MoreThanWaste.com - Steel recycling company fined over £0.5m for not accounting for carbon emissions (07/12/2006)

The first fines of their kind amounting to in excess of £750,000 have been issued by the Environment Agency for failures to account for carbon emissions. There were only 4 out of the 535 companies involved in the EU Emissions Trading Scheme (EU-ETS) that failed to account for their emissions.

The company that was issued with the largest fine was a steel recycling company, Alphasteel, from Newport in South Wales. The company was issued with a 'civil penalty' of approximately £565,000 for failing to surrender any allowances for 2005 by the 30 April 2006 deadline.

Kyoto Protocol and th EU-ETS

"The Environment Agency has successfully invested a lot of time and effort engaging with industrial operators to ensure a rigorous, consistent and effective approach to regulating the EU ETS. As a result, more than 99% of operators in England and Wales met their obligations during the first year of the scheme and these companies should be commended"

Barbara Young

The EU Emissions Trading Scheme is the centrepiece of Europe’s efforts to address climate change in the industrial sector to help achieve agreed targets under the international Kyoto Protocol for reducing greenhouse gas emissions.

Under the protocol the UK has agreed to reduce greenhouse gas emissions by 12.5% by 2010. The scheme will also contribute to the UK’s domestic goal of reducing CO₂ emissions by 20% by 2010.

Targeting the most carbon intensive industrial operators, the EU ETS provides financial incentives for industry to become more efficient and reduce the greenhouse gas emissions that are contributing to climate change.

Large industrial operators were asked for the first time to monitor, verify and report their greenhouse gas emissions from January 2005. Each company in the scheme was given allowances for a certain quantity of emissions. If they emitted more than this they needed to buy additional allowances. If they emitted less, they could sell their allowances to other operators. At the end of 2005, operators had until the April 30, 2006 to surrender all allowances to the Environment Agency.

Under the EU ETS Directive, member states must impose civil penalties on installations of €40 for each tonne of carbon dioxide emitted, if they fail to surrender allowances equal to their emissions by the due date.

The scheme has two operating phases:

Phase 1 from 1 January 2005 to 31 December 2007
Phase 2 from 1 January 2008 to 31 December 2012

Last week the European Commission underlined the importance of the Emissions Trading Scheme by tightening the greenhouse gas allowance levels for Phase II of the scheme, which runs from 2008 to 2012. The Commission reduced total allowances by almost 7 per cent below the 2005 level that was proposed by member countries.

Installations covered by the EU ETS are those which carry out activities listed in Annex I of the EU ETS Directive. These include energy activities, production and processing of ferrous metals, mineral industries and pulp and paper industries.

Barbara Young's comments

Environment Agency Chief Executive, Barbara Young said:

"The European Emissions Trading Scheme is our most important mechanism for reducing the greenhouse gas emissions that cause climate change - so it’s vital that everyone plays by the rules. The Stern Review explained unequivocally that if we do not reduce emissions by at least 60% over the next 40 years, the cost in both human and economic terms will be catastrophic."

"Unfortunately 4 companies out of 535 in England and Wales failed to surrender sufficient carbon dioxide allowances by the due date to cover their emissions. This is the cornerstone of the scheme. As such they are liable to automatic civil penalties."

How the EU-ETS works

The scheme operates by the allocation and trading of greenhouse gas emissions allowances throughout the EU. One allowance represents one tonne of carbon dioxide equivalent for the purposes of the scheme.

Member State’s Governments set an overall limit, or ‘cap’ on the total amount of emissions allowed from all the installations covered by the scheme. These 'free' allowances are then distributed across all the installations in the scheme.

Operators are required to ensure they have enough allowances to cover their installation’s emissions at the end of each year. The scheme offers the flexibility of buying additional allowances on top of their free allocation to cover their emissions or alternatively operators can sell any surplus allowances generated from reducing their emissions.

These options create a flexible compliance regime for operators and also ensures emissions are effectively capped across the EU. Though there have been recent concerns about the way that some other EU countries perhaps allocate allowances too liberally.

Other companies fined and penalties

The other companies involved were Scandstick, Daniel Platt, and Mars (UK) (trading as Masterfoods) which, with Alphasteel, had a combined total of €1,127,840 (£758,810.73) in civil penalties.

The details of the other penalties

Daniel Platt, ceramic tile company from Stoke-on-Trent, were issued a civil penalty of €181,480 (£122,099.74) for failing to surrender any allowances to account for 4,537 tonnes of verified emissions by the 30 April 2006 deadline.

Mars (UK) (trading as Masterfoods), a foodstuffs company from Peterborough, were issued a civil penalty of €78,080 (£52,532.22) for failing to surrender allowances for 2005 by the surrender notice deadline. Mars UK verified emissions for 2005 were 1,952 tonnes.

Scandstick, an adhesive products company in Cambridgeshire, were issued a civil penalty of €29,160 (£19,618.84) for failing to surrender sufficient allowances to account for 729 tonnes of verified emissions for 2005. Scandstick only surrendered 1,219 allowances but had verified emissions of 1948 tonnes.


	Steel recycling company fined over £0.5m for not accounting for carbon emissions (07/12/2006) The first fines of their kind amounting to in excess of £750,000 have been issued by the Environment Agency for failures to account for carbon emissions. There were only 4 out of the 535 companies involved in the EU Emissions Trading Scheme (EU-ETS) that failed to account for their emissions. The company that was issued with the largest fine was a steel recycling company, Alphasteel, from Newport in South Wales. The company was issued with a 'civil penalty' of approximately £565,000 for failing to surrender any allowances for 2005 by the 30 April 2006 deadline. Kyoto Protocol and th EU-ETS "The Environment Agency has successfully invested a lot of time and effort engaging with industrial operators to ensure a rigorous, consistent and effective approach to regulating the EU ETS. As a result, more than 99% of operators in England and Wales met their obligations during the first year of the scheme and these companies should be commended" Barbara Young The EU Emissions Trading Scheme is the centrepiece of Europe’s efforts to address climate change in the industrial sector to help achieve agreed targets under the international Kyoto Protocol for reducing greenhouse gas emissions. Under the protocol the UK has agreed to reduce greenhouse gas emissions by 12.5% by 2010. The scheme will also contribute to the UK’s domestic goal of reducing CO₂ emissions by 20% by 2010. Targeting the most carbon intensive industrial operators, the EU ETS provides financial incentives for industry to become more efficient and reduce the greenhouse gas emissions that are contributing to climate change. Large industrial operators were asked for the first time to monitor, verify and report their greenhouse gas emissions from January 2005. Each company in the scheme was given allowances for a certain quantity of emissions. If they emitted more than this they needed to buy additional allowances. If they emitted less, they could sell their allowances to other operators. At the end of 2005, operators had until the April 30, 2006 to surrender all allowances to the Environment Agency. Under the EU ETS Directive, member states must impose civil penalties on installations of €40 for each tonne of carbon dioxide emitted, if they fail to surrender allowances equal to their emissions by the due date. The scheme has two operating phases: Phase 1 from 1 January 2005 to 31 December 2007 Phase 2 from 1 January 2008 to 31 December 2012 Last week the European Commission underlined the importance of the Emissions Trading Scheme by tightening the greenhouse gas allowance levels for Phase II of the scheme, which runs from 2008 to 2012. The Commission reduced total allowances by almost 7 per cent below the 2005 level that was proposed by member countries. Installations covered by the EU ETS are those which carry out activities listed in Annex I of the EU ETS Directive. These include energy activities, production and processing of ferrous metals, mineral industries and pulp and paper industries. Barbara Young's comments Environment Agency Chief Executive, Barbara Young said: "The European Emissions Trading Scheme is our most important mechanism for reducing the greenhouse gas emissions that cause climate change - so it’s vital that everyone plays by the rules. The Stern Review explained unequivocally that if we do not reduce emissions by at least 60% over the next 40 years, the cost in both human and economic terms will be catastrophic." "The Environment Agency has successfully invested a lot of time and effort engaging with industrial operators to ensure a rigorous, consistent and effective approach to regulating the EU ETS. As a result, more than 99% of operators in England and Wales met their obligations during the first year of the scheme and these companies should be commended." "Unfortunately 4 companies out of 535 in England and Wales failed to surrender sufficient carbon dioxide allowances by the due date to cover their emissions. This is the cornerstone of the scheme. As such they are liable to automatic civil penalties." How the EU-ETS works The scheme operates by the allocation and trading of greenhouse gas emissions allowances throughout the EU. One allowance represents one tonne of carbon dioxide equivalent for the purposes of the scheme. Member State’s Governments set an overall limit, or ‘cap’ on the total amount of emissions allowed from all the installations covered by the scheme. These 'free' allowances are then distributed across all the installations in the scheme. Operators are required to ensure they have enough allowances to cover their installation’s emissions at the end of each year. The scheme offers the flexibility of buying additional allowances on top of their free allocation to cover their emissions or alternatively operators can sell any surplus allowances generated from reducing their emissions. These options create a flexible compliance regime for operators and also ensures emissions are effectively capped across the EU. Though there have been recent concerns about the way that some other EU countries perhaps allocate allowances too liberally. Other companies fined and penalties The other companies involved were Scandstick, Daniel Platt, and Mars (UK) (trading as Masterfoods) which, with Alphasteel, had a combined total of €1,127,840 (£758,810.73) in civil penalties. The details of the other penalties Daniel Platt, ceramic tile company from Stoke-on-Trent, were issued a civil penalty of €181,480 (£122,099.74) for failing to surrender any allowances to account for 4,537 tonnes of verified emissions by the 30 April 2006 deadline. Mars (UK) (trading as Masterfoods), a foodstuffs company from Peterborough, were issued a civil penalty of €78,080 (£52,532.22) for failing to surrender allowances for 2005 by the surrender notice deadline. Mars UK verified emissions for 2005 were 1,952 tonnes. Scandstick, an adhesive products company in Cambridgeshire, were issued a civil penalty of €29,160 (£19,618.84) for failing to surrender sufficient allowances to account for 729 tonnes of verified emissions for 2005. Scandstick only surrendered 1,219 allowances but had verified emissions of 1948 tonnes.