Multinational drinks giant Diageo has been fined more than £1.2m by the Scottish government for breaches relating to the EU Emissions Trading Scheme (EU ETS), despite having an appeal partially up-held.
The company operates six installations in Scotland that were required to participate in the EU ETS under its third phase, which began in 2013.
An investigation by the Scottish Environment Protection Agency (SEPA) found the firm had failed to apply for ETS permits at three sites on its Glen Ord complex in Muir of Ord, Inverness between 2013 and 2018.
The company corrected the error in 2019 after an external audit highlighted an issue relating to emissions released by burners used in malting. However, Diageo was ordered to pay civil penalties of just under £1.4m. Although reduced to £1.2m on appeal, a reporter appointed by Scottish ministers ruled on 8 March that it must be paid.
Under the ETS, companies must report their climate pollution every year. The scheme, designed around the polluter pays principle, aims to cut overall emissions by enabling companies to buy and sell pollution permits.
Diageo blamed “human error” for the reporting failure. It argued that the mathematical formula for determining the penalties is “unfair and disproportionate” and that the fines should have been £60,000. However, government reporter Paul Cackette found that SEPA had taken a “broadly correct” approach to judging the mitigating and aggravating factors of the offence, although he criticised the weight it placed on some of them.
Jamie McGeachy, carbon reduction, energy and industry manager at SEPA, said: “SEPA is clear that compliance is non-negotiable. The 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 the 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.”