EU leaders come head-to-head on climate package

11 December 2008 10:07  [Source: ICIS news]

PARIS (ICIS news)--EU leaders arrived in Brussels on Thursday for a two-day summit aimed at hammering out a deal on the EU’s climate change package.

They agreed last March to cut greenhouse gas emissions by 20% by 2020 compared with 1990 levels, but since then many leaders appear to have got cold feet and the global economic downturn is only adding to their fears.

Poland, Italy and Germany have all voiced concerns that changes to the European Union Emissions Trading Scheme (EU ETS) in particular, most notably the idea of making companies pay for their pollution permits, could make life even more difficult for their industries and cause fuel bills to rocket.

French president Nicholas Sarkozy, who will chair the talks as incumbent EU president, is believed to be optimistic that a deal can be agreed.

EU environment commissioner Stavros Dimas said that “we are going to have an agreement”.

Sarkozy has been busy trying to win over the dissenters, suggesting that Poland’s coal-reliant power sector, for example, should be allowed to continue to receive at least some pollution permits for free several years after the supposed cut-off date of 2013.

Environmentalists are opposed to such a move. Sanjeev Kumar, ETS coordinator for the WWF, claimed free allocation would make the scheme “a cash bonanza for polluters and leave European households to pay for another market failure”.

German concerns revolve around competitiveness, and the risk of so-called “carbon leakage” – the relocation of industry to countries outside Europe with less stringent controls on carbon emissions.

In a report published on Wednesday, the UK House of Lords’ EU committee said it recognised such a risk, but that any decision to allocate free emissions permits to sectors at risk of leakage should be postponed until after the UN climate change conference in Copenhagen in December 2009, when the position of non-EU countries should become clear.

If EU leaders are no closer to a deal on the climate package by Friday evening, it will have to be brought back to the table under the leadership of the Czech EU presidency next year.

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By: Philippa Jones
+44 20 8652 3214

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