WORKING OUT KINKS IN CAP&TRADE

EU in tussle over CO2 emissions
Laurence Peter, 24 September 2009 (BBC News)

"The European Commission [EC] is considering pursuing a legal fight with the EU's top court over management of the EU Emissions Trading Scheme (ETS)…[after] the European Court of First Instance annulled commission decisions which sought to cut the CO2 emissions quotas of Poland and Estonia.

"The court defended the right of EU states to set their own CO2 quotas…[S]everal other EU member states were challenging the commission over CO2 emission allowances: Bulgaria, Hungary, Latvia, Lithuania and Romania…Meanwhile, EU governments are striving to reach a common position on CO2 targets ahead of the December global summit on climate change in Copenhagen…"

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"…The court ruling is another setback for the EU carbon markets, which are still in the "settling down" period…[It] does not bode well for the EU's effort to persuade the US into a global carbon market…

"The commission had disputed the national allocation plans (NAPs) drawn up by Poland and Estonia for the 2008-2012 carbon trading period…[and] said Poland's CO2 quota should be cut by 27% and Estonia's by 48%…Under the ETS, CO2 permits are traded, with heavy polluters buying extra permits from enterprises that pollute less…Former communist bloc countries in Central and Eastern Europe want more lenient CO2 allowances, arguing that they made significant emissions cuts in the 1990s and that they need to catch up with the more developed, older EU member states."

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[The court ruling:] "…[A] member state alone has the power, first, to draw up the National Allocation Plan (NAP), which it notifies to the Commission and... second, to take final decisions fixing the total quantity of allowances which it will allocate for each five-year period, and the distribution of that quantity amongst economic operators…[The commission] has a power of review in respect of NAPs, a power which is very restricted…[The commission] exceeded the margin for manoeuvre conferred upon it…[It] cannot claim to set aside the data in the NAP in question so as to replace them at the outset by data obtained from its own assessment method…"

[An EC spokeswoman:] "…[There is now a need to] revise the allocation procedure…[but the carbon market will not be] swamped with allowances [as Poland and Estonia claim]…"