EU ETS

The EU Emissions Trading System (EU ETS) is a multi-sector greenhouse gas (GHG) trading system, which applies to organisations which have an intensive energy input. The aim of the system is to cut EU emissions to achieve carbon reduction targets and participation in the scheme is decided through the size of an organisation's combustion equipment.

The system works on a 'cap and trade' basis. Organisational emissions are capped and allowances allocated. Excess allowances generated by reducing carbon emissions can be sold on the market to companies that emit more than their allowance. By reducing the number of allowances allocated, organisations choose between paying more for allowances or reducing energy-related emissions.


EU ETS Small Emitter and Hospital Opt-out Scheme

Hospitals and small emitters are installations with emissions of less than 25 000 tCO2 / year. This is known as the EU ETS Small Emitter and Hospital Opt-out Scheme. Under this scheme, organisations have a target, rather than allowances, and penalties are administered for exceeding targets. Verification is optional however, unverified sites will be subject to random audits, with potential penalties for non-compliance.


EU ETS Aviation and CORSIA

Unlike fixed installations, aircraft operators are included in EU ETS if they exceed certain CO2 emissions thresholds. Inclusion is also dependent on the specifics of their operation and the geographical scope of their activities. Simplified monitoring and reporting procedures apply to operators with emissions of less than 25 000 tCO2 / year, but unlike optouts, they are still full participants - meaning they are still required to surrender allowances.

CORSIA is a global scheme to reduce aviation emissions. It has similar monitoring and reporting requirements to EU ETS but there are distinct differences. Operators are allocated to their International Civil Aviation Organisation (ICAO) member state for administration, dependent on the country in which they are registered. All operators that meet the inclusion criteria will have to monitor CO2 emissions from 2019 onwards.


The Carbon Reduction Commitment Energy Efficiency Scheme (CRC)

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) is a mandatory reporting system for carbon emissions covering gas and electricity for large commercial and public-sector organisations. Qualification is based on electricity usage.

The allowance price changes each year, and the potential cost can be high, with the aim of improving efficiency and reducing carbon emissions. The price for allowances bought in the compliance sale are:

  • 2016/17 reporting year: £17.20* per tonne of CO2
  • 2017/18 reporting year: £17.70* per tonne of CO2
  • 2018/19 reporting year: £18.30* per tonne of CO2

* The 2016 Budget announced that sale prices would increase by RPI until the closure of the scheme at the end of the 2018/19 compliance year. Prices are subject to parliamentary approval.


Energy Savings Opportunity Scheme (ESOS)

Energy Savings Opportunity Scheme (ESOS) is a mandatory energy audit scheme for all non-SME (small and medium enterprise) organisations. ESOS is the UK government's approach to meeting the requirements of Article 8 of the EU Energy Efficiency Directive which states that all EU member states must mandate a regular energy audit programme for all large organisations.

Qualifying organisations must conduct an audit by 5th December 2015 and every four years thereafter. It is hoped that organisations will act on the recommendations produced due to corporate social responsibility and the financial benefits of saving energy.


ISO50001 Energy Management System

ISO50001 Energy Management System is an international certification standard for an organisations energy management system. It covers the establishment, implementation, maintenance and improvement of an energy management system which enables organisations to continually improve their energy performance. This includes improvements in energy efficiency, better use of energy and reduction in energy consumption where possible, improving your bottom line, social responsibility and governance structure.

Energy Briefing & News


Energy Briefing is a free, electronic quarterly publication produced specifically to keep management informed about developments in the energy sector. Additionally, occasional newsflashes are distributed to readers.

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