EU will learn from emissions trading mistakes - Dimas
The EU will apply lessons from the recent carbon market disturbance when reviewing its emissions trading scheme for the next trading period, Environment commissioner Stavros Dimas said.The commissioner put the recent sharp drop in emission prices down to "speculation," after some EU states released data showing lower emissions than expected (see related story), but acknowledged that there is a lesson to be learnt for future management of the ETS.
"The recent shifts on the emission trading market should certainly be taken into account when discussing about the next trading period," he said.
"The price of allowances dropped sharply on speculation by market operators that overall emissions last year will turn out to be some way lower than the number of allowances allocated."
"We of course have to wait for the full EU picture. But in any case, the recent events will certainly allow us to draw lessons for the next period and allocation plans," he said.
The drop in allocation prices followed the release of emissions data from five states which together account for 25% of total European emissions. Numbers for the biggest emitters, including the UK, are still unknown.
Speaking during his visit to Finland, the commissioner outlined steps to take the ETS forward into the second trading period, from 2008-2012, and ways in which the Commission plans to fine-tune the scheme.
Three key issues are the length of future trading periods, avoiding the use of exceptions or adjustments to the market, and the harmonization of rules across member states.
The ETS currently covers around 11,500 energy-intensive installations accounting for almost half of European CO2 emissions. Arriving at an EU-wide definition of which installations fall under the scheme is part of the challenge.
"As Member states prepare their NAPs for the second period ahead of the 30 June deadline, they should have no doubts about the Commission's determination to take strong decisions again if necessary," Stavros Dimas said.
Over the course of the next 2008-12 trading period, EU member states will also have to reach their Kyoto targets. These are legally binding for the 15 older EU members.
"Where member states which have not met their [Kyoto] target yet - which is the case for most, including Finland - this is likely to require a tight cap on the number of emission allowances in their new NAP," Stavros Dimas said.
He also stressed the potential for the ETS to become "the nucleus for the international emissions trading system envisaged by the Kyoto Protocol from 2008."