European companies not ready for emissions trading

Only one-third of European companies that will be affected by the new EU Emissions Trading Scheme have yet addressed the issue by creating a budget for compliance, a recent survey found. The new plan, introduced to implement Europes Kyoto pledges, mandates significant reductions in the emission of greenhouse gases by 2005 and beyond.

The survey by LogicaCMG, a European consulting firm, was aimed at assessing whether corporations were dealing with the Emissions Trading Scheme beyond boardroom discussions and impact studies. They explained, “A good measure of this is the willingness to commit real money in the form of budget allocation.” It was found, however, that 91 percent of all companies are currently taking some sort of action to gauge how the regulatory scheme would affect their profits. Approximately two-thirds of those surveyed have created staff positions strictly for monitoring CO2 regulatory issues.

Twenty percent of the surveyed corporations were unsure as to whether they would be emissions sellers or purchasers. Of these, many felt they must first wait for a market to develop before deciding. The report concluded by claiming that “trading plans are not a high priority at present, with the vast majority understandably focused on actions necessary to prepare for full compliance, at least in the short term.” The lack of planning may explain why companies are only now realizing the serious effects the trading scheme will have on their profitability.