Further information in response to question 173, ev, p 56

  1. Greenhouse gas emissions trading schemes are being developing in several countries including the Netherlands, Sweden, Denmark, Canada and Australia. In the USA a sulphur emissions trading scheme has worked effectively since 1990. Eurelectric is currently facilitating an emissions trading game between generators in several European countries.

  2. An emissions trading scheme should not be a complement to an energy levy; it should be a substitute. Having both policies would be a double burden on some. A tax increases prices and is expected to affect users' behaviour. Likewise a cap and trade system may well increase prices (and thus affect users' behaviour), but any price increase will be less. Most importantly, as companies will be subject to binding caps derived from the UK's overall binding emissions target, the environmental goal will be met.

  3. SMEs could be covered by a cap and trade system. If the caps were placed on the emitters of carbon the electricity used by SMEs would have faced caps when it was generated. SMEs' emissions from other energy (e.g. gas) could be deal with, either by the SMEs using brokers, or suppliers of, for instance, gas, who took on the emission caps for the SMEs.

  4. AEP's position is not isolated. The Association has been working with many companies in various sectors to develop ideas about emissions trading. Forty-nine organisations are involved in the work. The CBI supports the development of an emissions trading scheme, and recently with ACBE it has started development work on a pilot scheme. This work is supported by the DTI, DETR and HM Treasury.

14 July 1999