Tuesday

19th Mar 2024

Green light for worldwide emissions trading

Companies failing to reach greenhouse gas emission targets may soon be able to buy their way out of trouble, under a Commission proposal unveiled on Wednesday (23 July).

Under the draft rules, 10,000 companies accounting for half of the EU’s green house gas emissions would be allowed to meet some of their own reduction quotas via projects in developing countries and other developed countries.

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The plan allows credits gained through emission reduction mechanisms in the Kyoto Protocol on climate change to be traded and exchanged to meet EU quotas.

"Reducing the cost of meeting our Kyoto targets [lowering the levels of greenhouse gases to 8% below their 1990 levels] is very important" a Commission official told journalists.

The saving for companies is estimated to be 700 million euro a year. The Commission hopes that the plan will reduce the nominal price of a tonne of carbon on the european 'market' from 26 to 13 euro.

The move will clear way for countries to meet 6% of total targets abroad before triggering a Commission inquiry. The cap for the total amount traded abroad will be set at 8%.

"We are sending a strong political signal to our partner countries… of course it sends a very special signal to Russia" said the official.

Russia’s signature is crucial as 55 countries, including those responsible for 55% of green house gas emissions, are needed for the Protocol to enter into force.

In an attempt to get Moscow to sign, the Commission was keen to spell out that Russia would very likely be the site of companies’ foreign projects.

Critics say the move shifts the responsibility away from industrialised countries, something the Commission denies.

"There is a clear expectation from developing countries that industrialised countries move first and reduce emissions, especially at home, before they use the flexible mechanisms".

"The industrialised countries should reach most of their targets through domestic emission reductions", says the Commission.

The proposal will have to be approved by the European Parliament and member states.

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