UK analysis of Members NAPs shows emissions levels will not meet Kyoto targets

An interim report analysing the National Allocation Plans (NAPs) for the EU emissions trading scheme (EU ETS) has found that, with some exceptions, the system is not being used to bring industry emissions in line with their Kyoto targets.

The study, funded by the DTI and Defra, and carried out by Ecofys, also found that many NAPs have little information on which to judge the basis of allocation levels. This, therefore, makes it difficult to estimate the real level of effort that is required from industry across the EU in 2005 – 2007.

In a statement, the DTI and Defra said: “The UK firmly believes that greater transparency from the European Commission on how it has made its own assessments of NAPs would be useful. This would help those wishing to understand the basis of allocations in some NAPs as well as providing more reliable and credible information to financial markets.”

In this, the government expressed similar views to those expressed by industry in a survey by Ernst & Young recently (see related story). This showed that a majority of the industries involved had serious doubts about the trading system and had not prepared for its introduction, and called for the Commission to provide greater transparency and clearer guidelines.

Ecofys’ study also claims that there are assumptions on savings in many NAPs from policies and measures other than the EU ETS which appear not to be substantiated. In particular, new announcements on the use of joint implementation (JI) and clean development mechanism (CDM) credits to meet Member States’ targets have been made in the NAPs without clarity on how developed these programmes are and how secure the funding is.

It also points out that only three of the 12 Member States who say they will use the Kyoto mechanisms to meet Kyoto targets have significant existing programmes.

The report concludes that there is significant potential for competitive distortion as a result of the scheme. The UK believes that the narrow scope used in France, Spain and possibly Italy is inconsistent with the Emissions Trading Directive and would create a damaging competitive distortion between EU countries in sectors such as chemicals and automotive manufacturing if accepted by the Commission.

The EU ETS is due to start in January 2005.

By David Hopkins

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