£1.2M Diageo civil penalties

  09 March 2022

On 8 March 2022 a Reporter appointed by Scottish Government Ministers issued a determination in an appeal by Diageo Scotland Ltd against civil penalty notices served by SEPA.

Jamie McGeachy, Carbon Reduction, Energy and Industry Manager, SEPA, said:

“SEPA is clear that compliance is non-negotiable.

“SEPA issued Diageo with civil penalties of £1,398, 911.28 under the Emissions Trading Scheme (ETS) (reduced to £1,212,389.78 under appeal). This was due to three of their facilities each operating for just over six years without an ETS permit.

“ETS is a crucial step towards achieving Scotland’s goal of a 75% reduction in CO2 emissions by 2030 and net zero emissions by 2045, and participation and full compliance is not optional. 

“These civil penalties demonstrate SEPA’s commitment to enforcement of obligations under ETS. Our message is clear: if you do not follow the regulations designed to protect and improve our environment, there are consequences. These penalties should serve as a warning to not only the company involved, but all others in Scotland, that we will take the appropriate action to ensure compliance.”

Further information

  • ETS puts a cost on carbon emissions to encourage qualifying polluters to reduce the amount of greenhouse gases emitted. It works under a ‘cap and trade’ principle, where a limit is set on the total amount of greenhouse gases that can be emitted by those within the scheme. The cap is reduced over time, making a significant contribution to achieving Net Zero.
  • Qualifying operators are required to hold a permit and accurately monitor and report all qualifying emissions on an annual basis.  An ‘allowance’ then needs to be surrendered for each tonne of CO2 equivalent which they have emitted, thereby ensuring both that the polluter pays and providing an incentive for those participating in the scheme to reduce their costs by reducing their emissions of CO2.
  • It is the responsibility of operators to know what regulatory regimes they should be operating under and to ensure they have applied for the relevant permits.
  • Operators receive or buy allowances and must surrender enough to cover their reportable emissions. Additional allowances can be purchased through the open market, as those who do not use their allocation may sell them. The cost of allowances is reflective of the cost of carbon.
  • SEPA publishes details of ETS civil penalties on its website once they are paid UK Emissions Trading System | Scottish Environment Protection Agency (SEPA)