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December 16, 2002
Volume 80, Number 50
CENEAR 80 50 p. 8
ISSN 0009-2347


EU approves first international trading system for greenhouse gas allowances


The European Union took a major step on climate change last week by agreeing to create the world’s first international emissions trading system for greenhouse gases. The trading scheme will help the EU implement the Kyoto protocol, a treaty that calls for industrialized countries to limit their greenhouse gas emissions.

EU environment ministers gave a green light to the plan on Dec. 10; it still must get final approval from the European Parliament before it can take effect.

The plan caps emissions of the greenhouse gas carbon dioxide from specific sectors, including power generators, starting in 2005. EU countries would hand out emissions allowances to these industries. A company that releases less CO2 than covered by its allowances may sell its excess to businesses that expect to emit more CO2 than permitted by their allowances.

The trading scheme will affect an estimated 4,000 to 5,000 facilities across the current 15 EU nations. Companies face fines of 40 euros per metric ton of CO2 emissions not covered by allowances. This penalty rises to 100 euros per metric ton in 2008.

The EU will eventually add other greenhouse gases, such as methane, to its trading effort, according to EU Environment Commissioner Margot Wallström.

“As early movers on emissions trading, we will gain valuable experience,” Wallström said. “The EU will be well prepared to participate in the [global] emissions trading system foreseen by the Kyoto protocol.”

The 1997 Kyoto accord sets emissions limits for industrialized countries and allows them to buy and sell emissions allowances among themselves. The EU has ratified the Kyoto protocol, but the U.S. has said it will not join the pact.

Eggert Voscherau, a member of the board of executive directors at BASF in Germany, said: “We can live with the compromise on European emissions trading. This presupposes that we will not suffer cost disadvantages compared with companies outside Europe,” Voscherau added.

However, he expressed concern that the trading plan could result in higher costs for electricity and natural gas and thus be a competitive downside for EU industries.

Also last week, the EU reported that its greenhouse gas emissions in 2000 fell 3.5% compared with 1990 levels. Much of this drop is attributed to the shutdown of coal-fired plants in the former East Germany and the U.K. EU emissions of CO2 were 0.5% below 1990 levels, while methane was down 16% and nitrous oxide fell 20%. Per capita greenhouse gas emissions in the EU fell from 11.5 metric tons in 1990 to 10.8 metric tons in 2000.

The report says the EU is on track to curb its greenhouse gas emissions to 4.7% below 1990 levels by 2010 without implementing new policies. But most EU nations plan to put new emissions reduction measures in place. If these plans come to fruition, the EU will cut its releases of greenhouse gases by a projected 12% below 1990 levels by 2010, thus doing better than the Kyoto target for the EU of 8% below 1990 levels averaged over the years 2008–12.


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Copyright © 2002 American Chemical Society

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