The market is a powerful tool to help reduce greenhouse gas emissions at the lowest cost to society. It allows companies to direct their investments in emission reduction to the places where they will do the most good.
More and more governments are moving to respond to the climate change. We expect, and call for them to make more use of market mechanisms, since they are a powerful way to harness innovation and reduce costs of CO2 reduction.
In a recent article, Shells Chief Executive, Jeroen van der Veer argues that:
“In order for market forces to work we (paradoxically) need more regulations. Governments must urgently provide the rules that can foster lower carbon dioxide emissions. These regulations must encourage both investment in new technologies and energy conservation.”
Read the full speech.
To find out more about market mechanisms and emissions trading, visit the International Emissions Trading Association - opens in new window.
Shell is supportive of and active in the development of market mechanisms and is encouraging their use throughout our businesses. Our programme has taken us from pilot to reality over the last eight years:
2006
- We are actively supporting a European Union (EU)-China dialogue that is trying to make it possible for European companies to use the EU Emissions Trading Scheme (ETS) to equip new coal-fired Chinese power plants to capture and store CO2.
- Shell was a signatory to a letter to UK Prime Minister Tony Blair from the Corporate Leaders Group on Climate Change. The letter covered a number of important steps in the journey towards a low carbon economy, with particular reference to the Phase II allocation discussions for the EU-ETS. The letter asked the Prime Minister to " show leadership in the negotiations over Phase 2 of the ETS by taking on challenging targets, and that the Government should aspire to a cap at the higher end of the range of 3MtC to 8MtC proposed in the Government's Consultation on the Draft National Allocation Plan for Phase 2."
- Shell Trading is active in the international carbon market. In March 2006, Shell Trading was the recipient of the first physical forwarding of Certified Emission Reductions (CERs) to an account on the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat's Clean Development Mechanism Registry. The CERs will be part of a portfolio that draws on Shell and non-Shell clean development mechanism projects.
2005
- 30 facilities, covering about a fifth of our worldwide operational emissions, participate in the European Emissions Trading System. Shell Trading was voted the best trading company in a poll by Environmental Finance magazine.
2004
- Our European business units actively prepared for the launch of the European Emissions Trading System. This legislation meant that all large emitters across the EU will have their greenhouse gas emissions capped from January 2005, but be able to manage that cap through trading as well as investment. We presented an overview on our preparations at a conference in London in February 2004. We were reported to have made the first ever trade in 2004 for the second-period EU allowances (2008-2012);
- Our European business units actively prepared for the launch of the European Emissions Trading System. This legislation meant that all large emitters across the EU will have their greenhouse gas emissions capped from January 2005, but be able to manage that cap through trading as well as investment. For Shell, the directive will cover some 30 European facilities emitting over 30 million tonnes of carbon dioxide. Our challenge is to be ready to participate in this exciting new market on our preparations at a conference in London in February 2004.
2003
- Shell Trading and Nuon executed the first ever trade of EU carbon dioxide allowances
2002
- Led by our new trading business, Shell UK entered into the voluntary UK Emissions Trading System - opens in new window. Key Shell UK upstream production facilities now have a greenhouse gas emissions cap on them as a result of entry into this system. The new trading business actively explored CDM opportunities for the Group, such as those available through the Netherlands Government CERUPT programme (which gives companies a potential buyer for their project based emission reductions in developing countries) and similar early schemes.
2001
- Created an Environmental Products Trading Team within the Shell Trading organisation. The team, led by an experienced emissions trader, has global responsibility for the Shell Group’s use of the Kyoto mechanisms.
2000
- Designed and implemented a pilot emissions trading system, the Shell Tradable Emission Permit System: STEPS, which operated in a number of Shell facilities in Kyoto Annex 1 countries. This programme has now come to an end as we move to trading in real external systems, such as those in Denmark, the United Kingdom and Europe from 2005. STEPS provided useful lessons that we have been pleased to share with those designing such systems.
1999
- Developed a pilot CDM screening process and used it to identify potential CDM projects within the Shell Group; The Shell clean development mechanism demonstration programme (PDF, size 481Kb) - opens in new window.
→ Shell Sustainability Report 2006
Visit the online Shell Sustainability Report 2006 and discover what we say about climate change - opens in a new window.