this was one New Year the European businesses did not celebrate. From January 1, 2005, the energy-intensive industries in the eu, for the first time, have been compelled to cut their carbon dioxide (co2) emissions or face penalties under the eu Emissions Trading Scheme (ets). The scheme aims to enable the eu to meet its Kyoto Protocol (kp) target of cutting greenhouse gas (ghg) emissions to eight per cent below 1990 levels by 2012. But the target may prove elusive unless eu members adopt planned policies and implement other trade mechanisms suggested in kp, the global treaty to arrest climate change.
Under the ets, 12,000 power plants and other industrial installations in the eu will have specific emission allowances. If they exceed their limits, they can buy the balance emission allowance from the companies that have not breached theirs. They may also buy emission credits from non- eu countries through investments in projects that reduce ghg emissions. The price of carbon credits will be determined by market forces: through the demand and supply for these credits.
In the period 2005-2007, the ets will cover the following sectors: heat and steam production, mineral oil refineries, production and processing of ferrous metals, cement, brick and ceramics manufacture and pulp and paper. Other sectors and ghgs other than co2 may be added in the next phase. If eu members continue their existing policies and those that meet their targets do not deliver more than what is required of them by 2012, the eu will cut its emissions only by 0.6 per cent. But if members implement planned policies and measures regarding energy, transportation, agriculture and wastes, and also use the carbon trading mechanisms of the kp, they will cut emissions by 8.8 per cent. However, this estimate assumes that countries will exceed their national targets. If they don't, the eu will fall short of its target by 1.5 per cent, says a recent report Greenhouse gas emissions trends and projections in Europe 2004 of the European Environment Agency.
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