Council agreement on EU climate plans in detail

Citation

(2009), "Council agreement on EU climate plans in detail", Management of Environmental Quality, Vol. 20 No. 4. https://doi.org/10.1108/meq.2009.08320dag.001

Council agreement on EU climate plans in detail

Article Type: News from the net From: Management of Environmental Quality: An International Journal, Volume 20, Issue 4

EU leaders meeting in Brussels agreed unanimously on key outstanding elements of a climate and energy package proposed by the European Commission. Among the most important features of the deal are the following.

The number of carbon allowances in the EU’s emission trading scheme would not change, but installations would receive more of them for free. From 2013, 20 per cent of allowances would be auctioned, rising to 70 per cent in 2020. There would be “a view to reaching” full auctioning by 2025.

Industrial sectors at risk of carbon leakage would be given quantities of free allowances based on state-of-the-art technology benchmarks. Firms would have to meet one of the two following criteria:

1. 1.

   Production costs exceed five per cent of gross value added and the total value of exports and imports divided by the total value of turnover and imports exceeds 10 per cent.

2. 2.

   Production costs exceed 30 per cent of gross value added or the total value of exports and imports divided by the total value of turnover and imports exceeds 30 per cent.

Firms in the power sector would as a rule still have to buy all their allowances from 2013. But derogations would be possible allowing some power plants to get up to 70 per cent of their allowances for free in 2013, declining to zero in 2020. The conditions for granting these derogations are still unclear.

The revenue from 10 per cent of carbon allowances auctioned by EU states would go to help the block’s poorer countries modernise energy infrastructure. An additional two per cent would be distributed among those that had reduced their emissions by 20 per cent in 2005 relative to 1990 levels. In practice this means Poland, Hungary, Slovakia, the Czech Republic, Estonia, Latvia, Lithuania, Romania and Bulgaria.

Firms regulated under ETS rules would be allowed to achieve half of their reduction effort using Kyoto protocol flexible mechanism credits. The maximum amount of credits that member states could use to reduce emissions in non-industrial sectors would be set at three per cent of 2005 emissions. A total of 12 EU countries felt to face particularly tough EU targets would be allowed to buy four per cent.

The number of allowances set aside under the ETS to finance carbon capture and storage (CCS) demonstration plants would be 300 million. This is significantly more than the French presidency had proposed, and closer to what MEPs had demanded.