Emissions regulations are reshaping the U.K. and Irish energy markets.
As U.S. policymakers consider how to tackle the challenge of greenhouse-gas constraints, the U.K.’s approach to the problem offers instructive examples.
EU leaders agreed to reduce combined CO2 emissions to 8 percent below 1990 levels by 2012. The U.K. is one of very few countries intending to exceed its Kyoto target of a 12.5 percent reduction in CO2 emissions below 1990 levels. The U.K. National Allocation Plan (NAP) for Phase II (2008-2012) expects to achieve a reduction of 23.6 percent. The European Commission accepted this Phase II NAP without amendment.
The British government has allocated free emissions credits to all sectors in the U.K., based on a business-as-usual scenario (BAU)—with one exception. Large electricity producers (LEPs) received an allocation 30.3 percent below a BAU scenario. A number of LEPs are considered to be good-quality combined heat and power (CHP) facilities, and will receive a full allocation for the CHP portion of their output. But the CO2 allocations given to large electricity producers (LEPs) will not be sufficient to cover the emitted quantities. The LEPs will need to purchase extra allowances.