Energy Efficiency and Trading Part II: Options for the Implementation of a New Mandatory UK Emissions Trading Scheme
28 April 2006
By Daniel Radov et al. with Enviros Consulting
As part of its Climate Change Programme Review, the UK Government is considering a proposal for a new trading scheme that will target the energy use of non-energy-intensive consumers outside the European Union Emissions Trading Scheme (EU ETS) and UK Climate Change Agreements (CCAs). Participants in the scheme would face a cap on the overall emissions associated with their use of electricity and fuel.
The UK Department for Environment, Food and Rural Affairs (Defra) commissioned NERA and partner Enviros Consulting to build on the initial analysis of the proposed scheme by exploring in detail its design, implementation, and effects. In this report, a team led by NERA Associate Director Daniel Radov considers a wide range of options for the design of the proposed trading scheme. The authors provide detailed implementation options for the new scheme and evaluate them based on a number of different criteria, including simplicity, administrative burden, legal feasibility, risk and uncertainty, competitive distortions, scope for evasion, emissions coverage, and cost-effectiveness. The report also analyzes the costs, emissions reductions, and energy saving benefits that could be achieved by different scheme designs.
