Carbon trade 'mess' leaves businesses in the dark

20 January 2005
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20 January 2005 | David Arminas

Many purchasers will have to wait at least a year before knowing what machinery and power generating units they need to help their company meet allowable carbon dioxide (CO2) emissions targets.

Ian Dobson, chairman of the CIPS energy committee, said the delay is because the government has not yet allocated emission levels to individual high-energy user companies. He described the situation as "a bit of a mess".

Companies expecting to exceed limits on CO2 emissions will be forced to buy carbon credits, which are trading at around ?8 a tonne this month, the official start of business.

Dobson believed that companies want to buy credits now while they are cheap.

Heavy polluters such as power stations, steel plants and paper works know they have to reduce emissions by some degree.

The real problem will be for large firms that learn they emit close to their allowable limit and then have to decide whether to buy credits or invest in new equipment, he said.

The Department for Environment, Food and Rural Affairs (Defra) revised its estimates of CO2 emissions for industrial sectors in October, but a spokesman said it was unclear when final figures would be available.

He added that the revisions will allow companies to emit more CO2 than under its previous plan, giving them some room for manoeuvre.

But he said the revision must be agreed with the European Commission (EC), which is not happy with the higher limits.

Jeremy Nicholson, director of the Energy Intensive Users' Group, said that its members had warned the government a year ago that the start date for the emissions trading scheme "would be tight".

"Ideally Defra could give individual companies their targets right now and the EC agree to them," he said.

The UK has set a target of a 20 per cent reduction in CO2 emissions on 1990 levels by 2010.

SMjan2005

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