05 July 2017

The latest figures from the Environment Agency show that the cost of non-compliance with the EU emissions trading scheme (EU ETS) and the domestic CRC Energy Efficiency scheme (CRC) can be significant. There can also be a reputational impact, as the Environment Agency report names the non-compliant parties alongside details of the fines handed out.

The report includes updates to penalties for non-compliance with the EU ETS scheme as relating to aviation emissions, as we previously reported.

Both the EU ETS and CRC regimes are market-based mechanisms designed to encourage limitation of carbon emissions (and, in the latter case, more efficient use of energy) through the requirement of purchase and surrender of allowances. In the case of the EU ETS, such allowances relate to emissions of specified greenhouse gases; in the case of the CRC allowances relate to usage of qualifying types of energy.

The CRC is being phased out, and it remains to be seen how EU ETS will be addressed as part of the UK’s exit from the EU, but these latest figures demonstrate that for now, these regimes are in place and are being enforced, with significant penalties for non-compliance. The largest single fine imposed was over £344,000 for non-surrender of EU ETS allowances, and there are a significant number of other fines under these regimes amounting to tens of thousands of pounds each.

Separately, the Environment Agency is also taking enforcement action against organisations which are subject to the Energy Savings Obligation Scheme (ESOS), with a number of civil penalty notices issued against non-compliant companies.

The carbon reduction and energy efficiency landscape can be confusing, but these fines and sanctions demonstrate that it is important for businesses to take control of compliance, because a failure to do so can lead to negative impacts to finances and reputation.

Key contact

Michael Barlow

Michael Barlow Partner

  • Head of Environment
  • Head of Water
  • Head of ESG

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