Manufacturers cash in on ETS windfall

The European Union (EU) has been criticised by the head of the Financial Services Authority for allowing billions of pounds to be given to manufacturers through windfall profits made from the Emission Trading Scheme (ETS).

In a study – the Carbon Leakage Report – by research outfit Climate Strategies, found some industries could make £18bn over the coming years without having to reduce their emissions if they receive more emissions allowances than they use and sell the surplus.

“We can’t solve the problem by giving out emission allowances for free,” FSA chairman Adair Turner told The Daily Telegraph, following the publication of the report.

The ETS, introduced in 2005, includes the heaviest emitters in the European Union – generally in manufacturing – and allocates allowance emissions to an organisation. The company can then buy and sell surplus allowances with other companies in the ETS.

The research also finds cases of companies moving its production outside the EU and continuing to sell its products within it. The FSA’s Turner called for a “border-levelling duty to prevent this from happening in the future”.