Commission calls on states for stricter greenhouse gas controls

The call might signal a move by regulators to speed up the programme to slowly lower allocations and put more pressure on industry to pollute less. Last month the Commission released data indicating that the initial allocation limits for each country had been set at too high a level under the bloc's greenhouse gas reduction programme.

"The 2004 result puts actual EU-15 emissions further above the level they are projected to be at if policies and measures agreed at EU level were fully implemented,"​ the Commission noted. "The widening divergence between projected and actual emissions indicates that member states have been slow with implementation of their measures and need to accelerate their efforts."​

The latest figures reveal that despite the rise in actual emissions, the EU-15's overall output stood 0.9 per cent lower than in the base year, set mostly 1990. This, even though the EU-15 recorded economic growth of 32 per cent over the same period.

However greater efforts are needed to reduce EU-15 emissions to eight per cent below base year levels for the Kyoto Protocol's first commitment period. The period runs from 2008 to 2012. The Commission is due to make national allocations of emission allowances for the period under its Emissions Trading Scheme.

The full figures from the EU's 25 member countries, for which there is no collective Kyoto target, rose by 0.4 per cent in the year to 2004 but were still 7.3 per cent below base year levels, the Commission reported.

"With their new national allocation plans, due by the end of this month, member states now have a major opportunity to reverse unsustainable emission trends and ensure they will achieve their Kyoto targets,"​ the Commission stated yesterday. "It is very encouraging that we have broken the link between economic growth and greenhouse gas emissions, but this decoupling needs to be accelerated.”​

The inventory for 2004, compiled by the European Environment Agency, shows an overall increase of 11.5 million tonnes in EU-15 emissions of greenhouse gases, expressed in CO2 equivalents compared with 2003. Emissions rose in 10 of the EU-15 member states and fell in the five others.

The 0.3 per cent rise brought down the reduction in EU-15 emissions since the base year to 0.9 per cent in 2004 from 1.2 per cent in 2003.

The 2004 increase in EU-15 emissions was mainly due to higher CO2 emissions from road transport, iron and steel production and oil refining. Increased emissions of hydrofluorocarbons (HFCs) - one of the most powerful families of greenhouse gases - from refrigeration and air conditioning, were also recorded.

'This makes it all the more important that member states make their national allocation plans (NAPs) for 2008-2012 under the EU Emissions Trading Scheme strict enough to ensure that they meet their Kyoto targets,"​ the Commission stated.

The NAPs will set a cap on overall emissions from the energy-intensive sectors producing almost half of the EU’s CO2 emissions. They will also determine how many emission credits member states intend to obtain from emission-saving projects in third countries. The NAPs must be submitted by 30 June, after which the Commission has three months to approve them or require changes.

Results from a number of member states also show that other EU and national measures are proving successful in decreasing emissions where implemented effectively, the Commission said.

For example, Germany reduced its overall emissions by 0.9 per cent in 2003-2004 as it increased the share of renewable energy sources in its electricity production from 7.9 per cent to 9.4 per cent. Denmark’s emissions fell by 8.1 per cent as its renewables share rose from 13.4 per cent to 14.2 per cent. An government energy efficiency drive helped reduce household energy consumption by 1.8 per cent.

Figures published last month showed that CO2 emissions were 44 million tonnes under the level permitted by the NAPs in 2005.

ETS is part of the bloc's plan to reduce greenhouse gas emissions to meet international commitments under the Kyoto Protocol. The "cap-and-trade" scheme, which took effect from January 2005, allows companies to buy and sell CO2 emissions rights on specially constructed Internet sites.

Plants that emit more CO2 than their allocation need to buy allowances to cover the extra emissions. Companies that emit less than their allocation are able to sell the allowances to companies that need them.

The food processing industry is a major energy consumer and discharger of greenhouse gas through its reliance on cooking, refrigeration, freezing and air compressor systems. The increased costs have added to the costs companies must pay to stay in business.

The ETS currently covers around 11,500 installations that account for about half of the EU's CO2 emissions. Arriving at an EU-wide definition of which installations fall under the scheme is part of the challenge regulators face in complying with the agreement.

Under the scheme companies can be fined about €40 per excess tonne of CO2 emitted, a price above allocations being traded on the market.

The 2005 data is the first verified emissions information for installations. The data released by the Commission last month covered about 9,400 of the 11,500 installations falling under ETS in the EU's 25 members. Four members – Cyprus, Luxembourg, Malta and Poland – released no information to the Commission as their allowance registries are not yet operational.

The EU ETS regulations require operators of installations in the scheme to monitor and report their emissions each year, and to have their emissions independently verified. They must then surrender sufficient allowances to cover their verified emissions.

The deadlines for reporting and surrendering allowances each year are 31 March, when operators must report the verified emissions for the previous year, and 30 April, when they must surrender allowances to cover their verified emissions.

The EU ETS Directive requires the European Commission to publish compliance data for each installation on 15 May each year.

The Commission is now preparing for the scheme's second trading period, from 2008 to 2012. As required by the directive, member states must draw up national allocation plans for the period for notification to the Commission by 30 June.

These plans are important climate policy tools since collectively they will determine the total permitted level of CO2 emissions from installations across the EU as well as how many allowances each installation receives individually.

The Commission plans to launch a review of the scheme and the directive later this year to see whether adjustments to its design should be introduced after 2012.

In the second phase member states and companies will come under increasing financial and administrative pressure to reduce CO2 emissions. They will have to buy credits if they want to expand.

In the guidance the Commission says the legislative framework for small installations will remain unchanged during the drawing up of national allocation plans. To ease the burden on small companies the Commission called on member governments to use the legislative flexibility already offered under the current plan.

It is also considering looking at measures to make the situation easier for small installations in its forthcoming review of the ETS. It will consider proposing an amendment to the directive to enable the removal of some small installations in the course of the second trading period, the Commission stated.

The Commission plans to revise the rules for monitoring and reporting of emissions in a bid to ease the administrative burden for small installations.

The Commission aims to have the changes in place by the start of the second trading period.

In November the EU's food and drink association told FoodProductionDaily.com that the scheme is being applied inconsistently across the bloc, hurts smaller companies and should not be expanded to other types of emissions. The Confederation of Food and Drink Industries in the EU (CIAA) is lobbying for changes to the agreement.

The CIAA says a more fairer definition needs to be applied across the bloc of what plants are caught under the ETS.

The CIAA says the scheme requires a harmonised definition of “combustion installation” across the EU, as some countries have used the loose definition to exclude certain sectors of the food and drink industry. This gives competitors in those countries an advantage over other CIAA members in more restrictive states.

During the second phase the Commission plans to include additional, smaller sites below the current capacity threshold. Below a rated thermal input of 20 MW, actual direct emissions would typically be less than 5,000 tonnes CO2/year.

On 23 November, in a case brought by the UK against the Commission, the EU Court of First Instance ruled the country should have been allowed to request an increase in air-pollution permits from regulators.

Earlier last year the Commission rejected the UK's request for a 2.7 per cent rise in free carbon-dioxide permits for energy and manufacturing companies

The market in trading emission rights is estimated at about €35 billion (US$43bn) per year.