Higher prices for emission permits?
The President of the European Commission, Jose Manuel Barroso, has announced Europe’s targets for alternative energy sources and carbon emission reductions. The targets are ambitious, and the proposed new rules for the ETS should lead to higher prices. Member states and MEPs need to endorse these proposals before they come into force.
“The aim would be a 20% cut in the EU’s greenhouse gas emissions by 2020, which could rise to 30% with a global deal.
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The commission’s proposals would see the Emissions Trading Scheme (ETS) extended to include more industrial sectors in the years between 2013 and 2020.
Apart from a few exempt industries, the power sector would lose the right to free emission allocations and have to buy all its permits at auction from 2013. Aviation and other industries would move gradually to a full auction.
Companies’ carbon allowances would be decided at European level, replacing the current system where nations submit bids to the commission.
The aim would be to reduce allowances so that by 2020, emissions from the sectors included would be about 21% below the level they were when the ETS started in 2005.
For emissions not covered by the ETS, such as transport, buildings and agriculture, the commission has proposed national targets.
Richer nations would have to cut their emissions: the target for Denmark and the Irish Republic is a 20% reduction and the UK’s is 16%. The poorest would be allowed to increase emissions, Bulgaria by 20% and Romania by 19%.”