The Guardian (UK): UK carbon output revision threatens trading scheme: “The ETS was launched on January 1, with the first deal (on forward credits) between Shell and the mining group BHP Billiton executed three days later in London…” (ShellNews.net) 10 Jan 05
David Gow in Brussels
Monday January 10, 2005
The EU's carbon dioxide emissions trading scheme (ETS), the world's first market-based plan for cutting greenhouse gases, is in danger of being stillborn because of threatened legal action by Britain, Germany and other countries against the European commission.
Margaret Beckett, environment secretary, has warned Stavros Dimas, the environment commissioner, that the UK will take Brussels to the European court of justice if he does not approve a new version of Britain's plan for emissions by power generators and energy-intensive sectors that is more generous to industry.
The threat of legal action, which could delay trading in the ETS for several months, is causing consternation within Britain's manufacturing sector, which fears that the European Union's scheme will add significantly to increased energy costs this year.
The ETS was launched on January 1, with the first deal (on forward credits) between Shell and the mining group BHP Billiton executed three days later in London, when 5,000 tonnes of CO2 were brokered by TFS at a price of €8.40 (£5.80) a tonne. It aims to help to cut EU emissions to 8% below 1990 levels by 2012.
The EEF, the manufacturers' organisation, has warned ministers that delays to the scheme, including legal action, will add further uncertainty to industries whose energy costs this year are expected to rise to £6bn, compared with £4.2bn in 2003 - with 30% of the rise down to the ETS.
It has told Ms Beckett that, if legal action produces a more effective and equitable scheme, manufacturers would back the government. An EEF report argues that, because of Britain's liberalised market, British companies will end up paying more for energy than their EU rivals.
The government's national allocation plan, which sets out how much CO2 companies or plants can emit in a given year and enables them to trade such allowances on the open market, was approved by the commission in July last year - subject to a few technical changes. But after further reports from consultants, ministers submitted a revised scheme in October, which the commission has rejected as it contains bigger and more generous allowances.
Brussels is especially perplexed as the UK's targets for cutting greenhouse gases under the Kyoto protocol are the toughest in the EU - 12.5% by 2012.
Ms Beckett's officials said last night that the government hoped for a speedy settlement of the dispute so the scheme could go fully ahead but it would be March at the earliest before ETS would be wholly operational. Ministers claim the revised NAP would still cut CO 2 emissions by 5.4% -though admittedly of a larger amount.
They denied that Ms Beckett had "caved in" to industry but Mr Dimas, who is demanding justification for the changes, has told her the revisions are far larger than those demanded by other countries, including Germany - and no country can "under any circumstances" increase the total number of allowances.
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