Fwd: EU Nations Pass Rules on Free CO2 Permits After 2012 (Update1)

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EU Nations Pass Rules on Free CO2 Permits After 2012 (Update1)
2010-12-15 18:46:25.765 GMT

By Ewa Krukowska
Dec. 15 (Bloomberg) -- European Union member states
approved rules for giving away a dwindling supply of emission
permits after 2012 to oil refiners, metal manufacturers and
other participants in the world's biggest cap-and-trade program.
The 27-nation EU, which has given away the majority of
allowances since it started the carbon-trading system in 2005,
will require most emitters to buy their allotment of permits in
the third phase, which starts in 2013 and runs through 2020.
Representatives of national governments in the EU's Climate
Change Committee gave the green light today to more than 50
benchmarks for allocating nearly 100 billion euros ($133
billion) worth of permits, the European Commission said in a
statement. The rules, drafted in October by the European
Commission, were designed to reward the continent's most-
efficient emitters.
"This vote represents a major milestone in the reform of
the European carbon market and gives industries more regulatory
certainty up to 2020," EU Climate Commissioner Connie Hedegaard
said in the statement.
The EU is seeking to balance the goal of reducing
allowances in its carbon-trading market with limiting cost
increases for energy-intensive industries. Refiners and other
companies that face higher costs tried to persuade the EU to put
off plans until later this decade to scale back free allowances.
The regulation sets rules for determining allocation of
about 6 billion free allowances in the eight years through 2020.
The vote today sets up a three-month scrutiny period in the EU
council of ministers and the European parliament, after which
the measure will be adopted by the commission.
The benchmarks will be based on the average performance of
installations in the top 10 percentile for efficiency in 2007-
2008. The most efficient 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, according to
the commission.
The EU will auction around 60 percent of the total number
of permits in 2013, according to the commission estimates, and
the proportion will increase in coming years.
The cap for CO2 discharges for 2013 has been set at 2.04
billion tons, valued at about 30 billion euros at today's price.
This limit includes aluminum and chemical makers that join the
program in the third phase. An adjustment is also planned for
airlines that will become part of the system from 2012.

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.

To contact the reporter on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or