EU lawmakers seek to ease burden on business of cutting greenhouse gases

By James Kanter
Published: October 7, 2008

BARCELONA: European Union legislators voted Tuesday in favor of new laws aimed at reducing greenhouse gas emissions, but frustrated some environmentalists by taking steps to ease the burden on industry.
The EU created the world's largest emissions trading market in 2005 to require heavy industries to cap their pollution levels. So far, that initiative has not helped cut emissions by much, leading policy makers at the European Commission this year to propose changes in the way it operates.
The most contentious changes would make it more expensive for heavy industries to continue to pollute, by requiring them to buy more of their carbon permits after 2012. EU governments currently award the majority of those permits free.
On Tuesday, the Environment Committee of the European Parliament voted to support proposals by the commission that would require most electricity utilities to buy all of their permits starting in 2013. Countries like Poland, which rely heavily on coal, are seeking a more gradual phasing in.
But legislators also added new proposals that would exempt utilities that feed heating systems or use high-efficiency technologies for heating and cooling. They also voted in favor of subsidies worth about €10 billion, or $13.6 billion, that could help utilities to develop technologies to capture and store carbon dioxide from coal plants.

Joris den Blanken, the EU climate and energy director for Greenpeace, warned that the subsidies could prolong the use of dirty technologies.
"Carbon capture is an expensive gamble that gives coal a lifeline," he said.
But Chris Davies, a British member of the European Parliament, said that carbon capture and storage, known as CCS, was a way of slowing harmful emissions if many parts of Europe continued to rely on fossil fuels to generate power.
"EU governments must now either back this proposal to kick start CCS development or produce a realistic alternative," Davies said. "At present the ideas from the Parliament are the only show in town."
The full European Parliament is expected to vote in December on the proposals, which also will require approval by EU governments.
The committee supported including the aluminum and chemicals sectors in the system, which already includes the steel, cement, glass, and the pulp and paper sectors.
Businesses have warned that the EU plan will cost billions of euros to implement. In a concession to those sectors, legislators said that they would only need to buy 15 percent of their permits starting in 2013 - a move designed to shield them from competition from manufacturers outside Europe, where there is less regulation.
The commission had proposed making these industries buy more permits - 20 percent - starting in 2013.
The amount of permits companies would be required to buy would increase annually, to 100 percent by 2020.
Companies also would be able to import significant amounts of credits from United Nations carbon-cutting projects in countries like China and India. The value of those credits rose on Tuesday, as traders anticipated more demand over the next decade.
Allowing imported credits angered some environmentalists, who complained that the practice would let polluters off the hook.
"Countries and industries can buy their way out of their required emissions reductions by offsetting about a third of their effort," said Delia Villagrasa, a senior advisor at the environmental group WWF.
Legislators also backed proposals for national targets to reduce greenhouse gas emissions from sources that are not covered by the trading system, like road and sea transport, buildings, services, agriculture and smaller industrial installations. These targets would allow some poorer countries, like Bulgaria, to increase emissions by up to 20 percent, while obliging wealthier countries, like Denmark and Luxembourg, to make significant reductions.
In a new proposal, the committee said laggard nations should pay €100 for each ton of excess CO2, or face deductions from their allowances to emit from the trading system. Those fines would be put toward a central fund for research into renewable energy, efficiency and conservation.