Last year, the Government applied to the European Commission to increase the total allocation under the first phase of the ETS from 736 to 756 million tonnes. However, the Commission refused to consider the application.
After a bruising scrap, the Government decided to allocate on the basis of the lower figure, so allowing the UK to participate in the trading scheme. But it also launched legal proceedings in a bid to overturn the Commission's ruling (ENDS Report 362, pp 44-45 ).
The Government is asking the court to require the Commission to consider the substance of the application.
It argues that the increased allocation is justified by more "up-to-date data" on forecast electricity demand; revised emissions factors for UK coal and gas; and finalised energy saving targets under climate change agreements.
Friends of the Earth's climate campaigner Germana Canzi said that if the UK wins the case, "the Government's targets will be knocked even further off course. So much for UK leadership on global warming."
If the Government eventually wins its case, the extra 20 million tonnes will be allocated to the power generators.