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Regulatory environment

Due to the importance of transport services to society, Express is affected by regulation.

Carbon Management and Reduction

EU Emission Trading Scheme (EU ETS)

The Kyoto protocol established three mechanisms to be used by countries to attain emission reduction through effective management of carbon: emission trading, joint implementation and clean development. The Directive 2003/87/EC established a scheme for greenhouse gas emission allowance trading within the Community in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner, recognising that, in the long term, global emissions of greenhouse gases should be reduced by approximately 70% compared to 1990 levels.

EU ETS recognises three time-based key phases, arranged in order of the polluting nature of industries. The first phase was from 2005 to 2007, covering heavy industry or service providers such as power, oil refineries, paper and steel manufacturers. The second phase, from 2008 to 2012, expands the scope to include the aviation sector, while the third phase, from 2013 to 2020, expands the scope to include other industries such as the aluminium and ammonia production industries. Therefore, as part of the regulatory obligations under the EU ETS, Express must monitor and report data regularly from 2010 onwards on all its aircraft.

A key part of EU ETS is the development of a monitoring plan that reports Express’ emissions and tonne–kilometre data, and the verification of this by an independent and accredited verifier. The monitoring and reporting plans for Express’ aviation have been accepted by the local authorities. The allocation of credits will take place in the second quarter of 2011, based on our reported data for use in 2012.

Carbon Reduction Commitment – Energy Efficiency Scheme (CRC)

In November 2008, the United Kingdom became the first country in the world to introduce a Climate Change Act, which is now a UK legally-binding, long-term framework for tackling climate change. The Act sets up a framework for the United Kingdom to achieve its long-term goals for reducing greenhouse gas emissions and to ensure steps are taken towards adapting to the impact of climate change.

The UK government is therefore now bound, by law, to cut emissions by at least a third by 2020 and by at least 80% by 2050, and to embrace climate change and commit to a low carbon economy. To help achieve this, a new mandatory carbon emission trading scheme, called the CRC, has been introduced for large non-energy intensive organisations.

The CRC will apply to organisations that purchase more than 6,000 MWh of electricity through half-hourly metres. Express falls into this category and will be ranked in a performance league table using three metrics:

The revenue raised from the sale of allowances was supposed to be recycled back to participants in the CRC after a six-month period and the amount of money paid back as an incentive to cut carbon emissions. However, the government of the United Kingdom, as part of its cost-cutting strategy in 2010, decided not to comply. Express will therefore have to pay this levy.

Express foresees the commitment to a low carbon economy being extended further into Europe and other countries and has included this in Express’ global approach in the development of its long-term CO2 efficiency improvement objective. In addition, Express is responding proactively by developing and implementing country, regional and divisional carbon reduction plans. The initiatives to reduce its impacts are being supported through its capital expenditure and budgetary process.