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CCC Welcomes Comission Ruling on Second Phase National Allocation Plans
(London 29 November 2006) UK investment banking group, Climate Change Capital (CCC), which is dedicated to investment in clean energy and a low carbon economy, welcomes today's ruling by the European Commission on the carbon emissions caps set by 10 Member States on the carbon emissions their power sectors and industries can emit.
Today's announcement of stricter National Allocation Plans (NAPs) for Phase 2 of the EU's Emissions Trading Scheme (EU ETS) puts the Commission on track to reduce national allocations beyond what was expected and is consistent with national targets set out in the Kyoto Protocol and the EU's State Aid rules. The EU ETS is now firmly established as a flagship system, giving confidence to other countries currently considering trading schemes and positioning Europe as the leader in carbon financing.
Kate Hampton, CCC's Head of Policy, said, "The EU has set a lead worth following. Today's decision will inspire investor confidence in emissions trading and the Commission's ability to effectively regulate the market. The EU has now demonstrated its commitment to the legally binding targets adopted under Kyoto, by providing a solid platform for Phase 2 that will reward investors in low carbon technologies and processes in both Europe and the developing world by means of the Clean Development Mechanism. Policy makers elsewhere should watch and learn."
Commenting on the decisions long term implications, Hampton said, "This decision will strengthen the policy signals to be provided by next year's EU ETS Review and longer term emission reduction targets. A strong emissions trading scheme in conjunction with a credible emissions pathway through to 2020 will constitute a giant leap towards establishing post 2012 market visibility."
With this pivotal decision made, there are fewer permits than are needed, which will force companies to reduce emissions. The Commission has seized the opportunity to provide a strong signal to investors in climate change markets. This precedent means that there is a real chance that investors will be convinced that the EU is serious enough about global warming to work to achieve its longer term objective of avoiding warming above two degrees Celsius by making significant emissions reductions between now and 2020.
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Enquiries:
Climate Change Capital
CommunicationsTeam +44 (0)20 7939 5319 media@c-c-capital.com
Notes to Editors:
About The Figures
Only 10 member states have thus far submitted their National Allocation Plans for approval. The withdrawal of the French submission and the stringent reduction of the German submission lead CCC to believe that when all 27 NAPs have been submitted, and approved, and providing subsequent decisions are consistent with today's announcement, there will be a reduction beyond the 10% CCC initially proposed.
How carbon trading reduces emissions
The Kyoto Protocol, set up to combat global climate change by reducing greenhouse gas emissions, includes the Clean Development Mechanism (CDM.) This mechanism enables companies or groups in industrial nations, such as Britain, to identify a source of greenhouse gas (GHG) emissions in a developing country, such as China, and to finance a project to reduce those emissions.
Each industrial nation who ratified the Kyoto Protocol agreed to an annual quota of tons of carbon dioxide equivalent emissions that they would emit. The CDM allows these nations to meet their emission targets by accessing cost-effective opportunities to reduce emissions or remove carbon from the atmosphere in other countries. The certified emission reductions (CERs) created under the CDM can be used to offset the emissions of these nations or they can be sold.
The global, policy driven market for Carbon Assets was created to give an incentive to countries to reduce GHG emissions, create demand for Carbon Assets and encourage the financing of GHG emissions reduction projects. This market is referred to as the "carbon market".
Critics say that the system may encourage some businesses to attempt to buy their way out of trouble but as James Cameron, the vice-chairman of Climate Change Capital says: "It doesn't matter where in the world a ton of pollutant is taken out of the atmosphere, whether it be Beijing or Burton-on-Trent. A ton of carbon is still a ton of carbon and it matters to us all.
