One month after the deadline of 30 June 2006, only five European countries - Germany, Poland, Lithuania, Estonia and Ireland - have sent the EC their National Allocation Plans for the second phase of the EU Emissions Trading Scheme. Nine other countries (Belgium, Bulgaria, France, Latvia, Netherlands, Portugal, Spain, UK and Italy) have only submitted draft plans, while the rest have not yet taken any steps toward complying with the EU Directive.

Among UK, Germany, Italy, Spain and Poland, emitting all together nearly three quarters of the EU greenhouse gases, Italy and Spain’s draft plans are the most ambitious as they propose the biggest cut in the number of emission allowances (13% and 16% respectively).

While the European Commission has suggested that the number of emission allowances in the second phase (2008-2012) be on average 6% lower compared to the first phase (2005-2007), UK’s cap was reduced only by 2.9%, Germany’s by 3.4%, while Poland’s increased by 17%.

“Not only the delay, but the flimsiness of most National Allocation Plans shows that European countries are underestimating the urgent need to fight climate change, which is already affecting people’s life”, says Delia Villagrasa, Emissions Trading expert at WWF European Policy Office. “Weak plans with flawed allocation methods fail to provide incentives for European industries to invest in clean technology and dramatically cut CO2 emissions”.

EU countries are shirking their responsibilities by encouraging industries to buy carbon credits delivered by projects in developing and transition countries. Spanish industries will be allowed to compensate 50% of their emissions in this way, Polish ones 25%, while British, Italian and German approximately 10%. According to WWF, this option should be used only up to 3% of the allocations for each installation and if the cleanest and best projects are used. Otherwise, buying cheap credits from overseas could divert the attention from the need to reduce emissions domestically.

Another weak point of the National Allocation Plans relates to the way permits are allocated to industries. Instead of benefiting from the chance to auction up to 10% of emission allowances, most countries just award them free of charge or use a system benefiting the most polluting technology. Auctioning has the potential to push further emissions reductions and create revenues for other protection measures against climate change. However, Germany, Italy and Spain are not planning any auctioning. Poland plans to auction only 1%, while the UK plans to auction up to 7% of its allowances.

WWF/WaluEurope,
28 July 2006