Positive Environment News

UK Backs Off In CO2 Row But Takes Legal Action

Date: 14-Mar-05
Country: UK
Author: Stuart Penson and Jeff Mason

The UK said it would go ahead in late April or early May with its original plan for limiting CO2 output under the European Union's emissions trading scheme, after failing to win Commission approval to use a revised plan that would impose softer restrictions.

The government said it was acting to enable UK firms to start taking part in the trading scheme but at the same time it would take the Commission to the Court of First Instance in a bid to have its revised plan reconsidered.

The Commission has called Britain's revised plan illegal. Britain says it is based on new energy and emissions data, and is legal.

The revised plan would allow firms to pump out nearly three percent more CO2 -- the main greenhouse gas blamed for global warming -- in the first phase of the EU's trading scheme (2005-2007), which started in January.

"The legal proceedings will seek to require the Commission to consider the substance of the amendment (to the UK's plan)," said the UK government in a statement.

"The government also considers that the proposed amendment notified to the Commission is compatible with the relevant Community legislation," the government added.


Friday's move is the latest twist in a row with Brussels that threatens to cloud Britain's record on climate change as the government seeks to put global warming at the heart of the UK's European Union presidency later this year.

The cap and trade scheme forms the centrepiece of Europe's effort to curb greenhouse gas emissions in line with its commitments under the Kyoto Protocol on climate change.

The Commission welcomed Britain's decision go ahead with the allocation of allowances for the trading scheme but repeated its view that approving the revised plan would be illegal.

Analysts said the UK's chances of forcing through its softer plan during the trading scheme's first phase (2005-2007) were slim. The government said it hoped to get a judgement by the first half of next year.

"A year is incredibly optimistic," said Anthony Hobley, a senior associate at law firm Baker & McKenzie. "It could take three years in which case it all becomes academic."

Carbon traders took a mixed view on the UK development and prices for CO2 allowances slipped despite the fact that Britain's enforced acceptance of its original, tougher plan removes about 20 million CO2 permits from the market.

Earlier this week the Commission demanded Poland and the Czech Republic make their plans for the trading scheme significantly tougher.

© Thomson Reuters 2005 All rights reserved

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