Monday 15 May 2006

Overall carbon dioxide emissions from European industry in 2005 were 44 million tonnes below levels permitted under the European carbon trading market. The news has prompted fears of a collapse in the price of carbon - and concerns that the European Emissions Trading Scheme may fail to reduce emissions in its first phase.

The figures show that all governments need to set much stricter limits on pollution in the second phase of the European Emissions Trading Scheme, which is currently under consideration by member states.

Tough limits under the next phase, which runs from 2008-12, are vital if the EU is to meet its targets under the Kyoto Protocol.

Keith Allott, Head of Climate Change at WWF, said: "This is a real wake up call to Europe to make much greater efforts to tackle climate change. This provisional data shows that the process for allocating permits to pollute has been a race to the bottom. Governments must not make the same mistakes in the second phase - and the European Commission must clamp down hard on any country which tries to over-allocate to its industry.

"The eyes of the world are on Europe. The EU ETS is the world's first true carbon market, and it is vital that the scheme is a success to show other countries how climate change can be tackled in a cost-effective way. The stakes are now incredibly high and countries must now ensure that the second phase of the scheme delivers real cuts in emissions."

Figures released by the European Commission indicate that 15 countries gave their industries more permits to pollute than they needed in 2005. The biggest surplus was in Germany, with an excess of 21.4 million tonnes of carbon dioxide permits. In contrast, emissions from industry in the UK were some 33 million tonnes higher than allocated.

Keith Allott added; "Whilst the UK has clearly not handed out a glut of permits to pollute, the government still needs to go much further to reduce emissions from industry. The power industry is by far the biggest sector under the scheme - and emissions from the UK's power stations have gone up 15 per cent since 1997, largely due to a switch back to coal. The government must ensure this is a trend that does not continue."