EU Commission sets out climate change proposals

United Kingdom

The European Commission put forward a number of ambitious proposals today to tackle climate change, one of the key proposals being to expand and strengthen the EU Emissions Trading Scheme (EU ETS), which has been under review for some time. These proposals provide a clear signal of the EU’s intent to put in place a third phase for the EU ETS post 2012.

Key EU ETS proposals

The proposals set out by the Commission will have a major impact on both those industry sectors already covered by the EU ETS, as well as on new sectors which have, until now, been excluded from the scheme. A number of new industries, including aluminium and ammonia producers, will be covered under the expanded scheme, as will two further gases, nitrous oxide and perfluorocarbons.

Other key proposals regarding the EU ETS for the post-2012 period include:

  • a single EU-wide cap on ETS emissions will be set, replacing the current National Allocation Plans;
  • free allocation of emission allowances will be gradually replaced by an auctioning of allowances;
  • emissions from sectors covered by the EU ETS are to be cut by 21% from 2005 levels;
  • pending the ratification of a future international agreement on climate change, Member States will be allowed to use Certified Emission Reductions credits (CERs) from Clean Development Mechanism (CDM) projects and Emission Reduction Units (ERUs) from Joint Implementation (JI) projects to meet their commitments under the EU ETS up to a limit of 3% of each Member State’s annual emissions from sources which were outside the scope of the EU ETS in 2005.

Other Proposals for 2020

The EU Commission also proposes the following targets for 2020.

  • the EU will reduce its overall emissions to at least 20% below 1990 levels, and the European Council supports a target of 30% if other developed countries commit themselves to a similar reductions;
  • the EU will increase the share of energy generated from renewable sources to 20% (UK: 15%);
  • biofuels to have a minimum 10% share of transport petrol and diesel consumption, subject to them being produced in a sustainable way.

The EU Commission also proposes to support the development of carbon capture and storage (CCS) technology, including up to twelve CCS demonstration projects.

The proposals now need to be approved by both the EU Council and the EU Parliament, and it is expected that an agreement will be reached by 2009.