EU cuts CO2 allocations by 10 per cent

The cuts means processors and others participating in the EU's Emissions Trading Scheme (ETS) face further pressure to reduce greenhouse gases produced by their operations -- or spend more to buy credits.

In the main the the targets further reduce the amount of CO2 emissions each sector is allowed to produce from manufacturing activities before having to purchase credits from other companies on the market.

Cutting allowances will affect member states in different ways.

Tthe Commission did not reduce the allowances asked for by Denmark, France, Slovenia and the UK.

The Commission reduced Germany's requested allowance by 2.5 per cent, representing a reduction of about 30m tonnes of CO2 to 453.1m tonnes.

Meanwhile the Commission cut Hungary's allocation by 12 per cent, Luxembourg's by 40 per cent, and Sweden's by 10 per cent..

Latvia had to cut its allocation cap by about 50 per cent.

In related news, the Commission also announced that Norway, Iceland and Liechtenstein are now part of the ETS system, the first time non-EU members have been permitted to join.

The three countries are part of the European Economic Area, making their inclusion the "first international agreement of its kind for emissions trading", the Commission stated.

With the inclusion of the three the EU's ETS now covers 30 countries across the European continent, part of the bloc's plan to make the system a global standard.

Under the ETS, countries submit national allocation plans (NAPs) determine for each member state the 'cap' or limit, on the total amount of CO2 that installations can emit.

The NAPs also specify how many CO2 emission allowances each plant will receive.

The Commission then assesses the plans to ensure these are consistent with meeting the EU's and member states' Kyoto commitments on greenhouse gas emissions.

Member governments report on the verified emissions in annual progress reports to the Commission.

The EU's ETS is part of the bloc's plan to reduce greenhouse gas emissions to meet international commitments under the Kyoto Protocol.

The "cap-and-trade" scheme, which took effect from January 2005, sets limits on each manufacturer's CO2 outputs.

Companies can then to buy and sell CO2 emissions rights according to need on specially constructed Internet sites.

Plants that emit more CO2 than their allocation need to buy allowances to cover the extra emissions.

Companies that emit less than their allocation are able to sell the allowances to companies that need them.

The food processing industry is an energy consumer and discharger of greenhouse gas through its reliance on cooking, refrigeration, freezing and air compressor systems.

ETS is mandatory for food and drink companies operating combustion installations with a rated thermal input exceeding 20 MW.

The importance of the scheme for the food and drink sector is reflected in the fact that, for instance, in France 13.6 per cent of all ETS installations are food and drink sites.

In the UK the food and drink industry make up 3.1 per cent of the estimated allocations.

Currently Hungary, Latvia, Malta and Lithuania, Poland and the Czech Republic are taking the Commission to court over the reductions to their allocations.

The countries claim that the allocations will harm their industrial sectors.

EU governments and others are due to meet 3-14 December for the UN climate talks in Bali to discuss the future of the Kyoto Protocol on climate change.

ETS Allocations (from the European Commission) Member State 1st period cap 2005 verified emissions Proposed cap 2008-2012 Cap allowed 2008-2012 (in relation to proposed)

Additional emissions in 2008-2012[1] JI/CDM limit 2008-2012 in %

[2] Austria 33.0 33.4 32.8 30.7 (93.6%) 0.35

10 Belgium 62.1 55.58[3] 63.3 58.5 (92.4%) 5.0 8.4 Cyprus 5.7 5.1 7.12 5.48 (77%) n.a. 10 Czech Rep. 97.6 82.5 101.9 86.8 (85.2%) n.a. 10 Denmark 33.5 26.5 24.5 24.5 (100%) 0 17.01 Estonia 19 12.62 24.38 12.72 (52.2%) 0.31 0 Finland 45.5 33.1 39.6 37.6 (94.8%) 0.4 10 France 156.5 131.3 132.8 132.8 (100%) 5.1 13.5 Germany 499 474 482 453.1 (94%) 11.0 20[4] Greece 74.4 71.3 75.5 69.1 (91.5%) n.a. 9 Hungary 31.3 26.0 30.7 26.9 (87.6%) 1.43 10 Ireland 22.3 22.4 22.6 22.3 (98.6%) n.a. 10 Italy 223.1 225.5 209 195.8 (93.7%) n.k.

[5] 14.99 Latvia 4.6 2.9 7.7 3.43 (44.5%) n.a. 10 Lithuania 12.3 6.6 16.6 8.8 (53%) 0.05 20 Luxembourg 3.4 2.6 3.95 2.5 (63%) n.a. 10 Malta 2.9 1.98 2.96 2.1 (71%) n.a.

Tbd Netherlands 95.3 80.35 90.4 85.8 (94.9%) 4.0 10 Poland 239.1 203.1 284.6 208.5 (73.3%) 6.3 10 Portugal 38.9 36.4 35.9 34.8 (96.9%) 0.77 10 Romania 74.8 70.8[6] 95.7 75.9 (79.3%)

n.a 10 Slovakia 30.5 25.2 41.3 30.9 (74.8%) 1.7 7 Slovenia 8.8 8.7 8.3 8.3 (100%) n.a. 15.76 Spain 174.4 182.9 152.7 152.3 (99.7%) 6.7[7] ca.

20 Sweden 22.9 19.3 25.2 22.8 (90.5%) 2.0 10 UK 245.3 242.4[8] 246.2 246.2 (100%) 9.5 8 Member State 1st period cap 2005 verified emissions Proposed cap 2008-2012 Cap allowed 2008-2012 (in relation to proposed)

Additional emissions in 2008-2012[9] JI/CDM limit 2008-2012 in %

[10] SUM 2256.2 2081.56[11] 2257.74 2038.63 (90.3%) 54.61