Italy asks to renegotiate EU carbon quota: source

BRUSSELS (Reuters) - Italian Prime Minister Silvio Berlusconi has written to the European Commission asking to renegotiate the caps on his country’s carbon dioxide emissions, an Italian government official said on Thursday.

Several European Union countries, including France, are also discussing the possibility of asking for more carbon emissions permits from a reserve fund of the ETS, an EU diplomat said.

The comments came one day after Poland and Estonia made headway in a court challenge to their own emissions caps.

“The cap assigned to Italy was excessively low and we have difficulty meeting it as our industry is already very efficient, especially our power generation system,” the Italian official said.

The caps cover carbon emitted during the 2008-2012 phase of the Emissions Trading Scheme, the EU’s main tool for ratcheting down industry’s greenhouse gas emissions in the fight against climate change.

“The letter was meant to raise a problem that has also become evident in the European court ... decision on Poland and Estonia’s caps,” the Italian official added.

“We are making no proposal, just looking to discuss this problem with the Commission.”

A shortage of carbon permits could cost Italy about 500 million euros ($736 million) in the short term, mounting to a total of 800 million by 2012, the official added.

Poland and Estonia’s victory at the European Court of First Instance has unsettled markets for carbon emissions permits as it raises doubts over the authority of the EU’s executive Commission to determine the quotas.

Some analysts have even raised the possibility the ETS will become bogged down in a string of appeals by member states unhappy with their quotas. But a European Commission spokeswoman played down the chances of negotiation.

“The ceilings have been established already, and normally are not renegotiable,” she told a news briefing.

Elsewhere in Europe, discussions center on the “New Entrants Reserve” of the ETS, a reserve of carbon permits intended to be used for new businesses joining the scheme as economies expand.

“The question of the reserve for new entrants is being asked in several EU countries, among them France, but at this point there is no formal demand of reviewing the allocation plan,” the EU diplomat said.

Reporting by Pete Harrison and Julien Toyer, editing by Timothy Heritage