January 2005
Government to Use Greenhouse Gas Scheme for UK Environmental Regulation
The Government plans to make the market-based emissions trading system for greenhouse gases the blueprint for its environmental regulation.
The European Union Emissions Trading Scheme (EU ETS), which came into force on 1 st January 2005, imposes a limit on the amount of carbon dioxide that certain industry sectors are allowed to produce.
Companies that produce less than their allowance can sell their remaining balance on an open market. Those producing more than their limit will have to buy extra allowances, or face a fine.
"We see the markets-based approach as key. We want to move away from the feeling that environmental regulation is all about restrictions and show there is an opportunity here for businesses as well," said Elliot Morley, environment minister.
Tradable allowances could also be brought to bear on emissions of other pollutants. The Government would issue allowances on what businesses in each sector are allowed to emit, and gradually reduce these allowances to push businesses into becoming more environmentally friendly. "Businesses recognise that we have to protect the quality of our environment for people and animals, and we want to provide a flexible, markets-based approach in which to do that," said Morley.
Trading schemes also opened up business opportunities for management consultants, brokers and experts, said Mr Morley.
He added that the EU’s carbon emissions scheme marked a significant step forward in environmental regulation: "We are confident this will be a success."
One of the effects of bringing a system of allowances trading to bear on environmental issues could be to elevate environmental concerns within companies to board level. Mr Morley said: "An advantage of the market approach is that it moves the issue on to the desk of the chief financial officer, instead of being on the periphery of the company, as it used to be."
Waste Management Trading Allowances
Last month, the Government announced a new system of trading allowances in waste management. Under this scheme, which begins in April, councils will be set allowances for the amount of biodegradable waste that they can place in landfill sites.
Waste disposal authorities will be able to trade their allowances with other authorities, selling allowances if their waste has been put to other disposal routes, such as recycling, and buying allowances if they exceed their landfill limits.
The idea is to relieve the pressure on landfill sites, which are coming under stricter regulation.
To discuss how environmental regulations may affect your business, contact Aneeta Patel on 024 76 279 000.
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