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Supply Tightened in the Carbon Trade

  • January 21st, 2007
  • Posted by EUA Editor

eu-industry-scape.jpgEuropean governments have been told to restrict the amount of carbon they permit to be traded.

The European Commission argues that its Emissions Trading Scheme (ETS) stands to make a major global impact against climate change, if only the volumes to be traded are kept down.

To put teeth into that appraisal it has been giving national governments stricter limits, this month (16.1.07) presenting National Allocation Plans (NAP) to two governments, Belgium and the Netherlands, which will mean steep reductions in their present limits.

Belgium has been given “allowances” totaling 58.5 million tonnes of carbon dioxide, the Netherlands 85.8 million tones. There are other restrictions, such as a prohibition on diverting the share of the Dutch NAB given to power stations, to other uses.

In November ten other countries in the 27-member group, (Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia, Sweden and the United Kingdom), received NABs, with similar reductions

The Commission said the CO2 allowances for energy-intensive industrial plants had been cut overall by 7%, and amounted to a reduction of permitted levels of the pollution to 93% of actual levels released into the air in 2005.

They applied to the second stage of the ETS program, for the period 2008-12.

Senior officials had complained that member governments were going too easy on industry, in several cases trying to ease-in the trading plan, by setting permitted levels actually above actual output.

They said the stricter limits imposed by the central executive, which by law governments must accept, would help their countries to meet their greenhouse emission targets under the international Kyoto Protocol.

Under ETS, governments set a fixed amount, or cap, for CO2 waste which particular industrial enterprises are allowed to produce; and after that the industries can sell off part of the allocation, or buy-in more from somewhere else.

(Late last year the Belgian power industry bought in an extra allocation from El Salvador, in international trading).

The EU has been talking with Australian and American State governments about getting them to join in with the scheme, side-stepping their federal authorities’ resistance to following the Kyoto protocols.

The European Environment Commissioner, Stavros Dimas, recently told a Parliamentary conference in London (11.1.07) that agreed targets for controlling global warming would not be met without determined action.

“The Commission’s starting point is that climate change most be limited to no more than two degrees Celsius above pre-industrial temperatures.

“The scientific evidence indicates that the risks of irreversible and potentially catastrophic impacts will greatly increase beyond this threshold.

“From our analysis it is clear that to have even a 50/50 chance of keeping within this two degree limit, worldwide greenhouse gas emissions will have to peak before 2025 and then fall by as much as 50% of 1990 levels by 2050,” be said.

The Commission wants the EU to push for an international goal of 30% cuts in 1990 emissions levels by the year 2020.

Reference:

EC Brussels, 16.1.07, IP/06/51; 19.12.06 !P/06/1826; 29.11.06 IP/06/1650; Questions and Answers on ETS, 29.11.06, MEMO/06/452.

Stavros Dimas, European Commissioner for Environment, “Climate Change: Why a Global response Needs European Leadership”, 11.1.07, SPEECH/07/8

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