The UK Emissions Trading Scheme: From a prototype to a phase-out model ?

The UK Emissions Trading Scheme, launched in spring 2002 as the world’s first economy-wide trading system for greenhouse gases, was designed to establish the UK’s role as a world leader in the field of emissions trading, even before similar trading systems were put in place on an European or international scale.

by Tankred Schuhmann

In spring 2003, when the results of the first trading year under the scheme were published, Government officials felt encouraged to draw up a rosy picture of clear success in terms of market activity and compliance status with respect to current emissions reduction targets set under the scheme. The following article shows that neither the 1st year’s market activity and compliance figures nor the basic foundations of the whole trading system are far from being indisputable as long as massive overachievements against annual targets were apparently reached by doing nothing more than business as usual and costs arising from the purchase of allowances on the market can be easily compensated or are even outweighed by subsidies provided by the Government. Moreover, evidence is looming up that in particular the voluntary nature of the scheme could have been one of the main obstacles for achieving a balanced market with a reasonable and stable price structure. Eventually, the article provides for an overview as to the recent developments in the ongoing implementation of the EU Emissions Trading Scheme from which the recently accomplished preparation of the Draft National Allocation Plan is certainly the most outstanding feature.

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published: Lexxion Verlagsgesellschaft mbH, EurUP 01/2004 (January 2004), 3|2004
Keywords: Collection, Material Recovery, Policy Tax Instruments