UK victory rips hole in EU's pollution trading scheme

David Gow in Brussels
Thursday November 24, 2005

Guardian
The EU's emissions trading scheme, cornerstone of Europe's effort to 
combat global warming, was thrown into chaos yesterday after Europe's 
second highest court ruled that Britain had the right to press for 
looser limits on polluting industries.

The European commission fears that the judgment by the Court of First 
Instance will mean others of the EU's 25 member states will demand that 
Brussels allow them higher carbon emissions from factories and power 
stations.

It is viewed as a hollow victory for the UK government in the run-up to 
next week's summit in Montreal where 190 countries will discuss how to 
control greenhouse gases after the Kyoto protocol on climate change runs 
out in 2008. Britain wants to outdo Kyoto by cutting emissions by 20% by 
2010.

The commission insists that market mechanisms based on carbon trading 
are more effective than technology in fighting global warming but Tony 
Blair, under pressure from the United States, has indicated a shift 
towards favouring technologies such as clean coal and nuclear power.

The court said Brussels was wrong to refuse to consider a proposed 
increase in Britain's greenhouse gas allowances under its national 
allocation plan (NAP).

Ministers originally proposed that the British firms among the 12,000 EU 
plants covered by the trading scheme be allowed to emit 736m tonnes of 
carbon in 2005 -07 and said this was a provisional estimate. After 
fierce industry lobbying, led by the CBI, and revised forecasts of 
electricity demand and emissions, including from coal burn in power 
stations, ministers submitted a revised NAP for 756m tonnes.

The court said if the commission restricted a member state's right to 
propose amendments it would make public consultation "purely academic".

It rejected the commission's argument that the revisions would have 
serious repercussions and destabilise the trading scheme, saying the 
proposed increase was only 2.7% of UK allowances, the market had not yet 
opened and nine NAPs had yet to be approved.

The court's judgment, cautiously welcomed by the government, means 
Brussels has three months to consider Britain's amended plan. Slovakia 
is already poised to submit its own revisions and, EU officials said, 
several others are waiting in the wings.

Defra, the environment department, said the UK was committed to making 
the trading scheme a key element of the strategy to tackle climate change.
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