Malta and Lithuania to join forces against EU CO2 caps

The EU’s Emissions Trading Scheme (ETS) is under increasing pressure as eight of the bloc’s 27 member states are threatening the Commission with legal action, following its decision to slash the amount of carbon allowances allocated to companies.

The governments of Lithuania and Malta have announced they could join Poland, Hungary, the Czech Republic, Slovakia, Estonia and Latvia in challenging the EU’s emissions-trading scheme, after the Commission ordered the two states to lower their proposed limits on national industrial carbon-dioxide emissions by 30% and 46% respectively.  

The eight Eastern European countries argue that the strict limits imposed by the EU executive are too low and will hurt their economies at a time when they are still playing ‘catch-up’ with the rest of the Union. They hope that the European Court of Justice will overrule the decision. 

Latvian MEP and former Finance Minister Valdis Dombrovskis has accused the Commission of “bullying” new member states into taking on the larger part of the burden in the battle against climate change. 

In a letter to the Guardian on 20 August, he claims that most of the 12 new member states already meet their individual Kyoto target of cutting emissions by 8% from 1990 levels by 2010, whereas the 15 older member states are projected to achieve only a 4.6% reduction by that date. Yet, while new members have seen their requested quotas slashed by up to 55%, almost all of the older members received more than 90% of their requested pollution permits. 

Dombrovskis said: “The Commission is shifting what should be a shared burden on to its newest members, which are already the most environmentally efficient in the European Union. In doing so, the Commission is rewarding inefficiency and reducing the effectiveness of its commitments to clean up the environment. [New members] need rapid economic growth to catch up with the rest of the EU. But their ability to grow is being impaired because they lack the resources to confront the massive business lobbies of the EU’s most developed and richest countries. Making the union’s newest members carry a disproportionate share of the burden of reducing the EU’s total amount of pollution is both unjust and foolish.”  

The wave of challenges come at a time when the EU’s ETS is already under sharp criticism for its failure to achieve real cuts in greenhouse-gas emissions after governments grossly overestimated the amount of pollution credits required by their industries during the first phase of the scheme, from 2005 to 2007, sending carbon prices crashing. 

A recent study by the UK-based think-tank Open Europe accuses the ETS of being an “embarrassing failure” and says that the second phase of the scheme, which will run from 2008 to 2012, “will see important new problems emerging”, such as the possibility for companies to import permits from developing countries in order to offset their needs, making it unlikely that the ETS will reduce emissions or spur low carbon investment, and potentially depressing prices in the same way that the EU’s own over-allocation did the first time around. 

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