Subject: Clips on EU Emissions Trading/Industry Views...
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Date: Wed, 29 Aug 2001 08:20:53 -0700 (PDT)

FYI - two stories -- are these stories consistent with what you are hearing?  Thanks.

German industry slams EU emissions trading plan 
GERMANY: August 29, 2001 
FRANKFURT - The German energy industry was firmly at loggerheads with government and European Commission officials Tuesday over plans to introduce an EU state-wide, company-based emissions trading system by 2005. 
Emissions trading - buying and selling the right to pollute - is one of the measures suggested by the UN-sponsored deal agreed in Kyoto in 1997 to help industrialized countries cut greenhouse gases (GHGs) linked to climate change. 
The Commission is working on a draft emissions trading directive, which it aims to present by the end of the year. 
"We have been formally involved (in talks), but none of the industry's comments have been taken into account in the EU's draft directive on emissions trading," Eberhard Meller, head of the association of German power suppliers VDEW, told delegates at a Euroforum conference in Frankfurt. 
Germany's own emissions trading working group aims to present a model for carbon dioxide (CO2) emissions trading by September and put a draft law before parliament in December. 
CO2 from fossil fuel combustion is the easiest of the six GHGs to monitor and accounts for 87 percent of them. It is thus the most suited to start off trading, said the Environment Minstry's Franzjosef Schafhausen, who heads the working group. 
An outstanding issue in the EU's plan, the Commission's Peter Zapfel said, is whether participation in emissions trading should be mandatory or voluntary. 
German industry opposes a mandatory company-based approach as running counter to its existing voluntary commitment to reduce CO2 emissions and insists a global country-based scheme would offer greater incentives to participate. 
Christof Bauer of German chemicals firm Degussa dismissed Schafhausen's warning that companies that do not participate in trading could face an increase in Germany's existing eco-tax, while those that do could have it removed. 
"Why should I have to make a choice between the devil and the deep blue sea? Maybe I am bit behind the moon, but I don't see any dirty dealing like that happening," he said. 
There is a stark contrast in the working group, industry sources said, between the environment ministry, which supports the EU-wide company scheme and the economics ministry and a large part of industry that want a country-based system. 
"We prefer an EU-wide company based scheme because it will mean a cost saving of one third compared with implementing emissions trading on a national level," Zapfel said. 
But Joachim Hein, of industrial consumers group BDI, argued that Kyoto itself calls for national emissions caps. 
"ET at a company level would ruin the Kyoto Protocol in fact, since international industries fear they will have to comply with state-of-the-art technologies, or be punished." 
Degussa's Bauer added that, with a company scheme, international companies would simply move their emissions to countries where it was cheaper to emit 
VDEW, BDI and Degussa said they want to be allowed to work with the "current tool kit" - the voluntary commitment, eco tax and laws designed to support combined heat and power (CHP) generation and the use of renewable energies. 
The government agreed with industry in June to target a 23 million tonne cut in CO2 by 2010 through CHP use, as part of a total 45 million tonnes/year reduction target. 
"This is not a one-way agreement - the federal government guaranteed it will not try to take any regulatory steps to achieve these voluntary targets," VDEW's Meller said. 
The associations and Degussa called instead for a "test phase" of voluntary participation in emissions trading. 

REUTERS NEWS SERVICE 

German HEW urges industry to back emissions trading 
GERMANY: August 29, 2001 
FRANKFURT - Hamburg-based utility HEW spoke as a lone voice within Germany's energy industry yesterday in its support for emissions trading, the market tool that allows companies to buy and sell the right to pollute. 
German energy industry associations had earlier criticised the European Commission's plan to introduce an EU-wide company-based scheme by 2005 as conflicting with their existing voluntary commitments to reduce emissions. 
"We get enquiries from rating agencies on how we will manage our environmental risk, since it could affect the rating they give us and the funding we receive from banks," HEW's head of future energy concepts Helmuth-Michael Groscurth told delegates at a Euroforum conference in Frankfurt. 
"The cost of carbon over the next decade could be as high as $5 to $15 per tonne and you need a tool to hedge against that risk." 
Emissions trading was proposed by the UN-sponsored Kyoto Protocol in 1997 to help industrialised countries cut greenhouse gases, chiefly carbon dioxide, that have been linked to climate change. 
Germany's target of a 21 percent cut in GHGs from 1990 levels by 2010 forms most of the EU's Protocol commitment. 
Groscurth said it was too much of risk to see if Germany could achieve that target by voluntary commitment alone. He defended the proposed setting of absolute targets on companies in place of existing agreed reduction goals. 
"Kyoto's absolute reduction goal for Germany isn't going to change, so we have to have absolute limits on company emissions. And it isn't a choice between emissions trading or nothing, but a case of trading along with other reduction measures." 
HEW concluded the first transatlantic emissions trading deal last year when it sold emissions rights to Canada's biggest investor-owned power generator, TransAlta . It also did a deal with an Australian firm to buy rights. 
"The TransAlta deal's volumes were so small that it will not affect Germany's target, but we did the the Australian deal in the same price range of 50 cents to $1 per tonne of CO2 and even made a profit on it," Groscurth said. 
Germany should not believe that because the world's biggest polluter, the United States, had pulled out of the Kyoto pact, U.S. firms were not preparing for emissions trading, he added. 
"A lot is happening in the U.S. at the state and company level, and once they are fit, the U.S. government will take notice. Then the U.S. will overtake us and we will have to play by their rules," he said. 
Groscurth also noted plans to set up a Chicago Climate Exchange with a budget of $760,000. 
Joachim Hein of the German industrial consumer group BDI said its members were sceptical about the role of emissions "verifiers" in the Commission's emissions trading plan. 
"I could see firms simply having to make a declaration on emissions levels, which would be monitored just like a company's balance sheet is monitored by independent auditors, with spot checks like on income tax returns," Groscurth said. 
He supported the German emissions trading working group's aim to distribute most emissions certificates under a system of free allocation according to historical emissions, or grandfathering, and, in lesser part, by auction. 
"A large share by grandfathering would avoid a high threshold for entry into trading, while an auction would give a price signal and allow new companies to get involved," he said. 

REUTERS NEWS SERVICE 

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