PREVIEW - EU States Challenge Brussels Tough Carbon Stance
Date: 16-Jan-07
Country: UK
Author: Gerard Wynn
The European Union (EU) executive rejected in November nine out of 10 emissions plans for the bloc's carbon trading scheme, and will reject proposals from Belgium, Cyprus and the Netherlands on Tuesday, government and EU sources said.
The European carbon market limits emissions of heat-trapping carbon dioxide from heavy industry and is the 27-nation bloc's main tool to steer it towards its targets under the Kyoto Protocol on global warming.
Under the scheme's first phase from 2005-07, now widely dubbed an experiment, the EC handed out too many emissions permits, prompting a carbon price collapse and underlining the need for tougher limits second time round.
"(We've made) a fair assessment for all member states which puts us on a path to the Kyoto target, the European Commission is determined to do this," said Artur Runge-Metzger, head of the Commission's Climate Strategy unit.
Since November several states have tried to persuade the Commission to soften its stance, while others have not ruled out legal action.
"The Commission is confident that they have made the right decision given the information received so far," Barbara Helfferich, spokeswoman for Environment Commissioner Stavros Dimas, said on Monday.
In November the Commission ruled that Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia and Sweden should all toughen their emissions plans.
Sweden was considering legal action, an Environment Ministry official said on Monday.
Greece was in negotiations with Brussels, Paris Zikos, an environment ministry official, said. "We will use all proper means to persuade them (the EC) that we are right," he added.
Germany and Slovakia have previously said they would consider legal action. Slovakia's environment minister was in Brussels on Monday putting the country's case for a better deal, an environment ministry spokesman said.
Both Lithuania and Latvia have asked Brussels to agree to compromises. Countries have two weeks to file a lawsuit.
ROCK BOTTOM
The EU carbon market puts a price on carbon emissions and is supposed to drive the bloc towards a low-carbon economy, and is seen a vital step in a global effort to avoid dangerous climate change.
Since the revelation last year that industry got too many permits phase 1 delivery prices have slowly collapsed, trading at 4 euros per tonne on Monday, an eighth of the peak last year.
A carbon price over 20 or 25 euros per tonne is seen necessary to make climate change solutions such as burying greenhouse gases underground -- the so-called carbon capture and storage (CCS) -- more competitive.
"Clearly at less than 20 euros per tonne that's not going to be enough of a driver to move forward with these technologies," Jake Ulrich, managing director of Centrica Energy, the power generation arm of British utility Centrica, said.
Carbon emissions permits for delivery in phase 2 of the European scheme were trading at just over 16 euros on Monday.
(Additional reporting by Jeff Mason and Emma Davis in Brussels, Dan Fineren in London, Tatiana Fragou in Athens, Martin Santa in Bratislava, Simon Johnson in Stockholm and Anna Mudeva in Amsterdam)
