4. Emissions trading

The EU Emissions Trading System (EU ETS) affects businesses from energy-intensive sectors - like the energy industry and certain manufacturers.

It lets you buy and sell greenhouse gas emission allowances to reduce your organisation’s environmental impact.

Large organisations not covered by the EU ETS are covered by another scheme called the CRC Energy Efficiency Scheme.

How it works

If your business is covered by the EU ETS you must meet targets by:

  • cutting your business emissions
  • trading emissions allowances

You’ll need to open an EU Registry account so you can trade allowances. You can then trade allowances by:

  • trading directly with other businesses
  • buying or selling from intermediaries, eg banks and specialist traders
  • using the services of a broker
  • joining one of the several exchanges that list carbon allowance products
  • bidding at UK government or other EU member state auctions

Calculate your greenhouse gas emissions

Work out your greenhouse gas emissions by multiplying the amount of energy you use by the (emissions they produce). You need to do this for each type of energy you use.

To do this, you need to know:

  • how much non-renewable energy you’ve used - this information can be found on your gas, electricity and water bills, invoices and receipts
  • the greenhouse gases produced by each type of energy (the ‘emission factor’) - these are updated every year