A SCATHING CRITIQUE OF EU CARBON TRADING

Guardian Unlimited Special reports Thinktank condemns EU carbon trading 'nightmare': "Thinktank condemns EU carbon trading 'nightmare'"

Under the scheme, 12,000 organisations emitting carbon dioxide - from power generators to factories and even hospitals - are given allocations, or permits, for the amount of the gas they can discharge each year.
If they want to exceed their quota, they have to buy allocations from other organisations with a surplus through the ETS, meaning polluters have to pay for the damage they cause.
Cleaner organisations benefit by selling their carbon allowances for cash.
However, the scheme has endured a rocky debut. Last month, the European commission confirmed companies operating more than 9,000 industrial plants had emitted 66m tonnes less carbon dioxide than allowed in 2005 - an indication that the EU had been too generous in setting reduction targets.
"At present, the system is simply not limiting emissions," OpenEurope said in its report, entitled the High Price of Hot Air.
A second problem is that the UK chose very tough targets, using past emissions as a baseline, while other member states, such as Germany, offered firms far more generous allowances based on future expectations.
"All that's happened is that UK firms have spent about £1.5bn in the first year buying up permits from other member states which have then made profits by selling them, and overall the level of pollution has risen," the OpenEurope director, Neil O'Brien, told BBC Radio 4's Today programme.
That criticism was echoed by the Confederation of British Industry, which said the industrial sector had so far delivered the largest element of the UK's Kyoto targets on curbing emissions.
"It is vital that the UK's ambition is matched by other EU countries - something which clearly did not happen in phase one," Richard Lambert, the new director-general of the CBI, will tell a CBI environment reception in the House of Commons tonight.
"At home, we also need the buy-in of the individual as we all need to be committed if our prosperity and our environment are to be protected."
OpenEurope described the complexity of the trading scheme as an "administrative nightmare".
"Compared to an energy tax or focused emissions tax on power stations, the scheme is complicated and has imposed very high administrative burdens," it said.
The thinktank added that many small plants, for example the main boiler in a hospital, were covered by the scheme. Staff have to be employed to conduct monitoring and compliance activities, even though such plants contribute little to emissions.
OpenEurope said the administrative burden to the UK economy was £530,000 a year, not including the knock-on costs of higher energy prices.
"This is unacceptably high, given that there is no evidence that the scheme is actually limiting emissions across the EU," it said.
For the UK to pursue its carbon abatement targets, it needs to persuade other member states to make an equal effort or pursue a UK-only emissions scheme, OpenEurope said.Special reportWaste and pollutionUseful linkOpenEurope