Renew On Line (UK) 39

Extracts from the Sept-Oct 2002 edition of Renew
These extracts only represent about 25% of it

8. Carbon Fraud ?

The UK government has been accused of misusing public money after it emerged, shortly after the new emissions trading system was launched, that it had guaranteed more than £100m compensation to some of Britain's biggest companies to encourage them to reduce greenhouse gas emissions. The UK introduced the world's first carbon trading scheme in April. The idea is to reduce production of emissions like carbon dioxide and methane by allowing companies that introduce new technology and changes in manufacturing to trade in any emissions saved above the national target level. The tonnes of carbon they save have a financial value which can be traded with other companies who find it cheaper to buy carbon credits than investing to reduce their own emissions. To get the scheme off the ground, ministers agreed to pay companies specific sums for improvements they have made over the last four years. But according to Environmental Data Services, the industry magazine which has investigated the scheme, it is "a scandalous misuse of public funds". The journal claims the companies involved were committed to many of the emission reductions anyway, or had been forced into them, because of environment agency pollution controls.

It says the whole scheme will be brought into disrepute as a result. The Guardian (April 3) relayed the story as follows ‘The government was so keen to start the scheme in the UK and make London the world capital of carbon trading that last month it pledged incentives worth £215m over five years to 34 companies prepared to reduce emissions. This money was to cover any financial risk to companies in fitting the new technology. They then could gain a second time by selling the carbon on to other companies: potential prices vary between £3 and £10 a tonne.’

However, investigation by Environmental Data Services shows businesses which had already reduced emissions over the last five years have been allowed to cash in on modernisation work planned and carried out before the scheme was under way. ‘In some cases, compensation is being paid to companies whose business is shrinking, like British Airways, whose emissions would have dropped anyway because they now have fewer domestic services due to competition from no frills airlines, which take no part in the scheme. BA will get £6.6m for saving carbon dioxide, but the company claims it is for use of more fuel-efficient aircraft, and reducing energy usage in offices.’

A spokesman for the Department of Environment, Food and Rural Affairs told the Guardian that some companies which had taken early action to reduce emissions ahead of their competitors were able to claim credit under the scheme, but that the amount companies could claim had been adjusted to prevent them receiving benefit from reductions made to meet legal requirements. See our Reviews section for a roundup of carbon trading schemes around the world.