Article 7 of 20 – “Early experiences with emissions trading in the UK”

So, this –

Roeser, F. and Jackson, T. 2002. Early experiences with emissions trading in the UK. Greener management international, Vol (39), p.43-54

was a sobering read. Written in 2002 when it was clear already that the whole thing was full of holes. The excerpts below are only part of the whole sorry picture. Of course, we’re heading back down the ETS route, and as I was reading this, it occurred to me that if you jumped in a time machine and went back and told someone in 2002 that in 2021 the government would be talking about an ETS and CCS to push as-yet-not-really-occuring-decarbonisation, they would have looked at you as if you were mad. And yet here we are…

Excerpts

“The Kyoto Protocol marks the birth of a carbon market which, eventually, will allow carbon emissions to be traded on a global scale (Skea 1998). First steps towards implementing this new market have already been taken and include the launch of pilot greenhouse gas emissions trading regimes at the national and subnational level.” (Roeser and Jackson, 2002: 44)

“In April 2002 the UK became the first country introduce a fully fledged industry-wide emissions trading scheme (ETS) as one of a number of tools to achieve its Kyoto Protocol targets.” (Roeser and Jackson, 2002: 44)

In stating that “Emissions Trading will… set a framework for the UK to move efficiently to a low carbon economy (DETR 2001: 48), the government ascribes a critical role to this new policy tool to achieve a directional turn away from the currently fossil-fuel-based-economy. (Roeser and Jackson, 2002: 44)

The core of the paper will be an analysis of the emissions profiles of FTSE 100 companies. (Roeser and Jackson, 2002: 44)

It is a voluntary downstream trading system targeted at energy end-users rather than energy producers…. Certain emissions sources, such as most transport activities, methane emissions from landfill and emissions from power generation, are excluded… These reduction targets were determined via an auction which took place in February 2002.

(Roeser and Jackson, 2002: 45)

…It is doubtful whether the UK ETS will help the UK achieve its short-and long-term climate change policy objectives, for a number of reasons.

With 34 direct participants the UK market is relatively small. As participation si voluntary, only companies with decreasing emissions have taken on absolute targets which, in turn, are relatively low compared to overall emissions. (Roeser and Jackson, 2002: 46)

If one looks at the largest industrial carbon dioxide emitters, which are cement, iron or steel manufacturing, brick and lime manufacturing, chemicals and the fuel industry (See 2001), very few are actually represented in the direct part of the scheme. With nearly 6,000 participants, the agreement sector now makes up the core of the scheme, quite contrary to policymakers’ original intentions. In addition, there have been serious allegations of ‘hot air’ trading, particularly in the case of the participating chemicals companies, and of non-additional emissions reductions, which merely represent business-as-usual scenarios. In fact at least 50% of claimed reductions are alleged to fall into this category (ENDS 2002). (Roeser and Jackson, 2002: 46)

As the Sustainable Development Commission (SDC, 2001) suggests, the use of financial incentives in the UK ETS has inverted ‘the polluter pays’ into a ‘pay the polluter’ principle. Together with the free allocation of emissions allowances, this clearly sends the wrong message to industry. (Roeser and Jackson, 2002: 47)

The reported data is seldom broken down by source, activity, business unit and geographical region, and companies often fail to include all their activities in the data collection process. A number of companies even exclude some of their highest impact activities: for example, an electricity generator that excludes emission from power stations, beverage producers that do not cover emissions from the fermenting process, or a mining company that excludes emission from electricity purchased. (Roeser and Jackson, 2002: 48)

The observations from the emissions data are particularly interesting in the UK ETS context as they provide an insight into the negotiating position of different industry sectors and show how the current scheme design has, in part, been informed by industry pressure and the desire to protect business from financial risk…. (Roeser and Jackson, 2002: 51)

The development of the scheme appears to have been rushed, driven by political interests to be a ‘first mover’ and constrained by the complicated institutional architecture of the existing energy policy mix…. The current scheme fails to constitute a significant step towards the UK’s long-term climate change policy aim of taking the economy into a low-carbon future. (Roeser and Jackson, 2002: 52)