Europe’s industry faces big cuts in emissions

European industry will have to slash its greenhouse gas emissions from 2008 under plans by the European Union to tighten up the carbon trading system seen as a pioneering weapon in the world's battle against climate change. Preview of an announcment to be made 29 November 2006 by the European Commission which will require some member states to cut the number of carbon permits they give companies for the second phase of trading from 2008 to 2012.

The European Union Greenhouse Gas Emission Trading Scheme (EU ETS) commenced in 2005. The scheme is the largest multi-country, multi-sector Greenhouse Gas emission trading scheme world-wide. It was based on Directive 2003/87/EC, which entered into force in 2003.

National allocation plans (NAPs) of CO2 emission allowances under the EU ETS have to be drawn up periodically by each Member State and accepted by the Commission. The first trading period covered 2005-2007.

The Commission will take decisions on a first package of NAPs proposed by Member States for the second trading period (2008-2012) under the EU ETS.

NAPs set a 'cap' or limit on total emissions of CO2 from installations covered by the scheme in each country, and also determine how many emission allowances each individual installation receives. The Commission is required to check that proposed NAPs meet a set of criteria laid down in the EU emissions trading directive. It can accept, conditionally accept or reject the Member States’ NAPs.

European Commission: DG Environment: Policies: Climate change: Emissions trading http://ec.europa.eu/environment/climat/emission.htm

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