Minimising the costs of EU-ETS compliance

The challenge

Our client has four manufacturing sites covered by CCA’s (Climate Change Agreements) and the EU ETS (European Emissions Trading Scheme).

With the next phase of these schemes coming in 2013 they wanted to identify opportunities to minimise what they expected to be significantly increased costs of compliance.

At their most energy intense site, emissions allowances were previously calculated based on fuel consumption over a baseline period.  In Phase 3 allowances are calculated based on heat or product benchmarks; meaning penalties for poor efficiency in thermal systems.  Furthermore, carbon leakage has been introduced, meaning sites producing non-protected products are subject to annually reducing allowances throughout phase 3.  These factors all conspire to make phase 3 of the EU ETS considerably more expensive for members.

Our brief was to provide guidance on forthcoming legislation, analyse and identify potential scenarios and impacts, and develop a plan of action to minimise costs and maximise benefits to the business.

What we did

By a detailed re-analysis of the site heat balance, our engineers were able to identify a more advantageous re-balance of heat use categories.  We also developed a methodology for measurement of the thermal heater system efficiencies, allowing a declared efficiency increase from 70% to 84% which improved the sites heat benchmark performance.


These two opportunities indicated carbon cost savings of £212,000 and £104,000 over Phase 3, and both for no capital investment. The methodologies used in this assignment were agreed and accepted by the Environment Agency and approved by a UKAS accredited auditor.  The total no and low cost savings realised under this project were £360,000 over 7 years.

Will Todd, Director at Carbon Architecture commented,

Due to the complexity, intricacies and government interpretation of the European emissions regulation schemes in the UK, there is still a lot of unrealised cost saving opportunity for companies to tap into.
Working on this project, we were pleased to be able to make such an immediate impact for our client.  Before submitting our final report, the savings relating to restructuring the permit had already been agreed with the Environment Agency and implemented.

Carbon Architecture has extensive experience of providing consultancy support on emissions schemes.  With an UKAS approved EU ETS Lead Auditor in our team, experienced administrators of Climate Change Agreements, and providing EU ETS support services to 15 operators, we are well placed to help you reduce compliance costs.

About Dan Jackson

Dan Jackson is a process and sustainability consultant. He has experience in helping clients reduce energy and cost in the NHS and across the hospitality supply chain, from breweries to pubs.