Government announces details of its latest energy-efficiency incentive

Environment minister Michael Meacher has announced details of the Emissions Trading Scheme (ETS). This government-run incentive is the latest initiative to help meet energy-efficiency and carbon emission targets. Meacher explained how ETS will provide a £215 million incentive over the next five years to organisations which have committed to absolute emission reduction targets.

Organisations joining the scheme are required to make reductions against a 1998-2000 baseline. They will be given yearly carbon targets and will receive incentive payments on verification of compliance.

In what has been described as a controversial move, organisations can meet the targets by trading directly between themselves or through third party brokers. Companies can sell or bank any excess carbon allowances where they have reduced emissions beyond their target for that year.

Anyone interested in joining as a direct participant needs to register by 31 December 2001. Companies with Climate Change Levy negotiated agreements will also be able to use the trading scheme to meet targets or sell excess allowances. In response, the Engineering Employers' Federation (EEF) says that while it welcomes the introduction of the scheme it warns that the government should extend ETS to smaller firms. EEF environmental affairs manager Helen Woolston explains: "In order for the scheme to be a success it is crucial to secure a high level of company participation. This will entail opening up the scheme to smaller companies to ensure that there are adequate numbers of buyers and sellers."

The EEF is also calling for the early inclusion of group participation in the scheme, whereby groups of smaller companies can aggregate their targets under a single banner. The EEF believes this would encourage smaller companies to take part through sharing the risk of pledging to meet the reduction targets.

For more details on the scheme visit the website at www.defra.gov.uk.