EU says US, China open to global emissions trade

By Jeff Mason

EISENSTADT, Austria (Reuters) – The European Union’s
environment chief said on Friday the United States was open to
discussing a global greenhouse gas emissions market, but the
U.S. government said it remained opposed to mandatory caps on
emissions as called for by the Kyoto Protocol.

EU Environment Commissioner Stavros Dimas expressed
optimism that the United States, China and India would be ready
to discuss a global system that lets industries that cut their
emissions under set limits to sell credits allowing other
industries to keep releasing greenhouse gasses.

Asked about Dimas’s comments, a State Department official
on Friday deferred to comments earlier in the week from an
Environmental Protection Agency spokeswoman.

The EPA spokeswoman had said the agency’s head had talked
with Dimas about U.S. plans to cut oil dependency, not about
curbing emissions after the first phase of Kyoto runs out in
2012.

The State Department official also deferred to comments
from Harlan Watson, the chief U.S. climate negotiator, who told
Reuters on Thursday at U.N. climate talks in Germany that
Washington was not reconsidering its opposition to Kyoto.

The United States, the world’s biggest emitter of
greenhouse gases, agreed last year to participate in a U.N.
non-binding exchange of information on how to combat climate
change beyond Kyoto’s first phase.

The EU’s own emissions trading scheme, which limits
greenhouse gas carbon dioxide (CO2), came into force last year
and is the 25-nation bloc’s key instrument for meeting its
legally-binding Kyoto targets to reduce global warming.

“In my own discussions with officials from the United
States but also developing countries like China and India — I
met them in New York — there is willingness to go ahead with
discussions on sort of a global emissions trading system, which
means cap and trade,” Dimas told reporters.

“The importance of the European emissions trading system is
more underlined by this,” Dimas said at a meeting of EU
environment ministers in Austria.

President Bush pulled the United States out of Kyoto in
2001, citing a lack of targets for developing nations and
concerns the caps would cost U.S. jobs.

But Dimas said there was pressure on Washington from U.S.
states, cities, citizens and the scientific community to take a
more proactive position on climate change, and market-based
mechanisms were considered the best way to go forward.

“This is a way that could bring us together,” he said.

GROWING PAINS

The EU scheme has taken a beating in recent weeks with
carbon prices diving after data showed most companies used
fewer CO2 permits in 2005 than they were given by their
governments.

Dimas said EU member states had allocated too many CO2
permits to industry in 2005 and must take that into account
when planning for the next trading phase, which runs from
2008-2012.

“The problem that we found out a few days ago was that
member states have allocated more than the actual emissions (in
2005),” Dimas said, adding businesses may have overestimated
their expected growth prospects and asked governments for more
emissions allowances as a result.

Dimas stressed the 2005-2007 trading phase was a learning
period but warned member states to apply those lessons for
their plans for the next phase, due at the end of June.

He said higher carbon prices created more of a need for
companies to make investments to cut pollution, but that a
price level of 15 euros ($19.10) per tonne — roughly where it
has stabilized this week — would still achieve that goal.

“Even at 15 euros there is an incentive for making
investments.” Friday, carbon traded at 16.15 euros.

($1=.7844 euro)

(Additional reporting by Timothy Gardner in New York)