EU industry emissions falls 3% in 2008

By Fiona Harvey and Joshua Chaffin
Published: May 15 2009 23:09

Greenhouse gas emissions fell last year by 3 per cent among the European Union’s most energy-intensive businesses.
The fall in the industrial and power sectors covered by the emissions trading scheme was claimed by the European Commission as a victory for environmental policies, though carbon traders were quick to note that the recession also played a big part.

”The reduction was partly due to businesses taking measures to cut their emissions in response to the strong carbon price that prevailed until the economic downturn started,” said Stavros Dimas, environment commissioner.
Carbon prices stand at about €15 ($20, £13), having recovered strongly since they hit a low of €8 in February, in response to the recession and a rash of companies selling off their allocation of permits to raise short-term cash.
However, even at their current higher level, prices are unlikely to provide a strong enough spur to encourage companies to invest in new equipment to cut greenhouse gases.
The 3 per cent reduction in 2008, compared with the previous year, will contribute to a 6.5 per cent reduction the Commission wants to achieve between 2008 and 2012, to meet the EU’s targets under the Kyoto protocol.
In a veiled reference to the White House’s efforts to pass a cap-and-trade system, Mr Dimas said: “This should encourage other countries in their efforts to set up comparable domestic cap-and-trade systems, which we would like to see linked up with the EU ETS to create a stronger international carbon market.”
Many companies also took advantage of a rule change which meant they could buy in carbon credits from abroad. Credits issued by the United Nations under the Kyoto protocol trade at a discount to EU permits, so representing a cheap way for companies to comply with the emissions regulations.
Copyright The Financial Times Limited 2009