Carbon trading opens up in the UK with the launch of the ETS (Emissions Trading Scheme), which went live yesterday.
What’s the ETS?
The UK ETS is the equivalent of the European Climate Exchange, serving as a substitute to the European exchange post-Brexit.
How does ETS work?
Emissions trading schemes work on the ‘cap and trade’ principle, where a cap is set on the total amount of certain greenhouse gases that can be emitted by sectors covered by the scheme. This limits the total amount of carbon that can be emitted and, as it decreases over time, will make a significant contribution to how the UK will meet its Net Zero 2050.
Each year, businesses and aircraft operators have to report their overall emissions. Each businesses will be able to work within its allowable cap. If a company does not manage to remain within the allocated allowance, they can buy emission allowances on the secondary market.
Earning from emission reduction
Allowances can be traded with other market participants as needed, so that businesses which managed to reduce their emissions beyond their allowance can sell their own credits and monetise on their reduced footprint.
BLK can support your business reducing its overall carbon footprint.
Through our Supply Chain service and Carbon Trading capability we:
- Help you reduce your overall emissions by sourcing from local suppliers and/or organising bulk deliveries for multiple companies, thus reducing shipping footprint;
- Trade your carbon allowances earned in this way on the UK ETS, so that you earn thanks to the emissions you off-set;
- Aggregate your purchasing volume with that of other companies, negotiating best prices with suppliers and delivering savings to your bottom line.
Not only you can save by outsourcing your supply chain to us, but you would open a completely new revenue stream going straight into EBITDA.
Carbon trading is going to be the next “big thing” and presents a clear opportunity for forward-thinking companies which are serious in reducing their footprint.
Market Size
The global Carbon Market is currently worth $240B.
The demand for voluntary carbon credits is set to increase x15 by 2030 – according to McKinsey’s research, and its size will be 100 times today’s value by 2050.
Carbon Credits are valued OTC at $30.05, with a growth of 56.25% YoY on the European Carbon Exchange alone, where prices soared from €9/MT to over €25/MT between 2018 and 2019.
Impact on UK & Scotland
If just 1% of Scottish businesses were to source raw materials locally, this would contribute to a reduction of 500,000 t of CO2 from the atmosphere, whilst creating 3,700 Scottish Jobs and adding £700M to the Scottish economy.
On a UK level, the reduction of CO2 linked to the increase by 1% of local sourcing (as opposed to importing) would near 2 million tons, with £2.6B added to the UK economy and create 14,000 new jobs.
To keep up-to-date with the UK ETS roll-out, learn how to reduce your overall carbon footprint and monetise on your carbon allowances, visit us here and get in touch.