Emissions – trade or fade
January 1st 2005 Emissions trading stands to floor any number of companies, reckons Guy Kennett of the Melsmart Energy Centre. However, there is potential to profit from the new regime, if you plan ahead and understand the rules of this new game.
Industry has been up in arms since the idea of emissions trading‚ was first mooted in Kyoto, claiming that it will destroy competitiveness. However, the EU and the British Government must have thought this was just the sabrerattling of the too comfortable and too conservative, because they have persisted and will start operating a scheme next year. Then they will step up its intensity in 2008 and 2012! The official view is that climate change must be addressed or the planet will choke to death, and the time-frame is such that we have to act promptly and decisively. Emissions trading is one of the chosen tools and is expected to create a market‚ in which clean operators prosper while heavy polluters are penalised until they see the errors of their ways.
The concept is simple. Each group of emitters' is set a cap on acceptable emission levels, measured in tonnes of carbon dioxide, and is free to use this allowance. The clever bit is that if it does not use the whole allowance it can sell its surplus credits.
On the other side of the coin, a group that exceeds its set emissions levels will have to buy credits on a free market basis.
Theoretically a supply-demand pressures will set the price, and all groups will have an incentive to reduce their emissions levels.
The big attractions of this format to governments is that they do not have to regulate, their costs will be minimal and they should have a win-win story for the next election campaign. Industry, though, has been far from ecstatic about the proposal and has raised objections that costs will be unbearable, that administration will be too cumbersome, that it will be impossible to set tariffs that are fair to all, particularly across an international landscape, that EU countries will be carrying an extra burden compared to non-EU competitors.
Grasp the nettle Today we can say that whether you agree with the introduction of emissions trading or not is irrelevant, they start of 1 January 2005 like it or not! The important question is, What should we do for the best? In effect it is now a fate accompli, industrial organisations consuming 20MW or more must trade emissions or suffer.
And it’s a fair bet that the entry level will move downwards sooner rather than later.
Plainly it is better to be in the position of a seller than a buyer.
Initially we can expect prices to fluctuate wildly, but they will soon settle down. A more interesting development will be to see who trades with whom and over what physical distance.
There may still be time in some sectors to negotiate a higher level of cap, but for the most part the die is cast and organisations should be looking at energy husbandry with a target of getting well below your cap.
There is a vast knowledge bank relating to energy savings, and advice is available from many sources. The boxed insert gives an almost-flippant Top Ten Tips, but please treat that as very much initial ideas and get professional help in the form of a comprehensive energy survey and action plan from a reputable organisation.
Experience at the Melsmart Energy Centre suggests that most organisations can save significant amounts of energy if they have the will. The introduction of emissions trading is a both carrot and a stick to encourage this. Save energy and your costs will go down; don’t and they’ll go up.
TOP TIPS FOR ENERGY SAVING - Insulate and double glaze. Space heating/cooling is a killer
- Variable speed drives. Many machines run at unnecessarily high speeds
- Soft starts, energy efficient and two speed motors. Older motors may be wasting energy constantly
- Lighting. Possibly the single biggest electrical load in your organisation.
- Compressed air. Usually taken for granted and usually very inefficient
- Logic blocks and PLCs. install them on energy saving duties
- Software. There is now plenty of dedicated energy saving software available
- The Internet. Type OEenergy efficiency‚ into a search engine and you will be snowed under with info, so go straight to www.energycentre.org
- On/off switch. Remembering to power down equipment rather than leave it idling for hours on end can pay huge energy dividends.
- Human imagination. Now, if ever, is time to think out of the box. Government ministers did it to come up with emissions trading, so meet fire with fire.
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