The UK Implements Proactive Policies to Reduce Greenhouse Gas Emissions

While humans use fossil energy such as coal, oil, and natural gas to create huge material wealth, they also emit large amounts of greenhouse gases, leading to global climate warming and causing inestimable losses. The concept that climate change will cause huge costs to mankind has been widely accepted by the world, and greenhouse gas emission reduction has also become a global environmental issue of widespread concern and research.

1. Global climate change and impacts Scientific research shows that in the past century, the global climate is undergoing a significant change characterized by warming. The Intergovernmental Panel on Climate Change pointed out in its third assessment report that since 1860, the global average temperature has increased by 0.6±0.2 degrees Celsius; the global climate will continue to warm in the next 50 to 100 years. Global climate warming is closely related to human activities. Since the Industrial Revolution, humans have excessively used fossil fuels such as coal, oil, and natural gas to emit large amounts of greenhouse gases, which is the main cause of global warming. At the same time, large-scale deforestation and grassland The damage intensifies the process of global climate warming. The current man-made greenhouse gas emissions accumulated in the atmosphere mainly come from emissions from developed countries since the Industrial Revolution, and currently account for 22% of the world's population, emitting more than 60% of carbon dioxide.

Observations show that global climate warming has had an impact on natural ecosystems in many regions around the world, such as rising sea levels, retreating glaciers, melting permafrost, shortening the freezing period of rivers (lakes), extending the growing season in mid- and high latitudes, and affecting the distribution of animals and plants. The range extends to the south, the Arctic and high altitude areas, the number of certain animals and plants decreases, and the flowering period of some plants advances; some extreme events closely related to global warming, such as El Niño, drought, floods, heat waves, avalanches and storms, and sand and dust storms , forest fires, etc., their frequency and intensity have also increased. It is expected that by 2100, the earth's average surface temperature will rise by 1.4-5.8 degrees Celsius compared with 1990, and the global average sea level will rise by 0.09-0.88 meters compared with 1990. The frequency of some extreme events (such as high temperature weather, heavy precipitation, tropical cyclones, strong winds, etc.) will increase.

2. The origin and introduction of the "Kyoto Protocol" In order to deal with the problem of global climate warming and stabilize the concentration of greenhouse gases in the atmosphere at a level that prevents dangerous anthropogenic interference with the climate system, the United Nations Framework Convention on Climate Change (1994) was adopted in 1992. Effective March 21, 2018). The Convention stipulates that all parties shall protect the climate system on an equitable basis, in accordance with common but differentiated responsibilities and respective capabilities, for the benefit of current and future generations of mankind. Developed countries should take the lead in taking action to combat climate change and its adverse effects.

In 1995, the first Conference of the Parties to the Convention held in Berlin decided to negotiate and formulate a legal document to provide developed countries with greenhouse gas emission reduction obligations and timetables after 2000; it also decided not to introduce additional measures for developing countries. any new obligations beyond those under the Convention. After many meetings and negotiations, in December 1997, the third Conference of the Parties was held in Kyoto, Japan, and the Kyoto Protocol of the United Nations Framework Convention on Climate Change (referred to as the Kyoto Protocol) was formulated. The Kyoto Protocol is the first international legal document that stipulates quantitative emission reduction targets for developed countries, but it does not provide any emission reduction or emission limitation obligations for developing countries.

The Kyoto Protocol stipulates that developed countries and countries with economies in transition should reduce greenhouse gas emissions by 5.2% from 1990 levels between 2008 and 2012. These countries should mainly rely on their domestic activities to complete their emission reduction tasks. However, in order to facilitate their fulfillment of their emission reduction obligations, the Kyoto Protocol also stipulates three flexible implementation mechanisms, namely: joint implementation between developed countries and countries with economies in transition; Emissions trade between countries and Clean Development Mechanism (CDM) cooperation between developed and developing countries. CDM cooperation essentially means that developed countries purchase greenhouse gas emission reductions from developing countries to fulfill their emission reduction obligations under the Kyoto Protocol. This kind of cooperation will not only help developed countries fulfill their emission reduction obligations, but also help developing countries improve their technological level, save energy and protect the environment.

3. The UK’s climate policy and practice The UK is the world’s most active advocate and practitioner of controlling climate change. The Kyoto Protocol sets a target for the EU to reduce greenhouse gas emissions by 8% by 2012 based on 1990 levels, while the UK's target is to reduce emissions by 12.5%. In March 2003, the British "Energy White Paper" proposed to reduce carbon dioxide emissions by 20% by 2010 and by 60% by 2050. In order to achieve this goal, the UK has formulated a series of climate policies to improve energy efficiency and reduce greenhouse gas emissions. The establishment of a carbon fund and the implementation of a greenhouse gas emissions trading system are two important policies.

The Carbon Fund is an independent company invested by the government and operated on an enterprise model. It was established in 2001. The focus of the Carbon Fund is to help enterprises and the public sector reduce carbon dioxide emissions. The short- and medium-term goals are to improve energy efficiency and strengthen carbon management, and the medium- and long-term goals are to invest in low-carbon technologies.

The Carbon Fund is funded primarily by the UK’s climate change tax. The climate change tax is an energy use tax levied on industry, commerce and the public sector (except residential and transport sectors, residents). It has been implemented since April 1, 2001. About 66 million pounds of climate change tax is allocated to Used by carbon fund management.

Carbon funds use strict management systems to ensure that public funds are used rationally through corporate operations. First, the board of directors of a carbon fund company is composed of people from government departments, the business community, trade unions, academia, and non-governmental organizations. It is stipulated that the board of directors can only be convened when directors from the business community account for a majority to ensure that the interests of the company are not compromised. ignored. Second, before receiving funding, carbon fund companies must submit work plans and priority areas and negotiate with the environmental affairs authorities to reach a framework agreement. Third, carbon fund companies must make an implementation report every year and make a comprehensive assessment every five years. The evaluation is based on the effectiveness of carbon emission reductions and is conducted by a completely independent agency to evaluate the efficiency of fund use. Fourth, the government does not interfere in the operation and management of carbon fund companies. Carbon fund expenditures, investments, wages and bonuses of carbon fund personnel, etc. are determined by the board of directors and the government does not interfere.

The investment of the Carbon Fund is mainly used in three aspects, one is to promote research and development, the other is to accelerate technology commercialization, and the third is to invest in incubators. Carbon funds are used for investment projects, usually 1.5 million pounds; for research projects, usually 50,000 to 250,000 pounds.

In terms of enterprise selection, the Carbon Fund mainly focuses on large enterprises with annual energy costs of more than 3 to 4 million pounds, because large enterprises have high energy consumption and high carbon dioxide emissions. When selecting low-carbon technologies, we pay attention to the scientific nature of technology assessment. The main screening criteria are carbon emission reduction potential and technology maturity. We also focus on cost efficiency and give priority to investing in mature technologies with large carbon emission reduction potential.

Carbon funds provide free carbon management services to enterprises, helping them identify energy saving and emission reduction potentials and identify investment opportunities, so enterprises are generally willing to accept the services of carbon funds. When the Carbon Fund first started working, it took the initiative to contact large companies and provided funds to help them conduct energy surveys and list 10 priority areas for energy conservation and energy efficiency improvement. Through this free service, Carbon Fund has been widely recognized by enterprises. In view of the limited funds of the carbon fund and the increasing market demand, the carbon fund's carbon management services are no longer completely free, but require enterprises to provide 50% of matching funds, and the funds provided shall not exceed 20,000 pounds. In the future, if enterprises want to obtain management services from the Carbon Fund, they must first conduct energy self-assessment through the Carbon Fund's portal, and then apply for funds and investment and financing support.

The greenhouse gas emissions trading system is a market-oriented environmental management tool that helps reduce emissions reduction costs. The UK is the first country in the world to formulate and implement a greenhouse gas emissions trading system. As an important part of the UK's climate change policy, the UK launched a five-year emissions trading system covering six greenhouse gases in 2002.

This system is based on the principle of voluntary participation and encourages companies to implement emission reduction actions through incentives such as rewards and tax exemptions. It includes four types of participants: First, direct participants, which refer to enterprises that receive government financial support and voluntarily commit to absolute emission reduction targets. In 2002, the British government used an auction to provide 215 million pounds to 33 companies that voluntarily committed to reducing emissions by 11.88 million tons of carbon dioxide equivalent between 2002 and 2006. The second is relative target participants, which refers to companies that commit to relative emission targets or energy efficiency targets by voluntarily signing a climate change agreement with the government. Companies that meet the commitment targets can enjoy up to 80% reduction in climate change tax. The third is project participants, which refers to project owners who can produce additional emission reductions relative to the baseline. Fourth, other individuals and institutions that have no commitment to emission reduction obligations, such as intermediaries and non-governmental organizations, can also voluntarily participate in emissions trading.

Allowed emission quotas are the trading objects of the emissions trading market, and their allocation quantity and allocation method directly affect the transaction price and market liquidity. The British emissions trading system uses the average emissions from 1998 to 2000 as the baseline, subtracts the annual voluntary emission reduction commitments, and determines the annual allowable emission quotas for enterprises. Currently, the quotas are allocated to enterprises free of charge. If a company's actual emissions are greater than its quota, it needs to buy it from the market and is not allowed to borrow future quotas to meet its current goals. If not, the quota can be sold or stored for later use.

In order to ensure the authenticity of emission reductions, the British emissions trading system has developed a strict monitoring, reporting and verification system. It stipulates that all participants who commit to emission reduction targets must measure and report their corporate emissions status in accordance with relevant regulations before entering the market, and their operating methods must be transparent, fair and continuous. Thereafter, reported emissions data each year must be verified by a licensed third-party independent certifier. In order to facilitate transactions and implement effective management of transactions, the British emissions trading system has established an electronic registration system. All participants must register at least one account in the system to record their basic situation and information such as quotas, quota transfers, and quota supply and demand. All transactions are conducted in real time through the Internet, and the costs for enterprises to search for information, conduct transactions, and government management costs are greatly reduced.

Under this registration system, for direct participants, there is a performance period every year, and the reconciliation period is three months after the performance period. The management agency issues annual incentive funds and all emission quotas to enterprises based on their performance status. If an enterprise fails to meet its emission reduction targets, it will not only lose annual incentive funds, but will also have to deduct a certain amount of emission quotas or be fined.

The UK emissions trading system is an open system in which participants are free to use international quotas or credits held under their obligations under the Kyoto Protocol to fulfill their obligations. But before 2008, quotas or credits generated by other flexible mechanisms were only valid after signing a bilateral government agreement. In early 2005, after the EU emissions trading system was implemented, in order to avoid dual rules, the UK applied and was approved by the European Commission to allow some companies that had already participated in the UK emissions trading system to temporarily withdraw, in order to ensure a smooth transition between the two emissions trading systems. Since its launch in April 2002, the UK emissions trading system has achieved significant emissions reduction results. In the first year of implementation, direct participants reduced emissions by 4.64 million tons of carbon dioxide equivalent relative to the baseline. In 2003, cumulative emissions reductions were 5.2 million tons, and in 2004, cumulative emissions reductions were 5.9 million tons. In addition to direct environmental benefits, the UK took the lead in implementing a domestic greenhouse gas emissions trading system, which enabled the business community, brokers, verification agencies, governments and stakeholders to gain rich and valuable practical experience, including the UK's development and establishment of a relatively The comprehensive emissions trading management system has created good conditions for the UK to better participate in the international greenhouse gas emissions trading system. London is gradually developing into the center of European carbon market trading.