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Irish EU Presidency To Privatise Pollution Rights: Cullen Gives 'Carte Blanche' to Irish Industry

category international | eu | feature author Sunday February 08, 2004 12:44author by vlo Report this post to the editors

Irish Presidency to settle deal on European CO2 Emissions Trading Market

cop6 From the Newswire: 'One of the central, but not well known, direct goals of the Irish EU Presidency is to reach agreement with the European Parliament about the CO2 Emissions Trading Market. This market is to be launched in 2005. Ministers of the EU member states are demanding a market full of loopholes, so that companies can escape reducing CO2 and other greenhouse gases on EU territory. Instead companies will be able to produce and trade the commodity “the right to pollute” by financing cheap efficiency projects in Eastern Europe and in the South.

An agreement between the EU Member States and the European Parliament should finally be reached at the end of June, but ideally should come about before the last legislative session of the European Parliament in April, before the elections. Ireland already held a conference in Dublin on February 3 to discuss the various National Allocations Plans among the Member States. These allocation plans are the foundation of privatising the right to pollute among companies in the EU, concerning high-polluting industries such as the steel and paper industries. Before the end of March, all Member States should have finished their allocation plans.

The most crucial topic will be on the loopholes that will be provided to companies. Last year, the European Commission proposed to link the European Market with other “flexible mechanisms” for reaching reduction targets, such as the CDM and JI mechanisms, that make it possible for Member States and companies to create the right to pollute with CO2 in the EU, by developing or financing “climate projects” in other countries. The Commission however proposed to put a cap of 8 per cent on this. The EU Parliament agreed on this. In December, a majority of the EU-member states expressed the opinion that they want to get rid of this cap. Now, Member States and the EU Parliament have to come to an agreement so that the trading scheme can be implemented in January 2005.

This so-called “linking directive” will boost the European Market with cheap credits, so reaching the Kyoto-targets will be much cheaper for companies. States such as Spain (which is very energy inefficient), as well as most industries, are heavily engaged in lobbying the EU Parliament and other Member States to link the European market with these other flexible mechanisms. The consequences are that no reductions will have to be met in Europe itself, enabling industry and Member States to continue polluting anyway and further postponing solutions to climate change. Another consequence is that a very lucrative market will be created, by creating a new commodity and very flexible market rules.'

The Effects of this Wrangling in Ireland are Already Apparent: Government is Giving Industry what it Wants: Industry Plays while the Consumer Pays (Waste Charges)
Irish Taxpayer Funds Free Ride for CO2 Industries: Friends of the Irish Environment
Cullen Decision on Emissions Cowardly -SF
Cullen Ignoring Kyoto Targets -Labour
Greens say Government is allowing Industry ignore Kyoto Obligations

Another issue is which type of projects will be approved. In the worst case scenario, nuclear power plants, large dams and industrial tree-plantations will be projects that can be developed for producing carbon credits, which then can be traded in the European Market. Parliamant is against these projects, but then again, several EU states are not. There might also be a future possibility of EU rules that contradict WTO universal trading rules, enabling supply-countries to bring the EU into Court for not accepting certain projects as a means for producing carbon credits.

Surprisingly maybe, it is a member of the Greens in the European Parliament who is proposing a new compromise. Alexander de Roo, member of the Dutch GreenLeft party, proposed to start linking from 2005 already, at the very start of the trading scheme, instead of 2008 as initially has been agreed between Commission and Parliament. He also is proposing not to wait for Russia to ratify the Kyoto Protocol, but to start next year anyway with the trading scheme. In response to the proposal, European Commission’s Catherine Day said: “We are optimistic we can reach agreement on the linking directive by the end of the Irish Presidency.”

It is common thought among members of EU-Parliament, the Irish presidency and analysts that there will be some trade-offs between this recent proposal and further demands of the member-states. De Roo his proposal is especially critical towards several types of projects, but less critical against a high cap on linking the flexible mechanisms with the proposed trading scheme.

Background Reading:
Electricity Industry wants unlimited use of CDM and JI in EU ETS
Irish Presidency hopeful to reach agreement on linking
EU emissions trading scheme could cause EU companies to go bankrupt or move overseas, - EU Energy Commissioner
How Global Warming May Cause the Next Ice Age
EU-Ministers Propose Yet Another Loophole in EU CO2- Emission Reduction Market
Debates and Actions around Climate Conference in Milan
"UN to allow GM-Trees for producing carbon credits"

More Useful Links:
Carbon Trade Watch
CDM Watch
Rising Tide
Rising Tide UK
Burning Planet


author by stevepublication date Sun Feb 08, 2004 13:40author address author phone Report this post to the editors

You seem sceptical of the flexible mechanisms yet they are there to protect the small to medium companies who would find it difficult to meet their targets because of capital capacity etc. The larger corporations/companies have much less issues with the system because they can easily absorb the cost of clean technologies etc. Its an interesting dynamic where some see a system that is good for the environment but dont realise that it potentially forces small businesses into bankrupcy and only benefits 'big business'

author by vlopublication date Sun Feb 08, 2004 14:12author address author phone Report this post to the editors

The flexible mechanisms has always been the idea of several businesses (yes, the big ones) and economics, and has been heavily lobbied for during the Kyoto-Process. Where smaller businesses will come in, is not yet clear at all. There are different ideas around for incorporating small(er) businesses and even consumers in this system, but that is not at all a necessary way to go forward for the burocracies.

There are many flaws within the proposed systems. One of them is that it commodifies and privatise the sky by using 1990 levels of emissions per state, thus institutionalising inequality (to name one of the fundamental problems with the scheme). Using the phrase "pollutionrights" next to the phrase "carbon credits" is completely normal and to the point. Please, allow me to propose you to do some reading.

Greenhouse Market Mania

The Sky is Not the Limit
The Emerging Market in Greenhouse Gases

author by Friends of the Irish Environmentpublication date Mon Feb 09, 2004 14:14author address author phone Report this post to the editors

The recent announcement by the Minister for the Environment permits Irish industries to continue to emit 96% - 98% of their current carbon dioxide emissions.

This will mean the Government will have to purchase 18.5 million tons of carbon dioxide emission credits on the international market in the years 2008 - 2012.

The Government estimates the cost per ton of carbon dioxide emissions at ?10 a ton, but if other countries follow Ireland's lead the price will rise sharply.

FIE calculates the costs could easily reach ?60 a ton, giving a total cost to the taxpayer of ?1.1 billion euro.

As the emissions credits are being given to industry for free, it is hard to see how the Minister can make good on his 'warning' of July 3, 2003 that 'there would be no free rides'.

Based on this announcement, it appears Mr. Cullen would be more suited as Minister for Industry rather than Environment.

No Free Rides DoELG Press Release of July 3 2004

Related Link: http://www.friendsoftheirishenvironment.net/main/article.php?sid=416&mode=thread&order=0
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