ENERGY AND EMISSIONS
1.1. EU tries to combat climate change with tough CO2 cut
29 November 2006 , Reuters
The European Commission sharpened its main weapon for fighting climate change on Wednesday, demanding across-the-board cuts in European Union states’ greenhouse gas emissions plans for 2008-2012.
The decision provoked an angry response from Germany , the EU’s biggest polluter. Economy Minister Michael Glos said it was "totally unacceptable" and would push up electricity prices.
France withdrew its plan at the last minute after indications it too faced rejection. Only Britain ‘s carbon dioxide emissions cap was accepted by the Commission.
"I think that with today’s decisions the European Union will affirm its leadership role in fighting climate change and also our strong commitment to achieving the Kyoto Protocol targets," Environment Commissioner Stavros Dimas told a news conference.
The EU has struggled to contain greenhouse gas emissions, which rose in 2004, and the bloc’s "old" 15 members are only narrowly on course to meet their Kyoto Protocol target.
Its emissions trading scheme, launched last year, is at the heart of EU efforts to meet Kyoto targets by capping emissions of carbon dioxide from heavy industry. Its success or failure may determine climate change policies around the globe.
The scheme’s first phase from 2005-2007 came close to collapse when 2005 data showed governments gave industry more emissions permits than needed and carbon prices crashed.
The Commission tried to restore lost credibility on Wednesday, demanding a nearly seven percent cut in the total allowance that 10 EU countries proposed for 2008-2012.
The 10, including Germany , accounted for 42 percent of total allowances in the first phase. The Commission has yet to rule on plans submitted by other EU member states.
"The second allocation process in the European Union emissions trading system is a credibility test for Europe and I’m confident that we have mastered the test," Dimas said.
The decision drew mixed reviews.
Lithuania , facing a halving of its planned emission, said it was "very upset" by the ruling.
"(The new levels) are far too tight for us to fit into, taking into consideration the closing of nuclear power station Ignalina and forecasts for Lithuania ‘s economic growth," said environment ministry official Vytautas Krusinskas.
German industry group VDEW, which represents 750 power firms, said in the new targets could hinder new power generation projects and discourage industry.
Michael Grubb, chief economist at Britain ‘s Carbon Trust, which spearheads Britain ‘s drive to a low-carbon economy, gave a positive response.
"I think the EC has done a good job. They have done a lot to create a level playing field," he said.
Carbon market participants — brokers, traders and analysts — forecast the cuts would fuel demand for permits.
"It’s slightly stricter than I’d expected," said Mats Ahl, head of carbon trading at German utility RWE.
"It looks like the second phase is going to be short. We might see a carbon price for 2008 delivery of 25 euros."
The 2008 carbon price rose by 60 cents to 18.5 euros by early afternoon, versus some 8.5 euros for 2006 delivery.
But some green groups were disappointed.
"The decision announced by the Commission today is still not strict enough on member states that seek to shelter their polluting industries from tough emissions standards," said Mahi Sideridou, EU Climate Policy Director at Greenpeace.
Decisions were handed down on 10 EU nations — Britain , Germany , Greece , Ireland , Latvia , Lithuania , Luxembourg , Malta , Slovakia and Sweden .
France said it would not resubmit for several weeks.
The Commission said it would not allow countries to guarantee emissions permits to firms after 2012 — a blow for Germany — and also sought to restrict banking of permits and the use of Kyoto credits from outside Europe .
1.2. Commission tells Members States to cut emissions – But CO2 emission plans still reward big polluters, say NGOs
29 November 2006 , CAN-E, WWF, Greenpeace Press release
Environmental NGOs welcomed today’s European Commission decision that Member States should lower emission quotas for big polluters. But CAN Europe , Greenpeace and WWF criticised the lack of Commission resolve to set the bar higher for the worst offenders.
The Commission released decisions on 10 National Allocation Plans (NAPs) submitted by EU Member States for the next phase (for 2008-2012) of the EU Emissions Trading System (ETS): Germany , Greece , Ireland , Latvia , Lithuania , Luxembourg , Malta , Slovakia , Sweden and the United Kingdom . According to NGOs, today’s decision to lower quotas is a step in the right direction, since significant cuts are necessary in order to meet the EU’s Kyoto Protocol targets and to ensure that this trading mechanism functions effectively. However, the Commission did not require significant improvements to the way allocations are granted.
“Tighter caps are essential for the credibility of European climate policy, but the rules for how emission allowances are given to individual plants are equally important. The National Allocation Plans must reflect the principle that those who pollute more have to pay more. At the moment this is not the case”, said Delia Villagrasa, Policy Expert at WWF. “Member States need to change their plans to reflect a sound allocation structure which will lead us to much deeper reductions for phase III, after 2012.”
“Today’s decisions are an attempt to protect the system against the worst damage Member States were about to inflict on the EU’s flagship policy on climate change. The Emissions Trading Scheme should not sanction pollution, but must be used as a tool to make reductions to meet our Kyoto targets,” said Matthias Duwe, Director of Climate Action Network Europe, a coalition of green groups.
“With 17 country plans still to be assessed, it remains to be seen whether the Emissions Trading Scheme will deliver real CO2 cuts in Europe . The decision announced by the Commission today is still not strict enough on Member States that seek to shelter their polluting industries from tough emissions standards,” said Mahi Sideridou, EU Climate Policy Director of Greenpeace.
A report prepared by WWF and CAN-Europe analyses National Allocation Plans for phase II of the EU Emissions Trading Scheme of twelve countries, responsible together for over three-quarters of the EU’s emissions. The report points out the major deficiencies regarding caps, allocation rules and over-use of external credits.
According to the report, the German plan is extremely protectionist: coal fired power plants are basically exempted from reductions until after 2020. France has even given its installations higher allowances than in the first ETS period – a fact only becoming visible when comparing the same installations in both trading periods. No auctioning whatsoever was foreseen in France and Spain , and the latter intends to cover up to 70 per cent of its electricity emissions by buying external credits. The UK ’s National Allocation Plans scores as the best of a very bad lot.
The report prepared by WWF and CAN-Europe, “Assessment of key National Allocation Plans for phase II of the EU Emissions Trading Scheme” is available on http://assets.panda.org/downloads/naps_report.pdf. A table to accompany the report is available on http://assets.panda.org/downloads/wwf_can_table.pdf.
1.3. Europe accepts its role as the green pioneer of the world
26 November 2006