If the European Union Emissions Trading Scheme (EU ETS) applies to your business, you can trade your emissions with other businesses across Europe. The scheme encourages businesses to reduce their greenhouse gas emissions.
Does the emissions trading scheme apply to your business?
The main business activities that the EU ETS applies to are:
- energy activities, eg operating boilers, electricity generators and combined heat and power (CHP) schemes
- combustion installations with a rated thermal input exceeding 20 megawatts
- iron and steel businesses
- mineral oil refineries
- the mineral industry (cement, glass, ceramics)
- pulp and paper businesses.
If you carry out more than one activity on your site that is covered by the EU ETS, you must consider the greenhouse gas emissions from all of them.
Apply for an emissions permit
If you carry out any of these activities, you must hold a greenhouse gas emissions permit. You can apply for a permit from your environmental regulator.
- In England and Wales you should apply to the Environment Agency.
- In Northern Ireland you should apply to the Industrial Pollution and Radiochemical Inspectorate (IPRI) department of the Northern Ireland Environment Agency (NIEA).
- In Scotland you should apply to SEPA.
- For UK offshore installations, you should apply to the Department for Energy and Climate Change (DECC).
Application forms are available online.
Emission limits and allowances
The EU ETS works on a 'cap-and-trade' basis. EU countries, including the UK, have set an emissions cap (limit) and an emissions allocation for all businesses taking part in the scheme.
If your business is in the scheme, you can find out the number of allowances allocated to you in the UK’s National Allocation Plan.
Emissions allowances and reporting
If the EU ETS applies to your business, you must report your carbon dioxide (CO2) emissions for the previous calendar year by 31 March.
You must then supply sufficient allowances to cover the CO2 that you emit by 30 April each year.
You can choose to:
- meet your allocation by reducing your emissions
- reduce emissions to below your allocation and sell the excess allowances
- produce emissions above your allocation and buy allowances from other EU ETS participants.
If you emit more than your allocation you could either:
- buy additional allocations from the market
- invest in measures to reduce your emissions.
If you don’t have enough allowances to cover your emissions, you will be fined 100 Euros per tonne for emissions that your allowances don’t cover.
Further information
