the data presented in each report is accurate and in accordance with the Accreditation and Verification Regulation.
The European Commission’s Guidance on the Accreditation and Verification Regulation works on behalf of the operators of all stationary installations, verification bodies, and EU ETS regulators. It provides practical guidance on the requirements for annual verification put out by the EU ETS Directive, the European Commission’s Monitoring and Reporting Regulation and Greenhouse Gas permits/monitoring.
The EU Emissions Trading Scheme (ETS) was established in 2005. All countries that make up the European Union made the decision to impose emissions restrictions on their companies that emit large amounts of greenhouse gases each year.
The overarching goal of the EU ETS is to reduce greenhouse gas emissions from energy-intensive industries by a certain percentage each year. As of 2013, the goal was set at 1.74 percent to achieve a reduction of 21 percent by 2020.
With the EU ETS, the European Union has given CO2 emissions a price, and set incentives to reduce emissions in cost-effective ways. The EU ETS scheme has considerably reduced emissions in power generation and energy-intensive industries, by 42.8 percent in the past 16 years.
Similar to the UK EST, to comply with the EU ETS, participating companies must properly allot their given number of allowances corresponding to their CO2 emissions each year. This makes burning coal and other fossil fuels for energy more expensive, and clean power sources more cost-effective and appealing. Therefore companies become incentivised to improve their energy-efficiency, as they can opt to sell their emissions permits on the market for a financial gain, rather than use up their allowances for the carbon they produce and potential penalties if going over set limits (see below).
The EU ETS is guided by a “cap-and-trade” approach: the EU sets a cap on the amount of greenhouse gases that may be emitted each year, and companies need to hold European Emission Allowance (EUA) for every tonne of CO2 they emit within a given year. They can gain, buy, or trade these permits.
The mandates imposed by the EU ETS apply to organisations that emit CO2 from power stations, as well as energy-intensive industries (for example: oil refineries, steelworks, and producers of iron, aluminium, cement, paper, and glass) and commercial aviation. Extra-EU flights are not included in the EU ETS scope; only flights between and within countries in the EU and European Economic Area must comply.
Non-complying companies face a financial penalty if they emit more CO2 than they have been granted in allowances, these penalties are typically 100 euros per excess tonne.
Also, instead of receiving free allowances directly from the EU ETS, companies can buy credits from emission (known as carbon offsetting) and invest in projects under the Kyoto Protocol’s Clean Development Mechanism (CDM) in developing countries. This is popular with heavy energy users that cannot avoid high emissions.
Ensure your business is in compliance with the EU Emissions Trading Scheme (EU ETS)