UK Government Consultation on the Future of Carbon Pricing

UK Government Consultation on the Future of Carbon Pricing

On 2nd May 2019, the UK Government published a consultation on the future of carbon pricing in the UK following our exit from the EU. This has a direct impact on hospitals and opt-outs, and their participation in the NIMs Phase IV Baseline exercise and the setting of their targets from 2021. 

The consultation includes the proposed schemes that the UK would plan to offer for small and ultra-small emitters; in the event that the UK remains in the EU Energy Trading Scheme (EU ETS) for Phase IV (subject to stakeholder feedback and European Commission approval of the schemes). The UK would also offer these schemes as part of a UK linked or standalone Energy Trading Scheme (ETS). 

Some key highlights from the document about the impact on hospitals and opt-outs, and their participation in the NIMs Phase IV Baseline exercise include:

* This consultation includes the publication of an Impact Assessment on the introduction of an Article 27 opt-out scheme for hospitals and low emitters. Administrative costs for small emitters and hospital are estimated at over £2.19/tCO2, while large emitters (>500 000tCO2) costs are estimated to be £0.03/tCO2. In recognition of the disproportionate administrative burdens of the EU ETS on small emitters and hospitals, Article 27 offers a way for installations to opt-out from the main compliance requirements of the EU ETS. 

* If eligible installations intend on entering the opt-out scheme and not applying for free allowances, a verified NIMs and MMP is not necessary, along with the all associated costs of verification. Only a small section in the NIMs form is required to submitted via ETSWAP.

* The UK offered this derogation in Phase III and proposes to continue to do so in Phase IV. Whilst not a full guarantee that this scheme will be put in place (as it is still subject to the EU Commission’s approval), this is the firmest answer yet from the government on whether an opt-out scheme will be implemented during Phase IV.

* We now consider the original risk of non-compliance from not submitting a full, verified NIMs template extremely low. We believe that the rigour of completing the full NIMs and MMP is now considered unnecessary, as is verification and its associated costs.

* Ultimately, as the Operator, it is your decision as to whether you would like to complete the NIMs exercise and have it verified, at a cost to you. The chances are that this data collection exercise will be dismissed and the past three years of emissions from your installation will be used to set your target for the next 5 years.

We recommend Operators concerned view and respond to the consultation, available if you click here.

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