EU-wide emissions trading moves closer

Claire Monkhouse from the IEEP looks at the latest developments at the European Commission

From 2008 certain companies must participate in the EU Emissions Trading Scheme, according to the final text of the Emissions Trading Directive published on 16 September.

Agreed in July, the directive establishes an EU-wide greenhouse gas emissions (GHG) trading scheme, which initially includes only CO2 emissions and will apply to all activities listed in Annex I of the directive, including large power stations and refineries, and factories that produce steel, cement, glass, ceramics and paper.

Operators of such plants would have to hold GHG emission permits and would be allowed to emit these gases up to a fixed allowance that would be determined by the appropriate Member State. Emitting in excess of allowances would incur a fine of €40/tonne of carbon dioxide equivalent before 2007 and €100 from 2008, and the excess would have to come out of the following year's allowance.

The total allowances and how these would be allocated nationally would be determined separately by each Member State, but would be subject to the Commission's approval.

Member States must produce national allocation plans and submit them to the Commission by the end of March 2004. The debate has now shifted to the level at which the national allocation will be set and how permits will be allocated.

The directive stipulates that at least 95% of permits must to be allocated free of charge in the first period, allowing up to 5% to be auctioned. The percentage that can be auctioned rises in the second phase to 10%. The directive will enter into force once it has been published in the Official Journal.

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