UK allocates CO2 emission permits, reducing levels

The increased expenditures made to reduce CO2 emissions have added to the costs companies must pay to stay in business.

They also face faces, as occured in the case of Mars, for not following the rules.

The level of pressure can be gauged from the individual plant permit allocations, published on 16 March by the Department for Environment, Food and Rural Affairs (Defra).

The annual allocations come into effect next year and are in effect until 2010.

The UK has put a cap of 237 million tonnnes of carbon dioxide (CO2) emissions per year on plants covered by ETS for the second phase.

The cap, which covers plants covered under the first phase along with those that opted out, represents a 13 per cent reduction in emissions compared to overall output in 2005.

In the UK a total of 48 food and drink plants are covered by ETS, but 73 have opted-out of the scheme in the first trading period from 2005 to 2007.

The numbers refer only to companies covered by the UK Food & Drink Federation.

There are also other non-member food and drink sites not covered by the association.

In phase two, Defra has allocated about 1.7 million tonnes of emissions allowances to food and drink companies that participated in the first phase of ETS.

Another 153,000 tonnes have been allocated to those that opted out.

Overall the sector accounts for 3 per cent of the total UK allocation for the second phase.

The UK ETS covered about 1,000 installations in the country during the first phase.

Companies included Unilever Bestfoods UK, Mars, Nestle, Gerber Foods Soft Drinks Ltd. and Dairy Crest among others.

Brewers and cheese firms are also covered.

ETS is part of the bloc's plan to reduce greenhouse gas emissions to meet international commitments under the Kyoto Protocol.

The "cap-and-trade" scheme, which took effect from January 2005, allows companies to buy and sell CO2 emissions rights on specially constructed Internet sites.

Plants that emit more CO2 than their allocation need to buy allowances to cover the extra emissions.

Companies that emit less than their allocation are able to sell the allowances to companies that need them.

For example CO2 emissions from Nestle's boiler house in Fawdon, which used 9,325 tonnes of its 10,310 tonne allocation, have been reduced to 8,270 tonnes per year duing the second phase.

Nestle's plants in York and Halifax are covered by separate allocations.

The food processing industry is a energy consumer and discharger of greenhouse gas through its reliance on cooking, refrigeration, freezing and air compressor systems.

Last week the UK government published a new draft bill targeting a 60 per cent reduction of greenhouse gasses on 1990 levels by 2050, with an interim target of between 26 per cent and 32 per cent by 2020.

Mars last year became one of the first food processors to run afoul of the EU's ETS, when Defra fined the company €78,080 (£52,532) for breaching the rules.

Mars trades as Masterfoods in the UK.

Mars was issued the civil penalty for failing to surrender allowances for 2005 by the regulatory deadline.

The allocation list for the second phase will deliver savings of 29 million tonnes of CO2 each year, Defra stated.

The list also removes the smallest emitters who had faced a disproportionate burden as a result of the scheme, the government department said.

The decision removed 12 per cent of installations from the scheme who account for 0.3 per cent of emissions.

CO2 is linked to causing a general rise in the temperatures worldwide.

Each member state must detail its allocations and programme to reduce CO2 in a National Allocation Plan (NAP).

The EU ETS covered approximately half of total UK CO2 emissions in 2003 and the non-traded sectors covered the remaining 50 per cent.

Defra estimates that opted out plants emitted 30 million tonnes in 2005.

Average projected CO2 emissions for the traded sector for the second phase would now cover about 52 per cent of the UK's total emissions.