EU Reaches Climate Emissions Trading Breakthrough

STRASBOURG, France, June 25, 2003 (ENS) - Governments and Members of the European Parliament have clinched a deal to create a climate emissions trading system for the European Union. The agreement removes any doubt that the scheme to trade emissions allowances will become a reality from 2005.

The law setting up the system is now set to enter force at the end of this year. First national emission allowance allocation plans will be due from EU member states the following March.

The deal is based on compromise proposals, tabled on Monday by EU member state diplomats, following voting in the European Parliament's Environment Committee earlier this month.

Rapporteur MEP and lead negotiator Jorge Moreira da Silva was unavailable today, but other parliamentary sources said the package had been backed by all the assembly's political groups.

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Emissions rise from the Chemical Works at Seal Sands, River Tees, Teesmouth, England (Photo courtesy Freefoto)
The parliament should now approve the text at its second reading during a plenary session in Strasbourg next week. The European Council of Ministers will then formally accept the amendments.

Reaction has been swift. Chris Davies of the Liberals said the early deal was a "vital step" in maintaining the EU's credibility on climate issues.

Green Alexander de Roo said the move would now "put pressure on the Russian Duma" to ratify the Kyoto Protocol which would bring the treaty into force. There had been fears that failure to compromise with the council before the summer would jeopardize the protocol's start date.

The Kyoto Protocol is an international treaty under the UN Framework Convention on Climate Change (UNFCCC). It requires 37 industrialized countries to reduce their emission of six greenhouse gases an average of 5.2 percent of 1990 emissions during the five year period 2008-2012.

The rules for entry into force of the Kyoto Protocol require 55 countries that are Parties to the UNFCCC to ratify the protocol, including enough of the 37 industrialized countries to account for 55 percent of that groupís carbon dioxide emissions in 1990.

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European Green Party MEP Alexander de Roo of the Netherlands is vice chairman of the parliamentary Committee on the Environment, Public Health and Consumer Policy. (Photo courtesy Groenlinks)
Countries accounting for 43.9 percent of the 1990 emissions have now ratified the protocol. A Russian ratification would push the emissions percentage above the required 55 percent.

Under the terms of the climate emissions trading accord agreed today, EU member states will not be subject to a quantitative cap on the amount of allowances they can distribute, contrary to the European Parliament's original demands.

Instead the member states will have to hand out "no more than is likely to be needed" for the "strict application" of the national emissions allocation plans.

For the initial 2005-2008 trial period, this must be "consistent with a path towards achieving or over achieving" Kyoto Protocol targets.

Auctioning of emissions allowances remains voluntary, against parliament's earlier insistence on the guaranteed sale of at least a small portion. During the initial period, up to five percent may be auctioned, with 10 percent from 2008. There is a promise of harmonized EU auctioning of allowances "after 2012."

Concessions won by the parliament include limitation of an opt out clause during the initial phase to individual installations rather than whole industry sectors.

Inclusion of other sectors and other greenhouse gases beyond carbon dioxide remains optional, though there is a stronger commitment for the addition of the chemicals, aluminium and transport sectors when the European Commission reviews the law at the end of next year.

The prospect of linking the Kyoto Protocol's flexible mechanism credits to the trading scheme remains, though softened with language insisting this should be "supplemental" to domestic actions taken within the industrialized countries governed by the protocol.

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