Closeted MEPs put the screws on industry

Brussels - Closeted away from the global economic meltdown, MEPs on the European Parliament's Environment Committee this week voted through plans to force most industrial sectors to reduce greenhouse gas (GHG) emissions by 21%, from 2005 levels, by 2020. They also decided to phase out free emission permits and bring in full permit auctioning - with an exception, though, for "energy intensive" sectors.

The MEPs also voted to use the EU emissions trading scheme (ETS) to support large-scale commercial demonstration carbon capture and storage (CCS) projects and urged the European Commission (EC) to ensure that contracts for the construction of 12 large-scale demonstration facilities to be awared by late 2009.

Under a proposal, led by Chris Davies - a Liberal Democrat MEP and the UK's CCS rapporteur to the European Parliament - a Euro10-billion fund will be set up to kickstart the building of the demo facilities. Power generators, are then, however, set to face tough new regulations banning any power plant that emits more than 500g of carbon dioxide per kWhr of electricity generated. The limit, to come into effect in 2015,  would effectively ban all non-CCS coal-fired power stations.

The Environment Committee also backed a Commission plan to introduce a harmonised single EU-wide cap on the number of emission allowances for the ETS third phase ETS (2013 - 2020) instead of the existing 27 national caps. MEPs also agreed  that from 2013 onwards, each year until 2020, fewer emission allowances will be put on the market.

The ETS caps the overall level of emissions allowed but, within that limit, allows participants buy and sell allowances as they require, so as to cut emissions cost-effectively. The scheme currently covers over 10,000 installations in the energy and industrial sectors which are collectively responsible for close to half of the EU's emissions of CO2 and 40% of its total greenhouse gas emissions.