23 January 2008 13:21 [Source: ICIS news]
By Philippa Jones
PARIS (ICIS news)--Carbon dioxide (CO2) emissions from petrochemicals, ammonia and aluminium will be included in the EU emissions trading scheme (EU ETS) post-2013, according to the draft climate change bill published by the European Commission (EC) on Wednesday.
The bill suggests adding these industries to the sectors already covered by the EU ETS, and says greenhouse gases (GHGs) other than carbon dioxide should also be included in phase 3 of the ETS.
Nitrous oxide (N2O) emissions from the production of nitric, adipic and glyoxylic acid production and perfluorocarbons from the aluminium sector should be included, according to the proposal.
The climate change bill also suggests that overall emission allowances be reduced year on year to cut GHGs covered by the ETS by 21% from 2005 levels by 2020.
National allocation plans (NAPs) would also be replaced by an EU-wide cap on the number of emission allowances.
The power sector will face full auctioning of allowances from 2013, while other industrial sectors and aviation will step up to full auctioning gradually.
Sectors particularly vulnerable to competition from producers in countries without comparable carbon constraints - such as the chemicals industry - are likely to continue to receive allowances for free.
Auctions will be open, meaning that any EU operator will be able to buy allowances in any member state.
Member states will be encouraged to use revenues - an estimated €50bn ($73bn) a year by 2020 - from the ETS to support innovation in areas such as renewables, carbon capture and storage and to help developing countries adapt to climate change.
To reduce the administrative burden, industrial plants emitting less than 10,000 tonnes of CO2 will not have to participate in the ETS.
In sectors not covered by the ETS such as buildings, transport, agriculture and waste, the EC wants to reduce emissions to 10% below 2005 levels by 2020.
The EC is proposing a target by which each member state must reduce or, in the case of new member states, may increase its emissions up to 2020. These changes range from -20% to +20%.
The commission is also suggesting individual, legally enforceable targets for each member state to increase their use of renewable energy.
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Moreover, the proposal puts forward a minimum target of 10% for use of biofuels in transport in the EU to be reached by 2020 and sets out sustainability criteria for this sector.
The bill must be approved by both the Council of the EU (national ministers) and the European parliament before it becomes law. The EC hopes that a final decision adopting modifications to the directive will be taken by 2009.
($1 = €0.68)
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