HM TREASURY News
Release (PN 95/08) issued by COI News Distribution Service. 18
September 2008
The Exchequer
Secretary to the Treasury, Angela Eagle MP, today announced that
the UK's first auction of carbon trading allowances - under
the EU Emissions Trading System (EU ETS) - will be held on the 19
November, 2008, making the UK the first country in Europe to hold
an auction in Phase II of the EU ETS.
The EU ETS sets a cap on the total emissions from the main
industrial sectors across Europe, covering more than 10,000
installations in the energy and industrial sectors. The UK is one
of the Member States going furthest on auctioning in Phase II,
within the limits set by the EU Directive.
Angela Eagle said:
"The UK is leading the way across Europe in efforts to cut
carbon emissions and ensure companies work now to put in place the
long term solutions to tackle climate change. Auctioning carbon
allowances will create greater incentives for companies to reduce
emissions and provide stability and transparency in this emerging market."
The Treasury has appointed Defra to conduct the auctions, and
Defra has appointed the UK Debt Management Office (DMO) to act as
its agent in running the auctions in Phase II. Environment
Minister, Phil Woolas said: "The UK is at the forefront of
the fight against climate change and putting in place tools which
mean that what's good for the environment is also good for
business. Auctioning these allowances marks an important step
forward in developing a system where market forces create
financial incentives for major carbon emitters to reduce their
emissions. This will help stimulate the development of green
technology and British business can begin to realise the benefits
of being leaders of the low carbon revolution."
Notes for Editors
1. The ETS currently covers more than 10,000 installations in the
energy and heavy industrial sectors. These sectors are
collectively responsible for close to half of the EU's
emissions of Carbon Dioxide.
2. Emission allowances, each representing the right to emit 1
tonne of carbon dioxide, are issued to operators in the scheme and
the limit is set by issuing a fixed number of allowances for each
trading period. Phase I was the first trading period and covered
2005-2007. During this period, almost all allowances were
allocated to participants for free. Phase II runs from 2008-2012,
covering the first commitment period of the Kyoto protocol. In
Phase II, the EU Directive sets a limit on the maximum amount of
allowances that can be auctioned of 10%.
3. The UK National Allocation Plan for the second Phase of
trading in the EU ETS (2008-2012) sets aside 7% of the allowance
cap for auctioning, amounting to approximately 85 million
allowances over the phase. As set out in the UK's Vision
Statement on Emissions Trading, published in 2006, the Government
supports the use of auctioning to allocate allowances, as it is
the most transparent and open way to allocate the allowances. This
will improve the efficiency of the EU ETS as allowances go to
those who value them the most.
4. The secondary legislation governing auctions was introduced by
the Government earlier in 2008, and can be found at:
* http://www.hmtreasury.gov.uk/consultations_and_legislation/community_emissions/consult_community_emissionsscheme.cfm
5. Further information on the Phase II of EU ETS in UK can be
found in DEFRA and DMO websites:
* http://www.defra.gov.uk/environment/climatechange/trading/eu/index.htm
* http://www.dmo.gov.uk/
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