Hopes rise after CO2 auction retreat - in Finantial Times -

Hopes rise after CO2 auction retreat, in Finantial Times

By Joshua Chaffin and Tony Barber in Brussels Published: December 11 2008 16:20 Last updated: December 11 2008 19:00

European Union governments unveiled a deal on more free pollution permits for manufacturing industries on Thursday – moving the bloc closer to a twin-track accord on fighting climate change and the economic recession.

A draft communiqué, made available at the EU summit, said industrial sectors would have to buy no more than 70 per cent of their carbon emissions allowances at auction in 2020 – down from the 100 per cent first proposed by the European Commission.

The reduction marked a victory for Germany, which had led a campaign to grant more free allowances to steel, chemicals, cement and other sectors.

“I have good hopes we can reach a deal on the climate package,” Angela Merkel, Germany’s chancellor, said as she arrived in Brussels for the talks.

Broad agreement was also in sight on a Commission-inspired proposal for a €200bn ($267bn, £178bn) fiscal stimulus package to revive the EU economy. “Germany is aware of its responsibility as Europe’s biggest economy, and Germany will also look at what we may have to do,” said Ms Merkel.

BASF, the giant German chemical group, and other companies had argued that the added cost of buying CO2 allowances at auction would force them to move production outside Europe in order to compete with companies in the US, India and China not facing the same burden.

The draft summit statement restated earlier proposals that would grant companies up to 100 per cent free allowances if they were deemed to be at significant risk of “carbon leakage” – or competition from companies operating in less regulated countries.

Poland also won concessions, according to the draft. Its coal-dependent utilities would receive up to 70 per cent of their allowances free – an exemption to be gradually phased out by 2020. This improved an earlier offer from France, which holds the EU’s presidency, for Poland to receive half its allowances free until 2016. Elsewhere, utilities will have to submit to full auctioning, beginning in 2013.

The draft preserved a solidarity fund, comprised of 10 per cent of the auction revenues and redistributed to poorer member states to help them invest in cleaner technologies.

An additional 2 per cent of auction revenues will be divided among eastern European states in recognition of the emissions reductions they achieved in the 1990s after the collapse of communism. This appeared to be another move to satisfy Poland, which had threatened a veto in recent days amid concerns that the increase in free allowances for industry was depleting the solidarity fund.

Germany had opposed the fund altogether, while the UK was determined to limit it to the 10 per cent first proposed by the Commission.

Silvio Berlusconi, the Italian prime , minister, who had been a harsh critic of the package, expressed optimism about its prospects after meetings on Thursday.

“We are heading towards a compromise. We are getting what we want,” he reportedly said.

The draft also calls for the set-aside of 150m permits to fund a dozen test plants for carbon capture and storage (CCS) technology. That is less than half the 350m requested by the European parliament, and amounts to some €7bn-9bn, depending on future carbon prices.

Earlier, Chris Davies, a UK Liberal Democrat MEP who is the parliament’s chief negotiator on CCS, threatened to delay the package unless the figure was increased. “The European parliament has surrendered a lot in order to facilitate agreement, but for me this is the bottom line. I will halt the legislation if the parliament’s demand is not met,” said Mr Davies.

EDITOR’S CHOICE

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Deal on climate and slump hangs in balance - Dec-10

Energy plan approved in EU compromise - Dec-09

Merkel hints at increase in stimulus - Dec-11

The reduction marked a victory for Germany,

Copyright The Financial Times Limited 2008

Obs: Qualquer governo da Europa - ou do mundo - está hoje confrontado com a quadratura do círculo, ou seja, assegurar o chamado desenvolvimento sustentável sem, com isso, deixar de garantir a coesão económica e social. A crise financeira, económica e de confiança que hoje atinge a economia mundial - só vem dificultar a promessa de um mundo menos poluente e mais sustentável. Tem que existir uma saída para esta quadratura.

Ela existe, só que ainda não a vemos. Investir intensivamente em energias renováveis e nas tecnologias que permitem construir transportes híbridos parece, à cabeça, uma boa iniciativa. Reduz o CO2 e a nossa dependência energética do ouro negro - que nos atravanca a economia e chantageia permanentemente o Ocidente.