Poor take-up plagues emissions scheme

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The Independent Online

The Government's policy to get businesses to cut their energy emissions through a process of buying and selling allowances was condemned by MPs yesterday as "money for old rope".

The Government's policy to get businesses to cut their energy emissions through a process of buying and selling allowances was condemned by MPs yesterday as "money for old rope".

The Public Accounts Committee, which has been scrutinising the UK's two-year-old Emissions Trading Scheme, found that although it had reduced harmful emissions, it had not given taxpayers good value for money. Only 34 companies are participating in the scheme, compared with initial hopes from the Department for Environment, Food and Rural Affairs (Defra) for more than 3,000.

The scheme was set up in March 2002 to help the UK meet the Kyoto Protocol on greenhouse gas emissions. Companies were asked to bid in an auction for up to £215m of incentives in exchange for reducing their energy emissions by certain targets. If companies beat their targets, they could sell their allowance to other companies. Companies that exceeded their emission allowance could buy additional allowances from other companies to cover their excess.

But MPs said that while the idea of creating a market to control emissions was "innovative and imaginative", it had not been executed well. "The targets were too easily attainable," Edward Leigh, the Conservative MP who chairs the committee, said yesterday. Some of the participants received incentive funding from Defra for emission reductions they had achieved before the scheme began. "The result is that £215m of money for worthy causes has gone into the hands of private companies, paying them for what they would have done anyway. It has been money for old rope," he said.

Defra came under fire for using an auction method that did not drive down the price of funding per tonne and for not reducing the £215m pot in the face of such a small take-up. "The Department might have retained some funds for another, subsequent auction to obtain better value for money," Mr Leigh said.

The four leading participants reduced their emissions by 3.84 million tonnes in 2003, almost five times their second-year target of 0.79 million tonnes. But the MPs said Defra had not carried out a big enough publicity and education drive. The five-year scheme is due to end in 2006, by which time it may have been replaced by a similar scheme from the European Union.

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