EU tries to combat climate change with tough CO2 cuts

Brussels, Nov 29 | Updated: Nov 30 2006, 06:30am hrs
The European Commission sharpened its main weapon for fighting climate change on Wednesday, demanding across-the-board cuts of emissions rights that European Union states want to give industry in 2008-2012. The Commission said it had cut by almost 7% the allowance amount that 10 EU countries had proposed for the blocs pioneering emissions trading scheme (ETS). Its success or failure will set the standard internationally.

Only Britains plan was accepted. The cuts also represented a 7% cut from 2005 emissions, the EU executive said in a statement.

Todays decisions send a strong signal that Europe is fully committed to achieving the Kyoto target (for emissions reductions) and making the EU ETS a success, Environment Commissioner Stavros Dimas said.

Decisions were handed down on 10 EU nations Britain, Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia and Sweden. France withdrew its plan at the last minute after indications it too faced rejection, and Paris said it would not resubmit for several weeks. The 10 countries involved in Wednesdays decisions accounted for 42% of the allowances allocated in the first phase of the blocs emissions trading scheme between 2005 and 2007. Emmanuel Fages, an emissions analyst at SG Commodities Research, welcomed the announcement. The Commission has delivered on what it said it would do. The 7% cut is what the market had in mind. Actually its on the high side, he said. The market expected 5-7 percent. This is a good signal for the credibility of the scheme. The scheme will be sustained.

On Europes carbon market, prices of carbon dioxide allowances were 45 cents higher at 18.30 euros a tonne shortly after the announcement. The EUs scheme is its key tool to meet targets for reducing greenhouse gas emissions under the Kyoto Protocol and puts a limit on the amount of carbon dioxide that big emitters such as power plants and oil refineries can emit.

Reuters