Use carbon credits more to cut emissions, says UK

The UK wants greater use of carbon credits from the Kyoto Protocol’s clean development mechanism and joint implementation programme to help EU member states meet their greenhouse gas emission reduction targets.

Last year, EU leaders agreed to cut EU emissions by 20% on 1990 levels by 2020. According to proposals issued by the European Commission last month, most of the cuts would be achieved by installations covered by an expanded EU emissions trading scheme (EUETS) with a centrally set cap. But targets to cut emissions from sectors outside the EUETS, such as transport and agriculture, will be allocated to countries on the basis of their wealth (ENDS Report 397, p 46 ).

The Commission has proposed limiting countries’ use of Kyoto credits to meet the non-ETS targets to 3% of their 2005 emission levels. But the UK was one of several countries at the Environment Council meeting in Brussels on 3 March to call for a higher figure.

In a written contribution to the meeting the UK said the limit and the linear reduction path proposed by the Commission were "restrictions" and that it will look at whether the credits limit is "set at an appropriate level", and "what other flexibilities might be appropriate" to allow countries to meet their targets in the most cost-effective manner. Similarly, regarding the EUETS, it will analyse the impacts of the proposals before deciding on an appropriate credits limit.

Many delegations urged the Commission to identify more quickly those energy-intensive industries at risk of "carbon leakage" - the transfer of manufacturing capacity to non-EU countries with lower emission standards. The Commission has promised to conduct an assessment by 2010, before tabling proposals in 2011, of which sectors could receive compensation.

At the spring European Council meeting of EU heads of state ten days later, Germany led efforts to get the EU to define measures to protect such industries from carbon leakage by 2009. Instead the summit agreed such measures will only be taken if international negotiations on a post-2012 climate agreement end in failure.

At the earlier meeting of environment ministers, some countries urged the Commission to specify burden sharing figures for a 30% emissions cut by 2020, which the EU has pledged to achieve if other developed countries follow suit.

The UK said it would like the Commission to set emission targets for each member state based on their whole economies, rather than just sectors outside the EUETS, so that other countries at the international climate talks in December in Poznan and in Copenhagen 12 months later can see clearly the efforts of each member state.

The UK supports greater use of auctioning of allowances. But instead of the Commission’s proposals for full auctioning for all sectors by 2020, it wants a system of mandatory minimum rates giving countries the discretion to auction up to 100%.

EU heads of state decided that agreement on the climate package should be reached by the end of 2008 to allow for their adoption by early 2009 before the European Parliament elections in June that year and the appointment of a new Commission around the same time.

Gordon Brown failed to win the unanimous support for proposals to cut EU-wide VAT rates for energy-saving products that is needed to make them become law (see pp 26-27 ). But the summit invited the Commission, in bringing forward proposals on VAT rates this summer, to examine whether they could have such a role.

  • Car CO2 emissions: Environment ministers remain split over the best way to cut carbon dioxide emissions from new cars. The Commission wants to cut average emissions to 130g/km CO2 by 2012. The target varies for each manufacturer according to the average mass of its cars (ENDS Report 396, pp 45-46 ).

    Firms could still make cars that exceed the limit for their weight provided this is offset by cars that overachieve it. Manufacturers would also be allowed to form a pool to meet the target, with companies expecting to miss their targets paying companies that overachieve it.

    Several countries without a significant domestic manufacturing industry called for the proposals to include a longer-term target for 2020. The UK called for a long-term target of 100g/km by 2020, or no later than 2025.

    To "avoid distorting the market" it also suggested that an emissions cap should be set at a percentage level of reduction some way above the industry average - for example, 25% from current levels, as compared to the industry average 19% reduction that the 2012 target will require.

    Environmental group T&E urged member states to back longer-term targets and robust penalties. It also called for standards to be based on cars’ footprints - equivalent to the area between the four wheels - rather than their weight.

    "Everything about European climate policy aims for 2020, except the part on cars," said T&E director Jos Dings. "The excuse is that we do not know what is feasible and what kind of car market that would lead to. Well, we do not know in detail what kind of technologies will be introduced in the power sector, or the cement sector or the aluminium sector… That does not stop us setting targets. Only a binding target ensures that we get the innovation needed to get there. We should have one for cars too…80g/km by 2020 and 60g/km by 2025."

    The European Automobile Manufacturers Association (ACEA) wants the 2012 target put back to 2015 to give it time to produce enough low-emission vehicles. It says that 60% of the new cars that will be for sale in 2012 are already in production or in advanced development.

    It also wants greater incentives for carmakers to develop "eco-innovations", such as energy-efficient car lights, which it says often go beyond the "complementary measures" that must deliver an additional 10g/km reduction by 2012.

  • Carbon capture and storage: Several countries said the new rules (ENDS Report 397, pp 50-51 ) should promote mineral and chemical sequestration of carbon as well as geological storage.

    The UK warned that the provisions requiring the Commission to give its opinion within six months on permit decisions by national authorities "could create delays, commercial uncertainty and deter investment".

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