Brussels gets tough on CO2 emissions
Wednesday, 31 October 2007
Laura Dixon
TOUGHER limits on carbon emissions were set late last week by the European Commission in an effort to strengthen its efforts to combat climate change.
Brussels cut 10 per cent from the figure requested by European governments for the second phase of the emissions trading scheme from 2008 to 2012, which was established to implement the Kyoto protocol.
The first phase, from 2005-2008, suffered from an over-allocation of permits to emit carbon resulting in a collapse in their market price.
Stavros Dimas, environment commissioner, said: "We have assured a robust market with real emission reductions which will constitute an important contribution to meeting our Kyoto target."
Member states had tabled a request for permits worth some 2.3bn tonnes of carbon dioxide within the scheme, while the commission has approved 2.1bn tonnes.
The levels were fixed following a decision on Bulgaria and Romania's carbon limits - the final two plans to be set by the commission. Both received levels considerably lower than they proposed. Bulgaria was given 42.3m tonnes of CO2 allowance, a cut of 37 per cent. Romania has been allocated 75.9 million tonnes, a fifth less than it had asked for.
Under the scheme, launched in January 2005, companies covering around half the EU's emissions are issued with permits to emit carbon dioxide. Cleaner companies with spare capacity can sell permits to businesses that need to emit more. One allowance gives the holder the right to emit one tonne of CO2.
Some member states proposed a cap far higher than their current emission levels. Latvia, for example, wanted to more than double their emissions-cap.
The commission is facing legal challenges from seven countries, who make some 18 per cent of total emissions allowances under the scheme. Lithuania, Poland, Hungary, Slovakia, Latvia, Estonia, and the Czech republic have all said they will appeal the carbon levels allocated by the commission.
The commission said last year it would cut down on allocations in order to establish a high-carbon price that should stimulate investment in low-carbon technology. Late last week, the benchmark December 2008 contract rose 25 cents to €22.78 a tonne. First phase permits are almost worthless.
Climate Change Capital, a specialised London-based investment bank, welcomed the commission's tougher targets. "This precedent means that there is a real chance that investors will be convinced that the EU is serious enough about global warming to work to achieve its longer term objective of avoiding warming above two degrees celsius by making significant emissions reductions between now and 2020," they said.
The commission said it had accepted Norway, Iceland and Liechtenstein into the scheme pending the approval of their governments.
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— FT Syndication Service
TOUGHER limits on carbon emissions were set late last week by the European Commission in an effort to strengthen its efforts to combat climate change.
Brussels cut 10 per cent from the figure requested by European governments for the second phase of the emissions trading scheme from 2008 to 2012, which was established to implement the Kyoto protocol.
The first phase, from 2005-2008, suffered from an over-allocation of permits to emit carbon resulting in a collapse in their market price.
Stavros Dimas, environment commissioner, said: "We have assured a robust market with real emission reductions which will constitute an important contribution to meeting our Kyoto target."
Member states had tabled a request for permits worth some 2.3bn tonnes of carbon dioxide within the scheme, while the commission has approved 2.1bn tonnes.
The levels were fixed following a decision on Bulgaria and Romania's carbon limits - the final two plans to be set by the commission. Both received levels considerably lower than they proposed. Bulgaria was given 42.3m tonnes of CO2 allowance, a cut of 37 per cent. Romania has been allocated 75.9 million tonnes, a fifth less than it had asked for.
Under the scheme, launched in January 2005, companies covering around half the EU's emissions are issued with permits to emit carbon dioxide. Cleaner companies with spare capacity can sell permits to businesses that need to emit more. One allowance gives the holder the right to emit one tonne of CO2.
Some member states proposed a cap far higher than their current emission levels. Latvia, for example, wanted to more than double their emissions-cap.
The commission is facing legal challenges from seven countries, who make some 18 per cent of total emissions allowances under the scheme. Lithuania, Poland, Hungary, Slovakia, Latvia, Estonia, and the Czech republic have all said they will appeal the carbon levels allocated by the commission.
The commission said last year it would cut down on allocations in order to establish a high-carbon price that should stimulate investment in low-carbon technology. Late last week, the benchmark December 2008 contract rose 25 cents to €22.78 a tonne. First phase permits are almost worthless.
Climate Change Capital, a specialised London-based investment bank, welcomed the commission's tougher targets. "This precedent means that there is a real chance that investors will be convinced that the EU is serious enough about global warming to work to achieve its longer term objective of avoiding warming above two degrees celsius by making significant emissions reductions between now and 2020," they said.
The commission said it had accepted Norway, Iceland and Liechtenstein into the scheme pending the approval of their governments.
..........................................
— FT Syndication Service