Allowing energy-intensive industries in the EU to purchase a large number of emissions allowances on the international market will undermine the EU Emissions Trading Scheme (EU ETS), argues a new report by WWF. CO2 emissions decreased slightly between 2004 and 2005, according to a separate study released on 14 June by the European Environment Agency.

As part of its report, WWF examined the national allocation plans of nine member states for the second phase (2008-2012) of the EU ETS: France, the UK, Germany, Ireland, Italy, the Netherlands, Poland, Portugal and Spain. These account for around 80% of total EU CO2 emissions. The Commission has adopted decisions on these plans as part of its current review of the EU ETS, and is expected  to propose a revised system in the second half of 2007.

WWF is concerned that, given the Commission's intention to tighten emissions limits for the second phase (EurActiv 10/01/06), member states would be allowed to make up for a shortage of carbon allowances within the EU by purchasing between 88% and 100% of their allowances on the international market, thereby undermining carbon trading and emissions reductions within the EU's borders.

Member states can obtain emissions allowances from developing countries at cheaper rates through the Clean Development Mechanism/Joint Implementation (CDM/JI) systems, part of the Kyoto Protocol. The CDM/JI system mandates that allowances created by industries in developing countries meet certain eligibility and sustainability criteria. Because of apparent shortcomings in oversight and monitoring procedures at UN level, WWF claims that the system is "short-sighted" and that a large number of CDM/JI allowances are not "clean". 

The excessive use of such allowances will "lock the EU into high-carbon investments and soaring emissions for many years to come", says the NGO.

Meanwhile, the European Environment Agency (EEA) published its annual inventory report, which found that CO2 emissions in the EU-15 decreased by 0.8% for the period 2004-2005. Not all member states reduced emissions, however - they increased in Spain, Austria, Greece, Ireland, Italy and Portugal, but these were offset by considerable emissions reductions in Germany, Finland and The Netherlands.