Europe sets tough caps on carbon dioxide emissions -

The European Commission set tough new caps on carbon dioxide emissions for 10 nations on Wednesday. The move means Europe has taken a significant step towards meeting its Kyoto Protocol commitments.
The caps set the amount of carbon dioxide each of the 10 nations will be allowed to emit during the second phase of Europe's emission trading scheme, between 2008 to 2012,. Experts say the allowances are stricter than for the scheme's first phase, from 2005 to 2008 (see table, right).
Overall, the European Commission (EC) set the allowances almost 7% below the levels requested by the national governments. They are also 7% below the actual recorded emissions in 2005.
The trading scheme is seen to be a key component of the Kyoto Protocol's success. The second phase is crucial as 2008 to 2012 is the period over which countries that have ratified the Protocol must meet their emissions targets. However, the trading scheme covers only industrial emissions, while the Protocol covers all emissions, such those from transportation and households.
Each country's government will divide its allocation between the nation's industries. Any industrial plant that wants to emit more than it has been given can buy emissions rights from any other European plant in the scheme.
Plummeting prices
In May 2006, the price of such rights plummeted after it was revealed that most countries had emitted less than their allowances – meaning demand for the rights all but disappeared overnight (see Carbon trading: Keeping the green dream alive). The EC was criticised for accepting overgenerous emissions targets from national governments.
"Today's announcement constitutes a strong set of decisions," says Michael Grubb, at the UK's Carbon Trust, a government funded company tasked with helping businesses reduce their carbon emissions.
Green campaigners WWF also praised the EC for clamping down on the weak allocation plans submitted by individual countries. "Today, the EC has given a clear warning shot to member states that they will not get away with weak cuts in emissions from heavy industry," says Keith Allott, head of climate change.
Grubb says he was pleased the EC did not opt for the "soft option of trying to cut everyone back by similar amount", but rather cut back on emissions plans where they had firm grounds for doing so. In particular, the EC turned down Germany's request to allow new industrial installations to be free of allocation restrictions. "Our study published a couple weeks ago that this would give free [emissions] rights to new coal power stations," says Grubb.
The EC expects to rule by the end of 2006 on the emissions caps for the other 15 member states of the European Union. Six of the countries have not yet submitted their plans, which were due in July.