Market News

 February 20, 2012
ExxonMobil hit with record €3.3m penalty for failing to report CO2

 ExxonMobil has received a stark reminder of the need to comply with green regulations, after it was fined €3m for failing to report 30,000 tonnes of carbon dioxide emissions from a Scottish chemical plant.

The Scottish Environment Protection Agency (SEPA) last week published its 2010-2011 enforcement report, revealing it had slapped a €3,296,600 penalty on Exxon after the company failed to report nearly 33,000 tonnes of carbon emissions from the Fife Ethylene Plant.

SEPA said Exxon had highlighted the error, but was still liable for the fine, which is charged at €100 per tonne of unreported emissions under the EU's Emissions Trading Scheme (ETS).

An Exxon spokesman told BusinessGreen the under-reported emissions accounted for just under five per cent of the site's total and that the error had been caused by "incorrect mapping of routings".

He added that the mistake was immediately reported when it was spotted and that the company has now fully reviewed and improved its procedures to avoid a repeat of the mistake.

According to WWF Scotland, the fine is by far the highest financial penalty for any environmental offence in British history, and serves as a warning to businesses of the need to understand and comply with environmental regulations.

"It is very embarrassing for a company as well resourced as ExxonMobil to have to admit that they can't fill in forms properly, let alone to get fined nearly £3m for their mistake," said WWF Scotland director Richard Dixon.

"This is the biggest, but there have been other examples of companies under-reporting their contribution to climate change. The whole point of the European trading scheme is to limit the total climate pollution coming from industry, so it is quite right that fines should be high for those who fail to comply," Dixon added.

David Symons, director of consultancy WSP Environment & Energy, told BusinessGreen that such penalties could have a reputational as well as financial impact.

"Fines of this level show the importance of accurate reporting, and also robust checking, both by internal auditors and external certification bodies," he said.

"However, the reality is that while a £2.7m fine is indeed substantial, the average fine paid for pollution in Scotland is still less than £5,000. The PR impact of incidents is often much more significant than the financial penalty itself," added Symons.

The money is understood to have been passed to the Scottish government and will now be used to fund a series of environmental projects.

The news comes as the EU prepares to debate reforms to the EU ETS that would further tighten the scheme and could result in higher carbon prices from 2013 onwards.

According to draft texts seen last week by news agency Reuters, officials have agreed in principle to hold back the release of some carbon allowances to help drive up the price of the carbon, but are yet to finalise the details of the proposed move.