Positive Environment News

EU parliament launches climate emissions trading

Date: 03-Jul-03
Country: EU
Author: Robin Pomeroy

The bill passed by the European Union's assembly will mean that from January 2005 many plants in the oil refining, smelting, steel, cement, ceramics, glass and paper sectors will need special permits to emit carbon dioxide (CO2).

"It means that the largest emissions trading scheme in the world to date will be a reality from 2005, and that the architecture foreseen under the Kyoto Protocol is coming to life," Environment Commissioner Margot Wallstrom said in a statement released after the vote.

The law is the centrepiece of the EU's efforts to meet its commitment under the Kyoto Protocol to reduce the emissions many scientists say are causing global warming. The United States withdrew from Kyoto in 2000, saying it would hurt its economy.

Market analysts have predicted trades in the right to emit CO2 among the 10,000 plants affected -- they produce 46 percent of EU emissions -- could be worth up to eight billion euros a year by 2007, creating a brand new financial market place.

Under the Kyoto, 1997 United Nations pact, the EU has to reduce its greenhouse gas emissions by eight percent of 1990 levels by between 2008 and 2012.


Despite the new cap on emissions which are an inevitable result of burning fossil fuels like oil and gas, EU industry welcomed parliament's decision.

"This provides European business with the certainty it needs to begin planning for emissions trading which starts in January 2005," said Philippe de Buck, secretary general of the EU employers confederation UNICE.

The electricity sector, which accounts for some 60 percent of the emissions covered, said it welcomed CO2 trading as a way for industry to cut emissions where it costs the least.

"Eurelectric (the EU industry body) recognises that society will face a carbon-constrained future, and thus it is vital that all policies and measures in this domain be introduced at lowest cost for society and industry," it said.

But companies are concerned that EU policies to combat climate change emissions could put them at a competitive disadvantage.

The United States, which is the biggest emitter, has no intention of returning to Kyoto and the treaty does not constrain emissions from rapidly industrialising countries like India and China.

"This is a good solution at the European level, but a major issue, having Europe's partners on board remains to be settled," said a UNICE spokeswoman.

Business both in the EU and in countries like Canada and Russia want the EU to open up to some form of global emissions trading.

The European Commission will issue in the coming weeks a proposal on allowing EU firms to gain credits by helping reduce emissions in other countries, credits which they might then be able to sell on the EU market.


Rob Bradley, an environmental campaigner at Climate Action Network, welcomed the vote, and said now it was up to national governments, in the 15 existing EU states and the 10 new ones that will join next May, to rapidly put the scheme in place.

Governments must decide on how to allocate CO2 credits by next March. They will give out at least 95 percent of them free of charge but could choose to auction the rest.

"This is the starting pistol for getting national allocation plans and target setting. This is an incredibly short time scale member states should already be on that road," Bradley said.

Under the final version of the law, which now has only to be rubber stamped by member states, factories might be allowed to opt out of the scheme if they can show they are making the equivalent effort to reduce greenhouse gases.

This opt-out is likely to be used by Britain, which already has a national emissions trading scheme in place, and by Germany, where industry has long-running voluntary agreements with the government to reduce greenhouse gases.

© Thomson Reuters 2003 All rights reserved

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