The Heat Is Online

EU Approves Formal Trading Market

EU strikes agreement on emissions trading
The Associated Press
, Dec. 10, 2002

BRUSSELS, Belgium - European Union environment ministers agreed Monday to establish the world's largest market for trading greenhouse gas emissions in an effort to reduce global warming.

EU officials said the accord was vital for the bloc's commitment to reduce gases blamed for global warming under the 1997 Kyoto Protocol.

"The EU can now really begin work on reducing emissions of greenhouse gases," said Hans Schmidt, the Danish environment minister who chaired the meeting.

The EU pledged to cut emissions by 8 percent of 1990 levels by 2010 under the international agreement concluded in the Japanese city of Kyoto.

Under deal reached by the 15 EU government's Monday, companies will be given a quota for carbon dioxide emissions. Those who exceed their limit will be able to buy extra quota from others that stay below their allotted levels. The trading system will come into force from 2005 to cover emissions from the power and heating industries, together with producers of steel, cement, glass, tile, paper, and cardboard.

Schmidt said the system will ensure emissions will be reduced in areas where they have greatest effect and in the most cost-effective matter.

"It's good for the environment, it's good for enterprises, and it's good for the economy," he said in a statement.

The system can be extended later to cover other sectors such as the chemical and aluminum industries, and other gases, the EU said. Participation in the system will be compulsory from 2008.

Companies that exceed their quotas without managing to trade more will be fined 40 euro (US$40) per ton of gas until 2008, then 100 euro (US$100) per ton.

Environmentalists hailed the deal. "The trading scheme will help the EU to meet its Kyoto commitments because it has specific financial penalties," said John Lanchbery of the Britain's Royal Society For The Protection of Birds.

However, they said European governments need to do more to ensure they meet their Kyoto targets.

Measures being considered include energy efficiency laws, promoting renewable sources such as wind and solar and reducing car emissions by hiking fuel taxes. Governments could also promote so-called biofuels, such as ethanol, which are mixed with traditional fuels that emit greenhouse gases.

The EU decided to push ahead with the Kyoto protocol despite a decision by U.S. President George W. Bush to reject it. Bush sees it as harmful to American business.

Copyright 2002, Associated Press