Emissions trading goes global

Emission reduction worldwide will count towards EU credits.

The Chemical Industries Association (CIA) has welcomed amendments to the European Emissions Trading Scheme, which will link the scheme to countries outside the EU via the Kyoto project mechanisms.

The trading scheme currently provides a Europe-wide mechanism to help EU member states meet Kyoto protocol commitments. The so-called amending (or ’linking’) directive now formally adopted by the European Parliament will allow emissions cuts to be connected to the EU Emissions Trading Scheme due to start in January 2005. Linkage will allow European companies participating in emissions trading to count credits from emission reduction projects around the world towards their obligations under the EU scheme.

The chemical industry is the largest manufacturing user of energy with an annual bill of approximately ?1 billion, according to the CIA. Estimates of the price of CO ₂ emission allowances under the Emissions Trading Scheme vary widely, they report, but analysts predict the impact on UK electricity prices could be as high as 80 per cent in some cases.

The cost-cutting potential of the latest amendment is clear, says Environment Commissioner Margot Wallstr?m. ’The linking of the Kyoto mechanisms to our emissions trading scheme, which is the largest in the world, will reduce costs for the companies participating in emissions trading and provide investors in green technology with the certainty they need,’ she said.

The UK Government is now aiming for a 15.2 per cent cut in emissions from 1990 levels by 2010. An earlier draft of Britain’s National Allocation Plan (NAP) had set the target at 16.3 per cent.