Emissions-trading comes into effect

The electricity-generation sector began to trade CO2 emission limits this week, after the European Union Greenhouse Gas Emission Trading Scheme came into effect on Saturday.

The scheme – based on Directive 2003/87/EC – covers industrial installations that produce carbon in sectors seen to be the most serious emitters. These include electricity generation; heat and steam production; and mineral oil refineries, among others.

Environment minister Elliot Morley said UK businesses would not receive their final allocations until next month, since the government amended its national ceiling on carbon emissions. He recommended businesses work in accordance with estimated allocations because the final figures would not be too dissimilar.

The scheme allows member states to set an emissions cap for each of the installations and businesses are free to buy and sell allowances on the open market.

Allowances traded in the EU ETS will be held in accounts in electronic registries set up by Member States. These registries will be overseen by a central administrator at EU level who, through the Community independent transaction log, will check each transaction for any irregularities.