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EU Draft on Free CO2 Permits Sets About 50 Benchmarks (Update1)
2010-09-09 14:43:11.811 GMT
(Updates with EU comments in second paragraph.)
By Ewa Krukowska
Sept. 9 (Bloomberg) -- The European Union has identified
about 50 efficiency benchmarks for industries including steel
and chemicals in a draft regulation for allocating nearly 100
billion euros ($127 billion) of emission permits.
The 27-nations EU has given away most allowances since it
started the world's largest emissions market in 2005. It plans
to sell a majority of them after the second phase of the
program ends in 2012.
The European Commission, regulator for the EU, is finishing
a draft to determine allocation of about 6 billion free
allowances in the eight years through 2020, according to Hans
Bergman, a specialist in the climate department. Under the EU
plan to reduce the supply of CO2 permits through 2020 to fight
climate change, the benchmarks will be based on the average
performance of the 10 percent most-efficient installations.
"These benchmarks are not emission limits or targets, but
thresholds for what installations will get for free," Bergman
told a briefing in Brussels today. "A benchmark value will be
multiplied by historic production to determine the amount of
free allocations for the installation."
Benchmarks will be set for products rather than for inputs,
the commission has said. The EU agreed last year that benchmarks
will consider the most efficient techniques, substitutes,
alternative production processes, use of biomass and capture and
storage of CO2.
The best installations in a given industry won't need to
purchase more allowances, while those that emit more than the
benchmarks will need to buy permits on the market, Bergman said.
Cornerstone
The EU emissions trading system, or ETS, is the cornerstone
of European climate-change policy and covers about 12,000
facilities that produce energy or goods from paper to cement.
Emitters including E.ON AG, Germany's biggest utility, and
Royal Dutch Shell Plc, Europe's largest oil company, need an
allowance for each ton of carbon dioxide they emit in burning
fossil fuels. Those that produce more than their allowance need
to buy more; those that emit less can sell their surplus.
"The main question is how much cement and steel sectors
will get," said Sanjeev Kumar, an associate at climate-
protection group E3G. "They were massively overallocated in the
second phase, and if they get high benchmarks in the third, it
will undermine the value of the ETS. They're subsidizing those
two sectors in times of financial crisis."
For Related News and Information:
Emission market news NI ENVMARKET <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
--Editors: Mike Anderson, John Buckley.
To contact the reporter on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or
ekrukowska@bloomberg.net;
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
