EU demands cuts in national emission plans

The European commission has told member states to cut the number of CO2 emission credits they will dole out to industry.

Britain was the only country to gain the commission’s green light in its assessment of the set of ten first national allocation plans for 2008-12.

The nine others – Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia and Sweden – must cut the number of emission rights they will distribute.

France, which was widely expected to see its plan rejected by the commission, withdrew its proposal at the last minute and told Brussels it would resubmit in coming weeks.

“Today’s decisions send a strong signal that Europe is fully committed to achieving the Kyoto target and making the EU emissions trading scheme a success,” said EU environment commissioner Stavros Dimas.

The EU’s trading scheme is its key tool for meetings its commitments under the Kyoto Protocol.

Under the plan, national governments give out a set number of permits to a total of 10,000 plants across the EU such as power plants, steel factories and oil refineries.

The system is intended to provide an economic incentive for the plants to go green, as they can sell their extra permits if they produce less CO2 than their cap.

But EU governments gave out more permits than necessary in 2005, leading to the price of CO2 to drop.

Dimas’s crackdown is central to the commission’s attempt to rescue the scheme’s credibility – and its own reputation for environmental leadership – ahead of the crucial next stage from 2008 to 2012.

“The European trading scheme is a credibility test for the EU, and I am confident that we have passed the test,” Dimas said after the publication of the report.

Brussels hopes the trading scheme will serve as the blueprint for a global emissions trading system.

The 7 per cent cuts are in line with market forecasts, which had ranged at 5-7 per cent; analysts said on Wednesday that this was a good signal for the scheme’s credibility.

The commission is currently assessing the remaining plans submitted by the member states, and is expected to come out with its report by January.

Unless it resubmits a new plan soon, France will join the five countries which are currently facing infringement procedures for failing to submit their national allocation plans.

Dimas said on Wednesday that he hopes France will submit an “improved” plan in the next two weeks.

Brussels has launched cases against Austria, the Czech Republic, Denmark, Hungary, Italy and Spain for not having submitted their plans yet – in spite of a June 30 deadline.

Reacting to the commission’s report, green MEP Satu Hassi said “a number of causes for concern remain”.

“It is clear that the EU will not meet its Kyoto target without very strict measures on emissions from private households and transport, which are not included in the emissions trading scheme,” she said.

The plants currently covered by the scheme are collectively responsible for about half of the EU’s CO2 emissions.

Areas which are not covered are transport (which produces 21 per cent of the EU’s CO2 emissions), households and small businesses (17 per cent) and agriculture (10 per cent).

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