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Government plans: carbon price floor or carbon price flaw?

In the recently published White Paper on Electricity Market Reform, UK Energy Secretary Chris Huhne unveiled a package of measures designed to encourage the investment needed to ensure secure, low carbon energy for the UK.

One of the five key policies outlined in the document was the introduction of a carbon price floor from 1st April 2013. 

Government make 1bn euros from auctioning EUAs

To download this report click here.

Between 19 November 2008 and 10 February 2011 the UK Government has auctioned over 77m EU Allowances. The revenue generated from auctioning these allowances is over the €1bn and projections show that this revenue is due to increase significantly, reaching up to €64bn by 2020. At the moment this money goes straight to the Treasury.

Carbon high club

Aircraft are responsible for 3% of global CO2 emissions. In the absence of stern regulation, CO2 emissions by airline carriers have doubled since 1990 and are forecast to double again by 2020.

There is an urgent need for reductions in this sector, but the International Civil Aviation Organisation has failed to get agreement for a global Emissions Trading Scheme for air transport. As a consequence, the EU has been working independently on a solution.

Aviation joins EU ETS

Is the EU Emission Trading Scheme working?

The EU Emission Trading Scheme (EU ETS) is the centrepiece of Europe's policy response to climate change. It covers over 10,000 factories, power stations and industrial plants, which collectively account for around half of Europe's carbon dioxide emissions.

Unsurprisingly, such a large scheme has received some criticism. The scheme is not perfect, and four of the most common criticisms are outlined briefly below.

Will carbon trading make flying more expensive?

Apparently the Met Office is to blame for a possible increase in the popularity of last minute foreign holidays. After predicting a barbeque summer, many Brits opted to holiday at home, only to be caught in the rain. 

Ed Miliband responds: we won't earmark auction funds

You might remember that we wrote to Ed Miliband a couple of months ago (download a pdf of our letter here) to encourage the government to ringfence the money it raises from selling EU Emission Allowances (the credits that we retire), which could be £1bn to £2bn between 2008 and 2012.

We felt that if the government sells rights to the global atmosphere, the money should be spent on global environmental causes.

Government pilfers permit auction money

The UK government auctioned 4 million emission allowances (EUAs) to companies in the EU Emission Trading Scheme in 2008, raising around £55m. During 2009 another 25 million will be auctioned, which in today's market would raise almost £250m. Between 2008 and 2012 the government stands to gain in the region of £1bn to £2bn.

Companies pass the costs of the allowances onto their customers, so we end up paying for them in things like our electricity bills.

Your view: Europe's carbon trading scheme

Like it or lump it, the EU Emission Trading Scheme is going to be with us for at least 11 years. It's at the core of Europe's response to climate change - but we weren't sure what people thought about it, so in our last newsletter we ran a poll. 78 of you responded and you had a real range of views.

Here are the results:

Poll: do you understand Europe's carbon trading scheme?

Carbon trading is Europe's key tool for addressing climate change. But does anyone actually understand it, and is it a good idea? We have a poll open, so click on the link and we'll let you know the results. Take the poll.

(This survey is now closed)



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