Environment Daily 1667, 13/05/04
Firms that have taken an
early interest in the EU's carbon dioxide emission trading scheme are
predicting the European Commission will make only limited use of its powers to
veto over-generous national allocation plans (Naps), according to emissions
broker Natsource.
Many of the 11 Naps so
far submitted to the Commission propose generous allocations of emission
allowances to industry when the scheme begins in January. This has resulted in
the forward market price of allowances slumping from €13 per tonne in
February to €7 now, Dirk Forrister of Natsource told a Brussels conference
on Wednesday.
"The prevailing view
[among firms already trading forward contracts for allowances] is that the
Naps are not going to be tightened up that much," he said. The consensus
is that the scheme "is going to have a fairly modest start".
Mr Forrister said the
Commission's scope to intervene could be limited by political and time
constraints: "The question is, does the Commission have the political
muscle to ratchet [the Naps] down? It's not going to just go through the
motions, but there's a tight time frame, they want the scheme up and running,
and the politics are difficult. There'll be endless speculation for the next
few months."
Two Commission speakers
at the conference declined to comment on the Naps, except to repeat general
concerns about over-allocation. Environment commissioner Margot Wallström has
previously insisted the EU will take robust action against any Nap it feels
may undermine the scheme.
Head of the environment
directorate Catherine Day told delegates the Commission was also worried that
plans by several member states to hold back some allowances for "new
market entrants" might distort the market towards the end of the scheme.
Climate unit head Artur Runge-Metzger stressed the Commission's "eagerness"
to link EU system to other emissions trading scheme overseas.
Follow-up: Natsource,
tel: +44 20 78 27 29 42; Conference organised by Ceps
and EU Conferences; see
conference details.