Climate Change, Environment, Europe, Headlines

ENVIRONMENT: EU Defends Emissions Trade

Stefania Bianchi

BRUSSELS, Apr 23 2004 (IPS) - EU leaders say a new emissions trading approved by the European Parliament this week will be a significant step towards reducing global warming.

The member states of the European Union (EU) will soon be able to buy and sell carbon dioxide quotas following a vote in the European Parliament Tuesday.

A full sitting of members of the European Parliament (MEPs) backed a directive less than nine months after the European Commission, the EU executive, proposed it in July 2003.

The new directive will allow European companies participating in emissions trading to count credits from emission reduction projects around the world towards their obligations under the EU’s emissions trading scheme.

In a bid to reduce greenhouse gases, the EU is planning to launch the world’s first multinational emissions trading scheme by January 2005.

The scheme follows the EU’s promise of cutting greenhouse gas emissions by 8 percent of 1990 levels between 2008 and 2012. This is in accordance with the EU’s commitment to the Kyoto Protocol even if the agreement does not come into force.

Under the scheme companies will be able to buy and sell carbon dioxide emissions allowances. Each government would be given allowances, which could be traded on a market.

Those that exceed their allocations will be forced to buy extra allowances from ‘cleaner’ companies or face heavy fines. To the cleaner companies the sale can mean extra income.

The European Commission says that the so-called flexible mechanisms aim to meet the global emissions reduction targets in a “cost-effective way” while “transferring technology to the developing countries.”

The EU executive adds that greenhouse gas emissions are a “global problem” and that the place where reductions are achieved is of less importance.

“In this way, reductions can be made where costs are lowest,” it said in a statement Tuesday. “The linking of the Kyoto mechanisms to our emissions trading scheme, which is the largest in the world, will reduce costs for the companies participating in emissions trading and provide investors in green technology with the certainty they need,” environment commissioner Margot Wallstrom said in a statement.

The scheme builds on the Clean Development Mechanism (CDM) and Joint Implementation (JI) created by the 1997 Kyoto Protocol.

JI projects allow governments to conduct emission-reduction projects abroad and can be undertaken in other industrialised countries that have quantitative emissions reduction targets under the Kyoto Protocol. CDM projects can be hosted by developing countries that have no quantitative targets.

Alexander de Roo, the Dutch MEP who has spearheaded the campaign, says this latest proposal is necessary for companies to learn how to fight climate change, even without the Russian ratification necessary to make Kyoto legally binding.

“The directive will allow for emission reduction credits gained through ‘clean’ and sustainable investments in Russia, Eastern Europe and less developed countries to be automatically usable within the EU emissions trading scheme,” he said Tuesday. “This legislation is ever greener than the Kyoto Protocol.”

But several environmental groups say in a joint statement that the legislation is “weak” and that the EU’s emissions trading system is “rapidly becoming a farce.” The organisations include Birdlife International, CAN Europe, Friends of the Earth Europe, WWF, Greenpeace, International Rivers Network and CDM Watch.

“First, member states are setting national allocation plans that give no incentive to their companies to make real emission cuts,” the groups said in their statement. “Now, the European Parliament has agreed to link this feeble system to unlimited volumes of cheap credits from the Kyoto Protocol’s project mechanisms.”

Rob Bradley of CAN Europe says “the EU has positioned itself as a world leader on fighting climate change, and is in danger of throwing it all away.. If it is ridiculed for its international climate policy, it only has itself to blame..”

John Lanchbery of BirdLife International supported this view. “The EU institutions have failed to protect EU climate policy at a critical time,” he says. “This will greatly reduce the chances of convincing developing countries and the United States that Europe is serious about fighting climate change.”

The proposal will now have to be approved by national governments before being returned to parliament later this year for a second reading. Once formally adopted, member states will have 12 months to transpose it into national legislation.