October 23, 2014 / 10:31 AM / 3 years ago

EU set to allow car emissions into carbon trading market

Rush hour traffic fills an avenue leading up to the Arc de Triomphe which is seen through a small-particle haze at Neuilly-sur-Seine, Western Paris, March 13, 2014.Charles Platiau

BRUSSELS (Reuters) - The European Union is set to make it easier to bring road transport emissions into the carbon trading market, a move that critics say could empower carmakers to push back against more effective curbs on greenhouse gases.

EU leaders will attempt to agree on energy policy for 2030 when they meet in Brussels on Thursday and Friday, including an EU-wide cut in greenhouse gas emissions of 40 percent compared with 1990 levels.

The EU's Emissions Trading System (ETS), key to efforts to reduce emissions, has so far excluded road transport. It has focused on curbing pollution from heavy industry and the power sector by forcing more than 12,000 power plants, factories and airlines to surrender an allowance for every tonne of CO2 emitted under a gradually decreasing emission cap.

But a draft of the EU's 2030 climate and energy package, seen by Reuters, says individual member states can include road transport in the EU ETS if they choose.

It also calls on the executive European Commission to "further develop instruments and measures for a comprehensive and technology neutral approach for the promotion of emissions reduction and energy efficiency in transport".

The phrase "technology neutral" is often used by business to champion using the EU ETS to tackle emissions, rather than sector-specific targets.

Transport is Europe's second-largest source of greenhouse gas emissions after the power sector, and is also the fastest-growing one.

Bringing cars into the ETS could reduce the costs the car industry faces in meeting existing regulation as well as tackling the oversupply on the carbon market which has pushed prices of carbon allowances down to around 6 euros ($7.64) per tonne from more than 30 euros six years ago.

But the impact on emissions would be negligible, analysts say. A study published this week by consultancy Cambridge Econometrics estimated that bringing road transport into the ETS would curb emissions by 1 percent by 2030 at current ETS prices.

It also found that to achieve a vehicle emissions goal of 60 grams of carbon dioxide per kilometer (g/km) by 2030 -- the logical extension of existing car emissions targets -- carbon prices would need to rise to over 200 euros per tonne, imposing huge costs on heavy industry.

Climate campaigners say heavy lobbying from business has already ensured a proposed emissions cut of 40 percent will not include a sub-target for transport, whereas the current set of 2020 targets includes a 6 percent cut in road fuel emissions compared with 1990.

Existing EU law also includes emissions standards to limit carbon dioxide pollution from cars, which extend to 2021 and have attracted stiff resistance, especially from the German luxury car sector, led by brands such as BMW and Daimler.

Several EU officials said there was no unanimity on bringing road transport into the ETS, so member states were likely to agree on asking the European Commission to look at ways to expand the carbon trading scheme.

But green campaigners say even the mention of flexibility in achieving targets could give carmakers more stick to persuade lawmakers to drop efforts for any further car specific standards, which they say have had a major impact on reducing vehicle fuel use and cutting pollution.

"The draft text makes the theoretical possibility of transport in the ETS move closer to reality," said Greg Archer of environmental group T&E. "It is a dangerous precedent that will undermine reductions in transport emissions while damaging EU growth and jobs."

($1 = 0.7859 euro)

Additional reporting by Barbara Lewis, editing by David Evans

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