The price of carbon dioxide has fallen in recent weeks after eight
EU countries revealed that the industries participating in the
scheme had polluted far less carbon dioxide than they were allowed
to under the scheme. This meant that they had surplus 'carbon
credits' to sell on the ETS market, causing the price of carbon to
fall dramatically. Today's figures from the rest of the EU shows
that countries across the whole of Europe were given more too many
pollution permits, and that the ETS needs to be strengthened [2].

Friends of the Earth's senior climate campaigner, Germana Canzi,
said:

Many governments gave away far too many pollution permits to their
industries. They must now all urgently review their strategy for
tackling climate change and ensure that tougher targets are set on
industry pollution for the next phase of the scheme.
Cost-effective solutions to climate change exist, but countries
across Europe, including the UK, must get their act together and
start showing some leadership on tackling it.

Friends of the Earth called on the UK to set tougher pollution
limits for UK industry. The Government consultation allocations
of permits to industry for the next phase of the scheme, is
currently being consulted on (until 23 May) [3]. But the
consultation document shows that the Government may consider
asking for an increase in pollution permits for UK industry.

Such a move would do little for the UK Government's failing
credibility on climate change. Carbon dioxide levels have
actually risen under Labour, and the Government recently admitted
that its promise to cut carbon dioxide levels by 20 per cent of
1990 levels by 2010 may not be met.

NOTES FOR EDITORS

[1] The European cap and trade system for industry emissions,
otherwise called emissions trading scheme (ETS) is the most
ambitious and innovative intergovernmental policy so far aimed at
reducing greenhouse gas emissions. The ETS started on 1 January
2005. Power stations, refineries and heavy industry across
Europe, which account for approximately half of EU carbon dioxide
emissions, were given a limit on how much carbon dioxide they can
emit. Participants in the scheme need to hold sufficient carbon
dioxide allowances to match their levels of pollution. Companies
which do not have enough at the end of 2008 must pay stiff fines
or buy spare allowances from the companies which have managed to
reduce their emissions.

[2] The searchable database on verified emissions and surrendered
allowances

(the Community Independent Transaction Log) can be found at:

http://ec.europa.eu/comm/environment/ets/[1]

[3] The UK Government is currently consulting stakeholders on the
allocations of permits to industry for the second phase of the
scheme, from 2008 to 2012.

For this next phase, Friends of the Earth the UK government to:

· Make sure industry does not get an over-allocation of permits.

Auction as many permits as possible, rather than given them away
for free. At the moment, permits are given away for free, and
this has let to very large windfall profits for utilities.

Make sure allocations are consistent with the aim of reducing
emissions by 20% by 2010 and are therefore higher than the stated
range.

· Stop encouraging utilities to burn more coal in old, inefficient
and highly polluting power stations. Encourage the development of
efficient ways to produce heat and electricity, such as Combined
Heat and Power.

· Work with the European Commission and other Member States to
improve the system for future phases of the scheme.

--
Stuart