Archived press release

EU emissions targets: Governments must set tougher targets

15 May 2006

European Union (EU) countries have undermined incentives for companies to cut greenhouse gas emissions, Friends of the Earth said today as EU pollution data showed that member states gave their industries too many pollution permits under the EU Emissions Trading Scheme [1]. Friends of the Earth called for a much tougher approach from all countries for the next phase of the scheme.

The price of carbon dioxide has fallen in recent weeks after eight EU countries revealed that the industries participating in the scheme had polluted far less carbon dioxide than they were allowed to under the scheme. This meant that they had surplus 'carbon credits' to sell on the ETS market, causing the price of carbon to fall dramatically. Today's figures from the rest of the EU shows that countries across the whole of Europe were given more too many pollution permits, and that the ETS needs to be strengthened [2].

Friends of the Earth's senior climate campaigner, Germana Canzi, said:

"Many governments gave away far too many pollution permits to their industries. They must now all urgently review their strategy for tackling climate change and ensure that tougher targets are set on industry pollution for the next phase of the scheme. Cost-effective solutions to climate change exist, but countries across Europe, including the UK, must get their act together and start showing some leadership on tackling it."

Friends of the Earth called on the UK to set tougher pollution limits for UK industry. The Government consultation allocations of permits to industry for the next phase of the scheme, is currently being consulted on (until 23 May) [3]. But the consultation document shows that the Government may consider asking for an increase in pollution permits for UK industry.

Such a move would do little for the UK Government's failing credibility on climate change. Carbon dioxide levels have actually risen under Labour, and the Government recently admitted that its promise to cut carbon dioxide levels by 20 per cent of 1990 levels by 2010 may not be met.

Notes

[1] The European cap and trade system for industry emissions, otherwise called emissions trading scheme (ETS) is the most ambitious and innovative intergovernmental policy so far aimed at reducing greenhouse gas emissions. The ETS started on 1 January 2005. Power stations, refineries and heavy industry across Europe, which account for approximately half of EU carbon dioxide emissions, were given a limit on how much carbon dioxide they can emit. Participants in the scheme need to hold sufficient carbon dioxide allowances to match their levels of pollution. Companies which do not have enough at the end of 2008 must pay stiff fines or buy spare allowances from the companies which have managed to reduce their emissions.

[2] The searchable database on verified emissions and surrendered allowances

(the Community Independent Transaction Log) can be found at: http://ec.europa.eu/comm/environment/ets/

[3] The UK Government is currently consulting stakeholders on the allocations of permits to industry for the second phase of the scheme, from 2008 to 2012.

For this next phase, Friends of the Earth the UK government to:

• Make sure industry does not get an over-allocation of permits.
• Auction as many permits as possible, rather than given them away for free. At the moment, permits are given away for free, and this has let to very large windfall profits for utilities.
• Make sure allocations are consistent with the aim of reducing emissions by 20% by 2010 and are therefore higher than the stated range.
• Stop encouraging utilities to burn more coal in old, inefficient and highly polluting power stations. Encourage the development of efficient ways to produce heat and electricity, such as Combined Heat and Power.
• Work with the European Commission and other Member States to improve the system for future phases of the scheme.

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Published by Friends of the Earth Trust