From: Reuters
Published January 21, 2008 07:00 PM

EU to phase in CO2 auctions for refinery

By Darren Ennis

BRUSSELS (Reuters) - The European Union, responding to industry pressure, will phase in auctions for greenhouse gas emissions permits for refineries and airlines from 2013 as part of a plan to combat climate change, an EU source said on Monday.

Speaking after senior European Commission officials put finishing touches to proposals to be adopted on Wednesday, the source said the power generation sector would have to buy 100 percent of emissions permits in auctions from 2013.

But in response to lobbying from governments and key industries, officials had agreed that refineries and airlines would start at a level of 20 percent of permits auctioned in 2013, with the rest issued for free, rising by 10 percent a year to reach 100 percent in 2020.

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The move is part of an EU plan to cut greenhouse emissions by a fifth from 1990 levels by 2020 to fight global warming.

"The business argument generally prevailed," said a senior EU source, speaking on condition of anonymity because the proposals have not yet been formally adopted.

European oil majors Shell and BP had mounted a campaign to have their refineries spared from having to buy emissions permits at auction, arguing it would put them at a competitive disadvantage against non-European rivals.

The United States, which some call the world's biggest polluter, has so far refused to accept any binding curbs on greenhouse gas emissions.

The source confirmed an earlier Reuters report that three energy-intensive industries -- steel, aluminum and cement -- would enjoy an easier regime, receiving their quota of emissions permits for free in 2013 and being phased in more gently.

The Commission will review the situation of energy-intensive industries in 2011 in the light of whether there has been an international agreement by then to curb emissions of carbon dioxide (CO2), the main gas blamed for global warming.

Other sectors such as fertilizers or paper and pulp will be able to apply for the status of energy-intensive industries but will have to produce evidence of competitive damage, he said.

The source said the Commission would set national targets for reducing emissions from buildings, heating and cooling and transport, not covered by the EU's Emissions Trading Scheme.

As previously reported, the wealthiest old EU member states such as Ireland will have to cut CO2 emissions by 20 percent by 2020 from 2005 levels, while the poorest new members, Bulgaria and Romania, will be allowed to increase emissions by 20 and 19 percent respectively to enable an economic catch-up.

Germany will have to cut non-ETS emissions by 14 percent and Sweden by 17 percent, the source said.

On renewable energy sources, the Commission will set national targets for the level of power generation to be drawn from wind, wave, solar and hydro-electric sources and biomass by 2020, varying according to countries' wealth and starting point.

Thus Sweden will have the highest target with 49 percent, while Romania will have a goal of 24 percent of power from renewables, Germany 18 percent, Ireland and Bulgaria 16 percent.

(writing by Paul Taylor, editing by John Picinich)

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