16 May, 2006

EU emissions trading in trouble

It seems the EU emissions trading scheme, launched to great fanfare last year, is in a bit of trouble (so the Guardian and Independent report). The idea was simple(ish): emitters of carbon dioxide covered by the scheme (power companies, cement factories, etc.) were given an emissions quota. If they did not use it all, they could sell the excess to firms whose emissions were too high; if those who exceeded their quota did not buy in extra rights, they would be fined. Hence cutting emissions is rewarded by making a profit from selling your spare emissions rights, rather than having to buy in extra ones. But all has not gone according to plan (all the quotes below are from the Guardian):

Officials involved in planning the first phase of the scheme, the results of which were announced yesterday, stand accused of being grossly overgenerous in issuing polluting permits to 12,000 European power plants and industrial installations, responsible for more than half of the EU's carbon dioxide emissions. The results showed that industrial sites in many member countries produced much less pollution last year than they were allocated - sending the fledgling market in carbon permits through the floor.

Obviously, if everyone can easily meet their targets, the system is unworkable because the emissions rights are effectively worthless. And it seems this is exactly what is happening. Of course, there's always an excuse:

European officials defended the scheme, blaming the mild winter in early 2005, soaring energy prices leading to reduced output, early use of clean technology and even the rain (promoting more hydro-power).

But you have to suspect the real reason is effective lobbying by the industries concerned for allocations way into the 'safe zone', where the targets could be met without much pain. Lots of talk in the right ears about 'stifling economic growth' would have done the trick. That's not really a criticism of them, by the way - more of those in charge of the scheme for not taking their whining with a pinch or five of salt. If they're really serious about this, the EU should adopt the approach used by my funding council when I applied for fieldwork costs - they ask how much we needed, then cut it in half. That would encourage a little bit of creativity.

Worst of all, of course, is the performance of our fair country - despite our demanding - and getting - a last-minute 20 million tonne increase of our quota, it seems we still managed to overshoot. You could argue that we were actually getting in to the spirit of the thing by having a quota in the right ballpark (rather than us being too incompetent to meet even a stupidly lax target), but a little fact belies this:

The UK government is considering asking for an increase in pollution permits for British industry in the next phase.

And this lot accuse Cameron of being a fair-weather environmentalist? Meh.

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