From: Reuters
Published February 14, 2008 05:52 AM

Germany says won't meet carbon permits deadline

FRANKFURT (Reuters) - Germany will probably miss a February deadline to issue carbon emissions permits to its industry under the next phase of Europe's carbon trading scheme from 2008-12, a carbon registry spokeswoman said.

Reuters reported earlier this week that Hungary would not meet the end-February deadline to issue carbon emission permits, called European Union Allowances (EUAs).

The European Union's executive Commission will take four to six weeks to approve member states' planned allocations, the spokeswoman for Germany's DEHST carbon registry office said in Berlin, adding that she expected other countries to be late too.

"We will be notifying all German participants in the scheme about their allocation by the end of this week or early next week," she said in response to an enquiry.


"Unfortunately, the physical handing out of the certificates is not likely to happen by February 28 because the EC must first approve our national allocation table."

"It is unsatisfactory but I believe these kinds of problems will apply to the majority of other EU member states as well."

An additional difficulty complicating the start of the second trading cycle of the European carbon market is that the scheme should now link with U.N.-led carbon trading under the international Kyoto Protocol on global warming.

The European Commission has delayed that link until as late as next year.

The Commission has tweaked trading rules to allow EU states to trade EUAs without linking to the U.N. scheme, but some member states are still concerned about the legality of trading without the link.

The German environment ministry foresaw legal problems handing out EUAs before the Europe-Kyoto link, the Germany registry spokeswoman said.

Hungary wants to link with the Kyoto trading platform, called the International Transaction Log (ITL), ahead of the European Commission's planned switch, but such an independent move may complicate issuing EUAs under the European scheme.

"We are seeking the technical solution to link simultaneously to the ITL and CITL (the EU trading platform)," said Jozsef Feiler, head of climate change and energy at Hungary's Ministry of Environment and Water, in a telephone conversation from Budapest on Thursday.

Hungary has a surplus of carbon credits under the Kyoto scheme, and making that ITL switch would allow it to sell these.

Overall, some 1,625 German installations will receive some 451.86 million tonnes of emissions permits annually from 2008 to 2012. That is slightly below an EU budget of 453.07 million after some spare quota was trimmed, DEHST said.

Carbon trading allows companies and countries to pay others to cut greenhouse gas emissions on their behalf through a currency of emissions permits, and is meant to cut the cost of fighting climate change.

(Additional reporting by Gerard Wynn in London, editing by Anthony Barker)

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