UK to Deepen CO2 Cut in EU Scheme, Miss Own Target
Date: 30-Jun-06
Country: UK
Author: Gerard Wynn
The carbon market is the European Union's main strategy for curbing greenhouse gas emissions and works by creating a shortage of emissions permits, forcing businesses to clean up.
The new British permits quota for the 2008-2012 second phase is 12.5 percent below the country's 2005 emissions of heat-trapping carbon dioxide (CO2), and is at the top end of a range the Government consulted on in March.
"(The plan) delivers on our environmental considerations consistent with our economic considerations," Environment Secretary David Miliband told reporters.
But environmentalists promptly rejected the cuts as too shallow, while industry complained they were too deep.
The annual quota of emissions permits in the second phase would be cut to 238 million tonnes of CO2, from 245 million tonnes in 2005-07.
All EU states must submit by June 30 their permit quotas for the second round of the market from 2008-12, but the European Commission can reject these if deemed too lax.
Earlier this year, after a long fight with the Department of Industry which wanted only small cuts, the Department of the Environment set out a range of possible cuts of between three and eight million tonnes of carbon a year.
"Our decision to set the cap at the top end of the range on which we consulted sends a clear message that the emissions trading scheme is here to stay," Miliband said.
But he admitted that on current efforts Britain would only manage to cut its carbon emissions by 16.2 percent from 1990 levels by 2010, well short of its self-imposed target of a 20 percent cut.
INDUSTRY WARNS OF RISK TO COMPETITIVENESS
"The world's scientists are telling us we're entering a critical period and need massive emissions cuts to protect the planet, so this proposed three percent reduction in CO2 from British industry is not ambitious enough," Greenpeace head Stephen Tindale said.
But the Confederation of British Industry said that while industry would do its bit in the battle against global warming, the scale of proposed carbon cuts was economically damaging.
"Such a demanding cut is likely to feed through to higher electricity prices, and with firms already struggling to meet current energy costs, the Government is taking a risk with the competitiveness of UK business," CBI deputy director John Cridland said.
Britain is proposing to auction 7 percent of the permits quota, giving the rest away free, but the auction would apply exclusively to big power generators.
Businesses can buy up to 8 percent of their permits from outside the EU market by investing in overseas clean energy projects under the Kyoto Protocol.
These credits are likely to much cheaper than EU permits and potentially dilute the rigour of the European scheme, but they have political backing for steering investment into developing countries.
Miliband failed to propose sector targets for individual emitters within the overall cap, thereby missing Brussels' Friday deadline to do so. A ministry official said Britain would comply by September.
The government estimated the proposed Emissions Trading Scheme phase 2 cap would add one percent to industrial energy bills and about 0.5 percent to household bills.
(Additional reporting by Stuart Penson)