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Emissions trading: UK retreats to lower limits, but sues Commission

Published 14 March 2005 - Updated 29 June 2007
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London has announced that it will go ahead with plans approved by Brussels last year to curb CO2 emissions from energy-intensive industries. At the same time the UK is taking legal action to force the Commission into agreeing to higher emission limits.

The stand-off between London and Brussels over the UK's upward revision of its National Allocation Plan (NAP) for the EU's CO2 trading scheme is to continue before the European Court of Justice in Luxembourg.

The UK announced on 11 March that it would go ahead with the initial NAP approved by the Commission in July 2004, thereby giving in to Brussels's request to maintain the approved 736 million tonnes cap on CO2 emissions from British industry for the period 2005-2007.

However, the UK simultaneously announced that it would instigate legal proceedings before the European Court of Justice to challenge the Commission's rejection. 

Positions: 

The UK Department for Environment, Food and Rural Affairs (DEFRA) said that the legal proceedings will seek to force the Commission into considering "the substance of the amendment" to the original NAP. It argues that the changes were caused by an increase in demand for electricity and adjustments to calculations on the amounts of carbon dioxide emitted by gas and coal power plants.

Next steps: 
  • The British retreat means UK companies will soon be able to start trading on the EU carbon dioxide market (late April or early May according to the UK government)
  • The UK hopes a decision by the Court of First Instance can be taken in the first half of 2006
Background: 

The UK National Allocation Plan for the EU CO2 emissions trading scheme was first presented in April 2004 and subsequently approved by the Commission in July. The initial plan proposed a "provisional" allocation of 736 million tonnes of carbon to be emitted by UK industry during the first trading period (2005-2007). 

In October 2004, the UK presented a revised version of the plan, which brought the allocations up by 20 million tonnes, to 756 million tonnes. The revision was termed as illegal by the Commission in February (see EurActiv, 16 Feb. 2004).

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