A draft study assessing the environmental and economic impacts of such a system was recently made public.
SO2 and NOx are atmospheric pollutants that cause acid rain, smog and related respiratory health problems. They are typically byproducts of fossil fuel combustion in the chemical and power sectors.
But EU employers' association BusinessEurope has warned that an an EU-wide trading scheme "cannot be the way forward" as these pollutants are already dealt with under existing EU directives.
"An EU-wide trading scheme would bring double regulation and unnecessary costs," the association warned in a letter to the European Commission.
The report, compiled over the past 12 months by Entec UK Limited, an environmental and engineering consultancy, concludes that "most trading scenarios" would be less costly than a planned industrial emissions directive (IED), which was used as the reference scenario for the study.
"This is because under trading, there is access to a wider range of cost-effective abatement options across member states and installations within the trading zone," the study notes.
Such a system would also be cheaper than the current Integrated Pollution Prevention and Control (IPPC) Directive, the Commission observes.
Follow-up study
SO2 and NOx emission trading schemes could potentially replace the proposed IED for the pollutants concerned in certain sectors, according to the Commission. The scheme could also replace the individual permitting system based on Best Available Techniques (BATs) laid down in the 1996 IPPC Directive, which is currently under review.
The study assessed various design options for potential NOx and SO2 cap-and-trade systems, considering a number of different aspects such as the cap level, the number of trading zones, the allocation method and the cost-effectiveness of each of the scenarios.
While a report assessing the possible development of EU-wide NOx and SO2 trading schemes for IPPC installations is currently being finalised, the EU executive has already launched another study to evaluate the economics of such schemes.
The study should be finalised by early 2011.
