Compliance with European Cap and Trade and Carbon Reporting Legislation
The EU has been devising measures to combat climate change for more than a decade and has established a variety of initiatives that impact manufacturers and processors. The EU Emissions Trading System (ETS), launched in 2005, is the most significant mechanism implemented to control and reduce emissions of Greenhouse Gases (GHG). As with all Cap and Trade systems, the idea is to engage the market place, with its financial incentives and penalties, to cut climate-changing carbon emissions rather than through top-down orders from regulators.
The ETS established a market for large industrial facilities to trade the right to emit CO2, with the total number of allowances being allocated gradually reduced since inception. Each CO2 emitter included in the ETS is given some allowances free each year by their national government. One allowance equals one ton of CO2. They can also buy more if they need them or, if they are under their allowance, sell ones they do not need themselves.
The ETS now operates in 30 countries (the 27 EU Member States plus Iceland, Liechtenstein and Norway). It covers CO2 emissions from installations such as power stations, combustion plants, oil refineries and iron and steel works, as well as factories making cement, glass, lime, bricks, ceramics, pulp, paper and board. Nitrous oxide emissions from certain processes are also covered. Between them, the installations currently in the scheme account for almost half of the EU's CO2 emissions and 40% of its total greenhouse gas emissions. For sectors not covered by the ETS, such as waste, EU member states have agreed to binding national emissions targets. These national targets will cut the EU's overall greenhouse gas emissions from non-ETS sectors by 10 per cent by 2020 compared with 2005 levels.
Airlines are joining the scheme in 2012, despite repeated, yet so far unsuccessful, attempts from countries outside the EU to exempt non-European Airlines companies.
Starting 2013, when the third trading period will start:
The EU ETS will be further expanded to the petrochemicals, ammonia and aluminum industries.
Emission allowances traded on the ETS will be cut each year to reduce them to 21 per cent below the 2005 level in 2020.
The allowances will also begin to be auctioned off rather than given away, while new sectors and gases other than CO2 will be included in the ETS.
Additional gases will be tracked.
Read here for more information about Climate Change Legislation in the United Kingdom.
Similarly to the cases of California and Australia, Oracle Environmental Accounting and Reporting (EA&R) can provide accurate and complete tracking and calculation of emissions data, along with rigorous internal controls and nimble reporting mechanisms. EA&R guarantees consistency across organizations in how data is collected, retained, controlled, consolidated and used in calculating and reporting emissions inventory. Without the necessary reporting capabilities, organizations cannot know if they are truly in compliance.
For organizations that need to manage allowances with a portfolio optimization strategy, using advanced tools, techniques, and models to increase the returns on their allowance investments, Oracle Hyperion Planning and Crystal Ball can integrate with EA&R to support scenario analysis and advanced analytical models. Decisions are driven by risk reduction and cost factors such as price trends, capital cost trends, and accounting and tax impacts. Emissions and allowances are managed as part of an integrated carbon portfolio.
EA&R also enables companies to develop an enterprise-wide data view that includes all five of the key sustainability categories: carbon emissions, energy, water, materials and waste. Reporting, metrics, disclosures, and internal controls that companies use for emissions, energy, water, materials and waste need to be as rigorous as those for financial data. Thanks to its native integration with Oracle and JDE ERP Financials and Inventory Systems and the capability of capturing environmental data across business silos, Oracle Environmental Accounting and Reporting is uniquely positioned to support a strategic approach to carbon management that drives business value.
RELATED SOLUTIONS FOR ENABLING THE ECO ENTERPRISE
For more information on how Oracle's solutions enable the "Eco-Enterprise" go to www.oracle.com/green.