EU nations seek new design for CO2 trade scheme

ESSEN, Germany – European Union nations are moving closer to redesigning the bloc’s emissions trading scheme to force industry to pay more to emit carbon dioxide and hand Brussels greater authority to set EU-wide emissions caps. In a series of interviews over the weekend, EU environment ministers meeting in Germany said consensus was emerging that the permits limiting industrial emissions should be sold to companies participating in the scheme, rather than given away. Furthermore, ministers are questioning the scheme’s basic design, where national governments allocate emissions permits to their industries after proposing limits, which must then be approved by the European Commission. «An EU allocation system is preferable above a national allocation system,» Dutch Environment Minister Jacqueline Cramer told Reuters, adding that multinational companies preferred to have the EU set sectoral targets rather than having each country set individual, national ones. «I am hearing more and more colleagues who talk about a European system,» she said. The scheme is the 27-nation bloc’s key tool to fight climate change and meet commitments to cut greenhouse gas emissions agreed under the Kyoto Protocol. Governments set a cap on companies’ emissions of carbon dioxide (CO2) – the main gas blamed for global warming – and those firms buy or sell the allowances based on whether they overshoot or undershoot their targets. Jan Dusik, the Czech Republic’s vice minister for the environment, said the scheme should be made more centralized and transparent. Allowing the Commission to set emissions limits rather than having countries submit suggested caps through so-called national allocation plans (NAPs) could achieve that aim, he said. More auctioning Although consensus has not been reached to scrap the method of allocating allowances, more and more governments support selling them to industry rather than giving them away. «Allocation should no longer be free of charge; allowances should instead be auctioned,» ministers said in a statement issued by Germany, which holds the bloc’s rotating presidency. German Environment Minister Sigmar Gabriel said he favored 100 percent auctioning of permits. Currently a very low percentage is distributed in that way. Swedish Environment Minister Andreas Carlgren told Reuters he supported full auctioning for the aviation sector, which is slated to enter the scheme in 2011, and the energy sector, but not necessarily for other industries in the scheme. «There should be more auctioning in the next round but the question is how much,» said Dutch Minister Cramer. «One hundred percent for all sectors is too optimistic, I think.» Governments appear to agree on at least one principle: The scheme must help the EU meet its goal of reducing greenhouse gas emissions by 20 percent by 2020, compared to 1990 levels. To do that, the price of carbon must be sufficiently high to give companies an incentive to reduce their emissions or improve their technology.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.