Emissions trading deal set for success

Date: 17/10/02

By Karen Carstens

ENVIRONMENT ministers meeting in Luxembourg today (17 October) are set to approve a sweeping Commission proposal to reduce greenhouse gas emissions.

The draft directive, which aims to create a mandatory EU-wide emissions trading scheme, was accepted in a first reading in the European Parliament last Thursday, when a report by Jorge Moreira da Silva was adopted with 393 votes in favour, 66 votes against and 36 abstentions.

'The carbon economy is born,' the rapporteur said after the vote.

'Those who are able to produce with less greenhouse gas emissions will be the winners.'

He emphasised that the system of emission trading, to be launched on 1 January 2005, will involve approximately 5,000 companies within the industry and energy sectors which account for more than 46 of all EU carbon dioxide emissions. It will provide a 35 cost reduction in the EU in achieving the targets set out in the 1997 Kyoto Protocol while saving more than €13 million annually, he added.

Environment Commissioner Margot Wallström hailed the vote as 'a major step forward towards implementing the Kyoto Protocol within the EU'.

'This first reading by the Parliament puts the ball firmly in the Council's court,' she added. 'An agreement in the Council is now vital before the end of the Danish presidency.'

However, the Commission - which may adopt a common position on the directive with the Council today - disagrees with some of the amendments approved by the Parliament, in particular the possibility, under certain conditions, of exempting installations from the emissions trading scheme until 2008.

The Commission's stance is that a system which is mandatory from the outset will be more cost-effective.

'But the unambiguous message today is that emissions trading is coming. That it is a key component for fulfilling the commitments made under the Kyoto Protocol at lower costs than would be possible without this instrument,' Wallström said.

Meanwhile, a cross-party group of German MEPs were disappointed, but not surprised, when their hopes to fundamentally alter the nature of the emissions trading scheme were dashed.

Karl-Heinz Florenz, the Christian Democrats environment spokesman, along with German Social Democrat MEP Werner Langen, had pushed for an amendment that would have exempt a national emissions reduction scheme in Germany from the mandatory directive.

Instead, a UK-backed scheme put forward by Liberal Democrat Chris Davies was adopted.

This allows for exemptions through to 2008, when the international system envisaged by the Kyoto Protocol is scheduled to begin. So it was only a 'partial compromise victory' for the Germans, said Peter Schmitt, an environmental expert on Florenz's staff.

The Germans argue that their own national emissions reduction scheme, based on an agreement between government and industry in place since 1998, is the most successful in Europe and thus see no need to be 'forced' into the EU-wide scheme envisioned by the Commission.

Only 127 MEPs cast their votes in favour of the German-backed 'opt-out' clause, while 361 voted against.

Given the resounding defeat of the German initiative, 'we will not be pursuing exactly the same tack again,' said Schmitt, adding that it was too early to tell what Florenz and Langen's next move will be.

'Now we must wait until we hear what the Council (of environment ministers) has to say,' Schmitt said.

EU environment ministers meeting in Luxembourg on 17 October 2002 are set to approve a sweeping European Commission proposal to reduce greenhouse gas emissions.