Europe’s technocrats and officials at Greece’s Environment and Public Works Ministry may have been taken by surprise by the United Nations decision to expel Greece from the Kyoto Protocol’s emissions trading system but it had actually been on the cards for months. As an unprecedented step, the UN’s decision has led to concern about the repercussions for Greece and the European Union – whether the problem will be restricted to the 152 Greek industries participating in the system or whether it might lead to the rejection of the system for the entire EU. The European Commission is also dealing with diplomatic repercussions, given that the commissioner for the environment, who is heading Europe’s offensive to persuade China and the US to reduce their greenhouse gas emissions, happens to be a Greek. The expulsion was the culmination of a number of omissions and mistakes that essentially began in 2002 when Greece, along with the rest of the EU, ratified the Kyoto Protocol. Unlike other countries, Greece did not set up a service staffed by experts within the Environment and Public Works Ministry to monitor greenhouse gas emissions and draft the required annual reports for the UN. On the contrary, it chose to outsource the job to the National Observatory of Athens. The contract expired in early 2007, but the ministry did nothing to ensure that the work continued. From April 2007 until February 2008, Greece sent no documented evidence to the Compliance Committee, whose enforcement branch soon contacted the Greek authorities asking for explanations. It appears the Greek ministry tried to avoid the problem «Greek style.» For example, when the UN officials began to ask for the names of those in charge, they were not given direct answers. One excuse led to another and, eventually, in January 2008, the UN announced to Athens its decision to refer Greece to the disciplinary committee because of the country’s failure to use a reliable system for measuring carbon emissions. Greece is the first country to be called to task out of the total 141 that have signed the protocol. WWF Greece, which first made the issue public, was harshly attacked by the ministry. And when European Commissioner Stavros Dimas addressed Parliament’s environment committee on the issue, the ministry retaliated in similarly harsh terms, even accusing him of raising the issue to boost his own public image. PASOK and Communist Party deputies who took a stand on the issue also came in for attacks. Realizing the potential repercussions, in February the ministry hastened to sign a contract with the National Technical University’s Chemical Engineering Department and set up a separate service within the ministry to implement the Kyoto Protocol. It was Deputy Environment Minister Stavros Kaloyiannis who was given the job of pulling the iron from the fire, apologizing for Greece’s omissions at the UN committee in Bonn. But this was not enough and, a month later, the ruling was issued expelling Greece from the emissions trading system for three months. What needs to be clarified from the outset are the repercussions of the expulsion. In the prevailing confusion, given the lack of precedent, even the experts have conflicting views. «Greece will have to submit by June a plan that will clearly explain how it intends to deal with the issues raised by the ruling against it,» explained John Hay, spokesperson for the UN Framework Convention on Climate Change (UNFCCC) Secretariat. Repercussions of expulsion for both country and its industries The first result of the UN ruling will be a summons to appear before the European Court of Justice. The EU is to send Greece warning letters early next week over its failure to comply with the Kyoto Protocol, for by doing so, the country is also violating EU legislation. However, it is seen as the lesser evil, as the case will close once Greece fulfills its obligations to the UN. The second, more important consequence is the country’s expulsion from the emissions trading system. For the next three months, Greece will be unable to trade emission rights, neither will individual industries such as the Public Power Corporation (PPC), according to a senior European Commission official. If the problems are not expected to be too serious, it is only because of the small size of the Greek market and to the reservations Greek businesses have about the system. PPC, which is the worst offender in Greece with regard to greenhouse gases, has been a member of three carbon funds for two or three years but so far has not taken part in any transactions. There could be a problem if one of the 152 industries in the system took the Greek state to court, arguing that the three-month suspension would force it to trade its pollution rights later at higher prices. A real problem could arise if Greece does not manage to resolve the problem by the end of the 2008-2012 period. That would mean that Greek firms would be unable to use the system to balance their surplus greenhouse gases and would then be asked by the UN to pay high fines of up to 100 euros per ton of CO2. Economic and technical issues aside, the ruling will undermine diplomatic efforts led by the European Commission, whose Environment Commissioner Stavros Dimas happens to be Greek. Everyone is hoping there will be no blows below the belt.