EU lawmakers plan to make climate goals cheaper

BRUSSELS (Reuters) - EU lawmakers will vote next month on steps to lower carbon penalties for industry and funnel billions of euros annually into climate change-fighting technologies, a European Parliament document shows.

The European Union’s emissions trading scheme puts a cap on carbon emissions from industry, and forces factories and power plants to pay for carbon permits above a certain free quota.

The European Parliament’s environment committee will vote in two weeks on the suggested changes to the European Commission’s original energy and climate blueprint, announced last January.

It is likely to set the parliament’s position ahead of final negotiations with member governments.

The lawmakers want to allow EU industry to meet half of their emissions-cutting goals from 2008-2020 by paying for these cuts in developing nations -- equivalent to 300 million tonnes more carbon dioxide (CO2) emissions than the Commission proposed, at 1.7 billion tonnes.

That expanded option for so-called offsetting could cut carbon prices and make industry’s climate goals cheaper to achieve -- amid concerns that high oil prices and an economic slowdown may last some time.

The recommendation is made in the European Parliament document, seen by Reuters on Wednesday, in which Irish conservative lawmaker Avril Doyle has condensed 827 proposed changes down to 15 key compromise amendments.

Doyle is the member of the parliament who is responsible for drafting the text that the legislature will vote on.

The proposals could change further before the vote.

Under the Commission’s original proposals announced in January, from 2013 companies in the 27-nation bloc will have to pay for far more emissions permits -- called EU allowances (EUAs) -- than at present under the EU emissions trading scheme.

Analysts estimate those auctions could raise more than 50 billion euros ($73.34 billion) per year for EU governments.


The proposed amendments broadly follow the Commission proposals on a rapid cut in free permits, agreeing that utilities should pay for all EUAs from 2013. Certain exempt sectors would pay for 15 percent in 2013 rising to 100 percent in 2020.

Sectors judged exempt would be those that cannot pass on the cost of carbon to consumers, for example because they trade in international markets. In addition, high-efficiency combined heat and power plants would get all permits for free.

The environment committee will vote on the draft proposals on October 7. They include a detailed breakdown of how auction revenues should be spent -- although it acknowledges this is a decision for member states.

Those steps include a quarter of revenues to be spent on adaptation to climate change which is already happening or which is unavoidable -- but only in countries that ratify a successor treaty to the Kyoto Protocol after 2012.

That could be a big carrot to try to seal agreement on a global pact, at a meeting timetabled for the end of 2009.

In addition, proposals in the document seen by Reuters on Wednesday proposed that more than 10 percent of auction revenues should be spent on measures to halt to reverse deforestation, and the same amount spent on emissions-cutting technologies.

The document recommends that the EU allocates up to 500 million EUAs, worth 12.5 billion euros at Wednesday’s prices, to utilities to trial a climate-fighting technology called carbon capture and storage (CCS), which cuts the global warming impact of coal plants.