Supplementary memorandum submitted by
the Environment Agency
The Environment Agency gave oral evidence to
the Committee on Tuesday 21 November 2006. This supplementary
evidence is provided further to the oral evidence session in response
to questions raised by the Committee.
1. Costs Incurred by Public Bodies
The Committee asked for confirmation of the
exceedances at St James Hospital, Leeds and Queens Medical Centre.
Defra allocated allowances for Phase I within
the National Allocation Plan (NAP).
St James Hospital has an annual allocation of
1,263 allowances. Their 2005 verified emission figure was 6,263
tonnes CO2, resulting in a shortfall of 5,000 tonnes.
Queen Elizabeth Medical Centre has an annual
allocation of 28,001 allowances. Their verified emissions figure
was 35,532 tonnes CO2, resulting in a shortfall of
7,531 tonnes.
The Committee stated that the think-tank
Open Europe estimated this cost in the first case of the Queen
Elizabeth at £90,000 and the Leeds Hospital at £60,000.
There were winners and losers in Phase I. For
2005, 55% of installations had surplus allowances and 45% had
a deficit.
St James Hospital and Queen Elizabeth Medical
Centre are atypical examples. There were 107 hospitals in the
scheme in 2005. 27 had surplus allowances and 73 had a deficit.
Three had a surplus greater than 5,000 tonnes of CO2.
Three had a deficit greater than 5,000 tonnes CO2.
There are two ways in which installations may
cover a deficit. They may buy allowances from the market or they
may borrow allowances from future years' allocations. If they
borrow this can only be within the Phase. So they will either
have to reduce emissions or eventually buy allowances to settle
this debt by the end of 2008.
The Registry Regulations prevent us from commenting
on what option was taken. Nor can we speculate on the price paid
for allowances if they were bought.
Open Europe has used an allowance price of €12
in its calculation. This was the price of allowances just before
the 2005 re-conciliation period. The allowance price fluctuated
throughout the year from a low of €8 in February 2005 to
a high of €30 in mid April 2006.
2. Impacts on the Ceramics Industry
The Committee asked for the conclusions of
the LETS Update project in respect of ceramics.
The LETS Update project did not actually make
any recommendations in respect of the ceramics industry.
Under the remit of the LETS Update project,
work was carried out to look into the feasibility of inclusion
of the most promising sectors and gases for expansion under the
EUETS, as selected in an earlier scoping phase.
The project concluded, with the support of a
Sustainability Appraisal, that:
— CO2 from the production
of ammonia, fertilisers and petrochemicals could be included in
Phase III. Nitrous oxide from adipic and nitric acid plant could
be included during Phase II and definitely by Phase III.
— Methane from active coal mines
could be included in Phase III.
— CO2 and perfluorocarbons
from aluminium production could be included in Phase III.
— Hydroflurocarbons from refrigeration
were not considered feasible for inclusion.
For each of the sectors and gases that were
considered to have potential, possible route maps towards inclusion
were developed, covering data collection, legislative processes,
further assessment of competition issues, monitoring and reporting,
administration and communication.
December 2006
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