Court ruling: alarm bells ringing for EU emissions trading? 

The Court of First Instance has annulled a Commission decision of April 2005 which had rejected the UK's increase of the total quantity of carbon emission allowances for its national emissions trading action plan. The Court stated that the Commission "failed to explain how that increase [...] could destabilise the market".

The Court's ruling could have serious implications for the future of the European emission trading scheme (ETS):

• several other EU member states could be encouraged to revise their action plans;
• the Commission's power to enforce stronger emission targets could be hampered.

The Commission did not want to react to the ruling immediately as it wanted to study its implications. In theory, it has two months to appeal against the ruling before the Court of Justice

The European emission trading scheme started at the beginning of 2005. It will have to be reviewed in the middle of 2006. The Commission has already announced that it wants to integrate more industrial sectors into the ETS, but the scheme has come under fire from several industries for putting an extra burden on the competitiveness of the European economy.