BP trades first UK carbon credits

10 April 2002 – BP today became the first company to use the UK’s newly introduced emissions trading scheme when it bought and sold 1000 carbon credits. BP has not revealed the vendor but said is had sold the carbon credits to minerals processing group Imerys for à‚£5 per tonne.

The UK scheme for trading in carbon credits was officially launched at the beginning of April and followed a government-sponsored auction of à‚£215m of emissions permits in which 34 companies and organizations participated.

Imerys, formerly known as English China Clay, have worked closely with BP over the past 12 years to achieve improvements in their energy and environmental performance. They became the first energy customer to benefit from a BP service designed to support the UK’s Emissions Trading Scheme and help customers lower emissions. BP said today that the trading enabled both companies to gain first-hand experience of trading early in the life of the scheme.

The BP service, which came into effect on the first day of trading, enables customers to access information on the emissions trading market and track their own environmental performance against agreed targets. It will help customers build their capability in using the Emissions Trading Scheme to reduce emissions cost-effectively.

BP is currently securing similar service agreements with other customers.

Fiona MacLeod, BP’s UK Gas and Power Managing Director, said, “BP has gained extensive experience in emissions trading from our own, internal emissions trading scheme. Developing an information service for our customers in support of emissions trading is part of our continuing efforts to provide innovative services that go beyond the provision of energy and, in this case, that help lower emissions cost-effectively.”

Thierry Salmona, IMERYS’ Executive Vice President Building Materials, Ceramics and Specialities, said, “This service will help give us confidence to participate in the emissions trading market and meet our emissions targets
cost-effectively. In doing so, it may also enable us generate further revenue to support additional investment in energy efficiency and environmental projects.”

BP introduced an internal emissions trading platform in January 2000 in which all its business units participate. To date, 7 million tonnes of emissions allowances have been exchanged with an average price of $28 per metric tonne of COà‚² equivalent. It was the first company to introduce an internal emissions trading scheme, which has helped BP to meet its commitment to achieve a 10 per cent reduction in greenhouse gas emissions below 1990 levels eight years early, and at no net cost.

A spokesperson for BP said that the price achieved for the credits today was in line with that achieved in the internal BP scheme. The level at which carbon credits trade should reflect the cost of making additional COà‚² emissions reductions.

Prior to the launch of the UK emissions trading scheme, futures contracts have been arranged. Last September, specialist broker Natsource Tullet arranged the first UK emissions futures contract between DuPont and Marubeni of Japan. DuPont sold 10 000 UK emissions allowances for delivery this summer.

The UK Government introduced a climate change levy, applied to energy used in the business and public sectors effective from April 2001. An 80 per cent discount is allowed in the levy rates for those in energy intensive sectors of industry that agree to meet challenging targets for improving energy efficiency or reducing carbon emissions within a climate change levy agreement.

Participants in these agreements will now be able (with the start of the UK Emissions Trading Scheme) to achieve their targets either by trading emission allowances with other companies in a climate change levy agreement, or by
participating in the wider UK emissions trading scheme.

BP and IMERYS are participating directly and Independently in the UK emissions trading scheme.

BP has made a 353,500 tonnes of COà‚² equivalent emissions reduction commitment into the UK Emissions Trading Scheme. All of its operated upstream assets are
participating in the scheme. BP’s chemical operations will also participate in the scheme, using its emissions trading market, as this will allow them to meet their Climate Change Levy Agreement obligations in the most cost-effective way.

BP said it would be considering the commercial benefits of further trading within the UK scheme, which is due to run up to 2006.

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