European electricity industry calls for rapid development of emissions trading

The European initiative will allow the industry to gain valuable experience in anticipation of an international system due to start in 2008. The union is calling for the rapid development of an emissions trading system, which will promote a liquid market capable of being extended to include as many sectors, entities and greenhouse gases as possible.

A position paper published by Eurelectric, the industry body, states that the trading system should preserve the competitive position of European industry, and be designed to ensure that environmental commitments of Member States be fulfilled at lowest cost with as few restrictions as possible.

Other important points include:

• the initial pilot phase should apply a simple system which at the same time covers sufficient sources and greenhouse gases to ensure a liquid market;
• emissions trading during 2005-2007 should be seen both as a training period and a framework for rewarding genuine early action to limit all greenhouse gas emissions, not just CO2;
• national schemes in place before the EU system must be encouraged and allowed to operate within the EU scheme through a coherent overall framework;
• candidate countries should be included, where the interconnected European power grids extend beyond EU borders;
• the initial allocation of permits is crucial to ensure minimum distortion of competition;
• penalties must have comparable economic impact on players.