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EC Refuses Governments’ Deals on CO2; Says Cut It Back

  • December 3rd, 2006
  • Posted by 7thmin

eu-industry-scape.jpgNational governments in the European Union are going back to the drawing board, or drawing up plans for legal action, after the excecutive Commission knocked back their allocations of pollutant gas to industry – as being too generous.
Ten countries had their submissions evaluated: Germany, Greece, Ireland, Latvia. Lithuania, Luxemboirg, Malta, Slovakia, Sweden and the United Kingdom. They were accepted only conditionally, with the European Commission demanding large reductions in their allocations.

If they make changes as instructed, their allocatons will be accepted automatically with no need to provide fresh submissions; but compliance would require very large adjustments in most cases, and breach of both political and legal undertakings given to industries.

First group in Stage 2

They are the first ten to be considered out of the twenty-five member states, in preparation for Stage Two of an ambitious Emissions Trading Scheme (ETS), devised by the EU to meet commitments under the Kyoto accord on global warming. Stage One began in 2004 with the requirements taking effect from 1.1.05, and Stage Two is to run from 2008 to 2012. Under the ETS system, industries will be able to obtain part of a national quota of pollutant carbon dioxide, CO2, expressed as set units (each one tonne of CO2), and will not be able to put out a higher level – unless they buy the additional amount on the market. (Recently the Belgian electricity system purchased a large quota from El Salvador).
Under the system, known also as carbon trading, carbon dioxide will become a scarce and expensive commodity to produce as waste; industries will have incentives to reduce output of it or devise other methods of production.

Commissioner declares

This week (29.11.06), the European Commissioner for Environment, Stavros Dimas, released the long-foreshadowed findings against the ten countries, indicating that in several cases the “caps” or limits they wanted were above actual levels of producton in the benchmark year, 2005.
They included large allocations, and future guarantees of access to quota, given to some of their national companies, which would permit them to expand output without incurring costs associated with the carbon emissions from their intstallations.
Mr Stavros considered such limits would be too generous to have sufficient impact towards meeting the Kyoto targets.The Commission had reduced the allowances by almost seven per cent below the emissions proposed by the national allocation plans and seven per cent below the 2005 emissions.
“Today’s decisions send a strong signal that Europe is fully committed to achieving the Kyoto target …,” he said. The European Commission has powers allocated under founding Treaties of the European Union, including powers of scrutiny to require that member governments conform with agreed, and mandatory, standards set for the EU as a whole. In this case it followed set criteria as laid out in legislation – an Emissions Trading Directive.


The Commission announced it was requiring changes to the 10 plans assessed where:
• the proposed total of allowances (‘cap’) for the 2008-2012 trading period is not consistent with meeting the Member State’s Kyoto target,
• the proposed total of allowances is not consistent with expected emissions and the technological potential to reduce emissions, taking into account independently verified emissions in 2005, anticipated changes in economic growth and carbon intensity,
• the proposed limit on the use by companies of credits from emission-reduction projects in third countries carried out under the Kyoto Protocol’s flexible mechanisms[2] is not consistent with the rule that the use of these mechanisms should be supplementary to domestic action to address emissions.
The governments concerned will be able to make the required changes to have their plans approved, without having to make new submissions. The Commission has started infringement procedures against five countries which had missed deadlines to submit their proposed quotas: Austria, Czech Republic, Denmark, Hungary, Italy and Spain.

French resistance

France was to have been evaluated with the first ten but withdrew its submission, understanding that it would be rebuffed. The country’s Minister for Ecology and Sustainable Development, Nelly Olin, had late talks with Mr Stavros, two days before the announcement of outcomes. French sources said they wanted to contest the decision of the European Commission to use performance during the year 2005 as a base standard.
Other national proposals have yet to be reviewed.

An aspect of the decision this week was the European Commission’s disapproval of governments’ dealings with particular industries and companies.

It considered “member state guarantees regarding the future methodology for allocating allowances” were “not in line with the allocation criteria set in the Emissions Trading Directive.”

Such guarantees would discriminate among companies in a way that unduly favoured certain undertakings or activities, contrary to the requirements of the EC Treaty; according to a statement from the Commission; and it has disallowed the provision of special guarantees beyond 2012.

The total cleared annual allocation is 860.1-million tones of Co2, for the ten countries; with the inclusion of the two large industrial states – Germany and the United Kingdon – that represents 42% of the level of allowances during the first trading period of the scheme, 2005-07.

The European Commission has foreshadowed the idea of extending its Emissions Trading Scheme to include gases oither than CO2, possibly methane from coal mines, and integration with similar schemes organised by State governments in Australia and the United States.


Details including figure / tables:

Emissions Trading: Commission decides on first set of national allocaton plans for the 2008 – 2012 trading period, IP06 1650; European Commission, Brussels, 29.11.06; (1.12.06)
Questions and Answers of Emissions Tradingand National Allocation Plans for 2008 – 2012, MEMO/06/452; European Commission, Brussels, 29.11.06; (1.12.06)

James Kantner, “EU likely to criticize nations on emissions: Report is expected to cite overuse of pollution allowances”; Interntional Herald Tribune, Paris, 28.11.06, p 1
“Emissions de CO2: les quotas francais ne convainquent pas Bruxelles”; Le Monde, Paris, 28.11.06, p 15 (1.12.06) (1.12.06)