From: EurActive
Published December 20, 2010 06:45 AM

Cap & trade, European style

A new regulatory regime for dispensing around 100 billion euros of carbon permits has been approved by EU regulators, granting steelmakers and oil refineries free emission allowances in an effort to shield them from international competition after 2012.

Fears that tighter controls on CO2 emissions in Europe will drive factories to relocate abroad has led the EU to grant sweeping exemptions for industries deemed to be at risk.


Existing proposals for the permits to be allocated according to carbon intensity "benchmarks" were approved with only slight modifications by the European Commission on 15 December.

The permits will be issued under the EU’s Emissions Trading Scheme (ETS), the world’s largest carbon market.

Maria Kokkonen, spokesperson for Climate Action Commissioner Connie Hedegaard, told EurActiv that the benchmarks were a means of setting an emissions cap and a price to carbon.

"They are an incentive to installations to cut emissions and improve energy-efficiency," she said.

The benchmarks chosen reflect the average greenhouse gas performance of the 10 most efficient installations in each sector, as calculated against the base year of 2007-2008. From 2013 until 2020, some 60% of permits will be auctioned but those for the most "climate-friendly" installations will be freely allocated for a transitional period.

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