Oil company fined a record £2.8m by SEPA over emissions failings

The civil penalty, imposed by the Scottish Environment Protection Agency (SEPA), is the largest ever fine for an environmental offence issued in the UK, according to press reports.

Details of the fine, which was imposed for a breach of the UK regulations that implement the EU Emissions Trading Scheme, were contained in SEPA's enforcement report (48-page/ 1.2MB PDF) for 2010-11, which was published last week.

Since 1 January 2005 energy companies, iron and steel producers, the mineral industry and the wood pulp, paper and board industry that fall within the scope of the Greenhouse Gas Emissions Trading Scheme Regulations must have a Greenhouse Gas Permit from the regulator to operate and emit greenhouse gasses. Under the regulations, companies in Scotland must submit an annual report to SEPA on any greenhouse gas emissions from their installation.

"ExxonMobil Chemical Limited notified SEPA that they had identified sources of carbon dioxide emissions which they had unfortunately not included within their annual reportable emissions for 2008. As a result, they had failed to surrender allowances in respect of the 2008 scheme year for the three omitted sources of carbon dioxide emissions," SEPA said in its report.

The company was fined €100 per tonne under the Regulations in respect of the undeclared emissions, SEPA said.

Additional fines amounting to £153,125 were issued against companies and individuals for criminal cases brought by SEPA over the last financial year.

“Mandatory civil penalties apply for emitters that fail to report all of their carbon emissions, even as a result of an oversight - at €100 a tonne, the costs of inaccurate accounting can easily mount up," said Gordon McCreath, an environmental law expert at Pinsent Masons, the law firm behind Out-Law.com. "At a time when wider, discretionary civil penalties are about to be added to the EA’s armoury, emitters should take note - this fine, although mandatory, could well serve to embolden regulators in their use of the new discretionary enforcement tools.”

SEPA Director of Operations Calum MacDonald said that the figures showed that the regulator would not "shy away from using formal enforcement tools" where necessary.

Richard Dixon of environmental charity WWF Scotland said that ExxonMobil's case was not the first example of a company underreporting its "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. You would assume Exxon are now very careful to report the right data but this massive fine is a big message to others to get it right," he said.

In a statement, ExxonMobil said that it had identified the cause of the reporting error and had "fully reviewed and improved" its verification procedures to address the issues.

"This inaccuracy was identified by ExxonMobil's internal systems and represented some 4.7% of the site total. We immediately provided this information to the Scottish Environment Protection Agency. In the past two years ExxonMobil Chemical Limited has made significant investments at Fife to reduce NOx and CO2 emissions," the company said.