News story

Small Emitters can opt out of EU ETS from 2013

25 May 2012 The UK is offering small emitters and hospital installations the opportunity to ‘opt out’ from the EU ETS from 2013 as part of …

• From: Department of Energy & Climate Change
• Published: 25 May 2012

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

25 May 2012

The UK is offering small emitters and hospital installations the opportunity to ‘opt out’ from the EU ETS from 2013 as part of Government efforts to cut down on red-tape.

The Opt Out scheme could save industry up to £80 million from 2013-2020, depending on take up from the around 250 eligible installations, accounting for 1% of UK EU ETS emissions.

The EU ETS remains the primary scheme through which the UK will meet its ambitious carbon emission reduction targets in the EU. The opt out will help ensure that the policy is implemented in a proportionate manner.

Gregory Barker, Minister of State for Climate Change, said:

“We have worked closely with industry looking at their needs in order to develop and design a policy which genuinely saves companies money and time, while still ensuring we meet environmental goals.

“Under the proposals smaller installations, who experience higher costs from complying with the current regulations, will be able to opt out of the system from 2013. We have worked successfully with the European Commission to ensure EU regulation is proportionate.”

Government is now inviting applications for the ‘Opt Out scheme’ which has been published on the DECC website.

The application period runs until 18 July 2012.

The ‘Opt-out’ will take effect from January 2013, the start of Phase III of the EU ETS.

Industry reaction to the scheme

British Ceramic Confederation Laura Cohen:

“As a sector that is largely affected by the EU ETS small emitter opt out threshold, the Ceramic Industry welcomes the cooperation between DECC and the energy intensive sectors to produce an opt out measure, intended to reduce the administration burden, for small companies eligible for EU ETS Phase III. It will enable installations to consider the best option for their circumstances.”

Nigel Jackson, Chief Executive of the Mineral Products Association, described DECC’s opt-out policy as:

“A welcome step in the right direction. Industry is going through a tough time and anything the government can do to ease the regulatory burden can only be good for business, jobs and growth”.

Notes for Editors:

1. To be eligible to opt out installations must be incumbent to the EU ETS and meet the criteria for a small emitter: verified annual emissions below 25,000tCO2e from 2008 onward and, where it undertakes combustion, thermal capacity below 35MW during 2008-2010. Incumbent hospital installations may also opt out. The opt out is only available to stationary installations, therefore aircraft operators are not eligible to opt out.
2. The ‘red tape challenge’ is a Government wide campaign to work in partnership with the public to cut out unnecessary red tape in order to save businesses money and time:
3. For the UK the EU ETS remains the primary means by which we will meet our ambitious carbon emission reduction targets in the EU, and the opt out will help ensure that the policy is implemented in a proportionate manner. Although almost quarter of UK EU ETS installations may be eligible to opt out they collectively account for just 1% of UK EU ETS emissions.
4. The Opt-out scheme aims to alleviate the disproportionately higher administrative burden faced by these installations per tonne of CO2 emitted and as such is a key proposal on cutting out ‘red tape.’ Administrative costs for small emitters are estimated at over £1/tCO2, while large emitter costs are estimated to be £0.04/tCO2.
5. The Opt-out scheme will begin on January 2013, the start of Phase III of the EU ETS. Installations that are opted out will be given an individual emission reduction target and will face a penalty if annual emissions exceed this target. The penalty price per tonne of carbon dioxide equivalent will be set in line with the EU Emission Allowance (EUA) price. Operators will not be required to surrender allowances against emissions and will therefore will not receive a free allocation. The main administrative cost savings offered under the Opt Out scheme are the replacement of requirement to surrender allowances with an emission reduction target; simplified monitoring, reporting and verification; removal of the requirement to hold a registry account and less burdensome rules for target adjustment on changes of installation capacity

Published 25 May 2012