Dutch Utilities to Get Tighter CO2 Limits - Official
Date: 03-May-06
Country: NETHERLANDS
"The idea is that there will be a cut in the emission rights for electricity utilities to tackle the windfall profits. A cut of 15-20 percent is mentioned in a draft proposal but it is not decided yet how much exactly it will be," the official told Reuters.
He confirmed government plans to keep the total emissions limit for industry and power stations in 2008-2012 similar to the level in 2005-2007, but added that the total cap included a bigger reserve of CO2 allocated for new installations.
"The second period of trading (2008-2012) is longer than the first one, that's why we have allocated a bigger reserve for new installations," the official said.
The decision to leave the total emission limit broadly unchanged comes despite a European Commission comment last week that the 2008-2012 period should take into account evidence that several countries had undershot their 2005 pollution targets.
The Netherlands has a limit in place of 112 million tonnes of CO2 a year for 2005-2007, according to environment ministry data.
EU carbon dioxide prices surged last year and have been cited as one of the main reasons triggering a significant rise in European power prices. Studies concluded power producers charge customers for CO2 allowances they receive free of charge.
Dutch Economics Minister Laurens Jan Brinkhorst urged the European Union last month to change its emissions trading scheme because it was inflating electricity prices and handing companies windfall profits.
Brinkhorst suggested the problem could be solved by giving tighter carbon dioxide pollution limits to electricity companies or by organising auctions at which companies can buy their limits instead of getting them for free.
However, CO2 prices fell sharply last week after both the Netherlands and the Czech Republic said carbon emissions in 2005 were lower than expected, which implied a greater surplus of credits than previously thought.
The Dutch official said the economy and the environment ministries will most likely submit a final government proposal for the 2008-2012 allocation plan to parliament on May 15.