Court sides with UK in carbon case

By Emily Smith

Date: 24/11/05

European Commission claims that the new EU emissions trading market would be damaged by a UK proposal to change its industrial CO2 allowance were exaggerated and unsubstantiated, according to an EU court ruling.

In November last year, the UK proposed increasing its emission allowance for 2005-07 from 736 million tonnes of CO2 to 756m tonnes. When the Commission said it would not allow this, the UK appealed to the European Court of First Instance.

On Wednesday (23 November) the Court said Commission fears that the change would destabilise the emissions trading market were "at the very least, exaggerated".

The UK had proposed a 2.7% increase in the emissions allowed under its national allocation plan (NAP), seven weeks before the market opened, the Court pointed out. It added that the Commission failed to explain how this could have a "significant impact on the market price" of emissions.

The Court also ruled that the Commission had no right to ban a member state from proposing amendments to its own NAP.

The UK originally submitted its NAP proposal a month after the official deadline and stated at the time that further amendments might be necessary. The increased allowance was then proposed in November, following updated industry growth projections.

The Court on Wednesday said that emission trading had to take into account both the fight against climate change and "the needs of the European economy. If a NAP was based in part on incorrect information or erroneous evaluations...the member state in question would have to be entitled to propose amendments... including increases to the total quantity of allowances to be allocated, in order to address those problems before the market began functioning".

The Commission now has to consider the amended NAP proposal. It is, however, still free to reject it.

The Commission was unable to say on Wednesday whether it would appeal against the Court ruling. Commission spokesman Johannes Laitenberger said: "The Commission never decides in the first hours after a judgement is rendered whether to appeal it or not." He said Wednesday's ruling would require "careful study".

Spokeswoman Mireille Thom said it was "far too early" to speculate on whether or not the ruling would lead to more member states revising their NAPs.

The UK government issued a statement welcoming the judgement and said it would now discuss with the Commission the best way forward.

It added that the UK was "committed to making a success of the EU emissions trading scheme" but its "provisional plan was based on interim projections and gave a provisional figure...work on the projections was continuing".

Green group Friends of the Earth UK (FoE) said the revised NAP would allow the government to "pump out an extra 20 million tonnes of CO2 under the [trading scheme] between 2005 and 2008".

Tony Juniper from FoE said: "Ministers should be finding ways to cut carbon dioxide levels rather than mounting legal challenges to increase them."

Article reports that European Commission claims that the new EU emissions trading market would be damaged by a UK proposal to change its industrial CO2 allowance were exaggerated and unsubstantiated, according to a ruling by the European Court of First Instance on 23 November 2005.

• Primary Source

European Court of Justice: Case-law: Search form: Case T-178/05 http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=en&Submit=Submit&alldocs=alldocs&docj=docj&docop=docop&docor=docor&docjo=docjo&numaff=T-178%2F05&datefs=&datefe=&nomusuel=&domaine=&mots=&resmax=100

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