The Guardian on Saturday published a feature on the EU Emission Trading Scheme, highlighting that some companies stand to make a windfall from the scheme.
This is true, but the article is wrong to suggest that the scheme isn’t working yet.
Some companies do have more EUAs than they initially need – but, as environmentalists, it is the overall cap that concerns us. The Guardian’s analysis shows that the UK’s allocation is 60 million tonnes below baseline emissions.
And what really matters is that the scheme as a whole is not over-allocated. As the World Bank’s Carbon Markets 2008 report (pdf) shows, the annual allocation across Europe in phase 2 (2008 – 2012) is 7.1% below 2007 CO2 emissions, which are trending upward.
The distribution of EUAs among installations is a financial issue for individual companies. To some extent this type of economic disruption is inevitable while the government is giving out a large proportion of EUAs for free (see previous post on why the government has to allocate free credits in the early stages). It is not a significant environmental issue and it is a shame that such a respected voice is potentially undermining support for a successful scheme that is not well understood by the public.