1998.49 The initiative was termed GETS (Greenhouse Gas andEnergy Trading Simulations) and Peter Vis from the BEST group was appointedto the GETS advisory board. A sort of ETS community was being formed. Theelectricity industry’s ﬁrst GETS simulation (GETS I) was launched in May 1999.50Over eight weeks in May/June 1999 16 virtual power companies traded both CO2and electricity. It was concluded as a ‘striking lesson’ that trading did not guarantee
47 The experience with cap-and-trade was largely drawn from the acid rain programmeon sulphur dioxide emissions and the Regional Clean Air Incentives Market (RECLAIM) onnitrogen oxides and sulphur oxides in the Los Angeles area. Experience with baseline-andcredit came from emissions credit trading programmes established for major pollutants since1977 in the USA.48 Interviews in Brussels, January 12–13 2006.49 Interviews in Brussels, 12 January 2006.50 The Climate Change Working Group of UNIPEDE/EURELECTRIC, in collaborationwith the International Energy Agency and Parisbourse, agreed on a set of rules for the tradingsimulation.
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compliance by all participating sources (ibid., 25). This observation resembled theconclusion in FIELD/CCAP reports.At the GETS II simulation in February 2000, the number of participants wasincreased to 34, including companies from other energy-producing and intensiveenergy-using industries. An absolute versus relative cap was tested.51 Results ofEURELECTRIC’s GETS II simulation were presented in early November 2000,contributing a more practical, bottom-up element to the developing body ofknowledge on the design of effective emissions trading.52 The simulation indicatedthat different ways of allocating permits did not affect the environmental outcome,but did change the ﬁnancial implications for ﬁrms. A primary beneﬁt of emissionstrading was to assist companies in deciding when they should invest in emissionreductions. It was concluded that a carbon market alone would not provide sufﬁcientincentives for signiﬁcant development of renewable energy sources: green certiﬁcatesor other instruments would also be needed.53 According to process insiders, the GETSsimulations were not so inﬂuential on the thinking of the European Commission,nor even much known outside the electricity sector itself (although that sector isadmittedly important). GETS was not used as a model for the EU system – ratherthe other way around: the electricity sector tried to guess and prepare for the comingdesign of the system.54The European Parliament also became involved in the discussion on a possibleEU ETS at this stage. When its Environment Committee debated EU emissionstrading in September 1999, clearly diverging views were expressed by the Membersof Parliament (MEPs). On the hand, some MEPs underlined the ethical aspect,viewing emissions trading as fundamentally immoral (see Chapter 1). As noted inChapter 2, the EP has generally been receptive to main ENGO positions, and theethical perspective was emphasized by the ENGOs at the time. Other MEPs putforward a more pragmatic position, stressing that ‘the ends justiﬁed the means’.BEST’s man Jos Delbeke was there, pointing out the common ground betweenthe Commission and the EP, as both were trying to ﬁnd a pragmatic approach thatcould also uphold the EU’s reputation on climate change.55 Signalling a changingattitude of the green movement towards emissions trading, German Green MEPHiltrud Breyer stated to Europe Environment that ‘the proposal seeking to create aCommunity emissions trading system is a step in the right direction, but only if the
51 EURELECTRIC 2000; ENDS Daily (14 February 2000), ‘Euro-climate Gas TradingSimulation Extended’, Issue 700; Europe Environment (22 February 2000), ‘Power Industryto Carry Out New Emissions Trading Simulation Exercise’, 562, 8.52 The GETS II simulation had ended up by including 40 companies in six industrialsectors operating in 16 countries. Three simulated 15-year trading periods were run.53 EURELECTRIC 2000; ENDS Daily (8 November 2000), Second Euro-CO2 TradingExperiment “a Success”’, Issue 870.54 Interviews in Brussels, 12–13 January 2006.55 Environment Watch (17 September 1999), ‘Parliament Split over Tradeable EmissionPermits’, 14–15.
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system is ﬂanked with stringent conditions and it involves monitoring arrangementsand includes penalties’.56Emissions trading within the EU would apparently be easier to accept forENGOs and the EP than international emissions trading. An EU ETS would notcarry the same moral hazards as international emissions trading, since it would bebased on trade between industrial countries with ‘real’ commitments (not ‘hot air’),and trading as such does not ‘exploit’ less developed countries.57As noted, the Green Paper was presented on 8 March 2000, complemented by thelaunching of a Communication on EU policies and measures to reduce greenhouseemissions.58 Seen in combination, these documents meant that the EU was drawingup a ‘twin-track plan’ to reverse the worrying trend of increasing greenhouse gasemissions and remain credible as a global leader in the ﬁght against climate change.59The other track – ‘policies and measures’ – comprised some 30 possible policyand control measures. These included energy efﬁciency standards for electricalequipment; transport pricing and economic instruments for aviation; energy auditsand heating performance certiﬁcates; increased use of combined heat and powergeneration and a harmonized energy products tax, the adoption of which was stillseen as of ‘utmost importance’.60 However, this tax proposal was signiﬁcantlyless ambitious than the carbon/energy tax proposed in the early 1990s (Wettestad2001). To further develop this ‘twin-track’ approach the Commission proposed theestablishment of a ‘European Climate Change Programme’ (ECCP).61Clearly, the most important development in this phase were the inputs from theexternal consultants FIELD and CCAP, echoes of which can be noted throughoutthe Green Paper. In addition to some direct, explicit references to the reports, thegeneral observation is a general correspondence between main recommendationsput forward by the consultants and the design preferences expressed in the GreenPaper. The other major development in this period was that the main target group56 Europe Environment (21 March 2000), ‘Climate Change: Commission FloatsEuropean Programme and Emissions Trading Plan’, 564, 1–3.57 We would like to thank Sebastian Oberthür for pointing this out.58 European Commission (8 March 2000), COM(2000)88 ﬁnal, Communication fromthe Commission to the Council and the European Parliament on EU Policies and Measuresto Reduce Greenhouse Gas Emissions: Towards a European Climate Change Programme(ECCP) (Brussels).59 International Environment Reporter (15 March 2000), ‘“Twin track” Plan to ReverseRising GHG, Meet Kyoto Aims Includes Trading Scheme’, 23:6, 223–4.; Europe Environment(21 March 2000), ‘Climate Change: Commission Floats European Programme and EmissionsTrading Plan’, 564, 1–3.60 European Commission (8 March 2000), COM(2000)88 ﬁnal, Communication fromthe Commission to the Council and the European Parliament on EU Policies and Measuresto Reduce Greenhouse Gas Emissions: Towards a European Climate Change Programme(ECCP) (Brussels), 4.61 Ibid.; International Environment Reporter (15 March 2000), ‘“Twin track” Plan toReverse Rising GHG, Meet Kyoto Aims Includes Trading Scheme’, 23:6, 223–4.; EuropeEnvironment (21 March 2000), ‘Climate Change: Commission Floats European Programmeand Emissions Trading Plan’, 564, 1–3.
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of the EU ETS – the power-producing industry – started to prepare for, and gainexperience from, ‘virtual’ emissions trading.Crafting Agreement through ConsultationThe broad consultation process announced in the 1999 Communication thenstarted in the wake of the Green Paper. A ﬁrst and important EU-level element ofthis consultation process took place within the umbrella of the above-mentionedEuropean Climate Change Programme, ECCP. Its Working Group 1 focused on‘Flexible Mechanisms’, and in total ten meetings were held between July 2000 and2001. According to Jurgen Lefevere (2005, 98–99), who was a member of the group,‘these meetings served not only as a platform for different stakeholders to exchangeviews on the development of the trading regime, but also as a capacity-buildingexercise, as the exchange of opinions between the various participants helped clarifydifferent concepts and approaches and generated new ideas.’The mandate outlined two main phases in the work of the group. In the ﬁrstphase, the group was to concentrate on the possible development of an EC-wideframework for emissions trading and the necessary regulatory framework. In thesecond phase, the group would concentrate on the link between emissions tradingand Joint Implementation and the Clean Development Mechanism. The group wasto ‘generate consensus on the appropriate basis for an EC policy framework(s), andon the appropriate role for the Community therein’. Where consensus could not bereached, differences of opinions were to be recorded.62Furthermore, the mandate listed 19 main participants, all with one alternate,except for some of the Commission DGs which were set up with several alternates.All participants had one seat at the table, but alternates were also allowed to attend– which they mostly did.63 From the Commission, four DGs participated: threefrom DG Environment, including chairman Jos Delbeke and secretary Peter Vis;and one each from DG Enterprise, DG ECFIN (economic and ﬁnancial affairs),and DG TREN (transport and energy). Then there were ﬁve national experts (fromAustria, France, Germany, Sweden and the UK). Five industry bodies were included:EURELECTRIC, BDI (Bundesverband Deutscher Industrie – Federation of GermanIndustries), ERT/UNICE, European Chemical Industry Council, and the EmissionsTrading Group UK. Finally, environmental NGOs had three representatives. Inaddition to FIELD/Lefevere, the CNE and WWF were represented.64This was a process carefully and deliberately steered by the BEST group. TheBEST group sought to involve representatives assumed to be positively inclinedtowards emissions trading and those with a substantial interest in the issue. Asstated by a well-informed Brussels observer, ‘WG1 was set up to achieve a positive
62 European Commission (5 June 2000), Mandate – Working Group 1 of the EuropeanClimateChange Programme: ‘Flexible Mechanisms’ (Brussels).63 Interviews in Brussels, 12 January 2006.64 European Commission (5 June 2000), Mandate – Working Group 1 of the EuropeanClimate Change Programme: ‘Flexible Mechanisms’ (Brussels).
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outcome. If you did not show up twice you were out.’65 BEST people chaired themeetings, presented various background documents and wrote proceedings, andcould hence to a certain extent frame the developing consensus within the group.The work programme of the group listed ﬁve main issues to be discussed:‘objective setting’ (e.g. deﬁning suitable objectives for sectors and entities andclarifying relationship to other directives such as the IPPC and Large CombustionPlant directives); ‘how to recognize early action’; ‘co-existence with wider tradingschemes’; ‘regulatory infrastructure’: and ‘fair competition and internal market’.66Six meetings were held during the second half of 2000.As mentioned, at the ﬁrst meeting, the director of the Clean Air Market Divisionat the US Environmental Protection Agency presented the US SO2 and NOX tradingschemes. WG chairman Jos Delbeke underlined that the group should have a ‘practicalfocus’ and prepare for a ‘learning-by-doing’ approach. The important thing was toget started. BEST’s man (and group secretary) Peter Vis presented a backgrounddocument on ‘objective setting’.67 Discussions at the second WG1 meeting includedan economic analysis of EU emissions trading, presented by BEST’s Peter Zapfel andindicating substantial economic beneﬁts from an EU ETS. A background documenton allocation methodologies and early action was also discussed. Here it was widelyfelt by industry representatives that auctioning and taxation would be completelyexcessive, threatening competitiveness.68 This was in contrast to the conclusion fromthe scoping papers.The second important element of the consultation process involved the responsesto the Green Paper by the European Parliament, the ENGOs and industry. By thistime, emissions trading had become generally accepted as a good idea, but actorpositions varied signiﬁcantly on design, harmonization and the role of emissionstrading compared to other policy instruments. The EP’s stance on climate policy andthe use of the ﬂexible mechanisms was clariﬁed in the Parliament’s plenary sessionin late October 2000. The MEPs insisted that an EU ETS would have to be ﬂankedby other, more ambitious measures. Emissions trading and ﬂexibility mechanismsin general should be no more than supplementary instruments, and a global 50per cent ceiling on the use of such mechanisms was suggested. With regard to thedesign of trading, quantiﬁed GHG abatement targets should be set in advance for EUemissions trading, by country and sector, and based on auctioning of permits. TheEP called for the introduction of legally binding measures to oblige member-statesto adhere to their quotas. The Commission should put forward a draft directive tothis end under the co-decision procedure which would impose sanctions in cases ofnon-compliance. In the debate in the Parliament, environment commissioner Margot
65 Interviews in Brussels, 13 January 2006.66 European Commission (5 June 2000), Mandate – Working Group 1 of the EuropeanClimate Change Programme: ‘Flexible Mechanisms’ (Brussels).67 European Commission (28 September 2000), ECCP Working Group 1, SummaryRecord of Meeting July 19 2000 (Brussels).68 European Commission (28 September 2000), ECCP Working Group 1, SummaryRecord of Meeting September 26 2000 (Brussels), 3. Meetings three to six did not, as far aswe can see, produce any speciﬁc conclusions.
Table 4.1
Main non-state actor positions on the emerging EU ETS
Non-state actor Welcomes EU ET?responses toGreen Paper
Common forcertain sectors?
Overall amount ofallowances agreedat EU level?
Allocation methodand agreed atEU level?
Monitoring andenforcementat EU level?
Degree ofharmonization
CNE(leading ENGO)UNICE(industryoverall)EURELECTRIC(powerproducers)OGP/EUROPIA(reﬁneries)
Yes, but cautiously
Yes
Yesa
Yes, auctioning
Yes
Centralizeda
Yes
Yes
No
_
Yes
Mixed
Yes
Yes
No
Yes
Mixed, but strongcentralized element
Yes, but dep.upon Kyoto P.entry into forceYes
No, voluntaryparticipation
_
Yes, combinationof grandfatheringand auctioning.Yes, grandfathering.
_
No
No
Yes, but no penalties Mixed, but strongfor non-compliance decentralizedelement_Decentralized
Yes
Yes
No
No, grandfathering.
No
Mixed
Yes
Yes
No
Unclear
Yes
Mixed
Only reluctantly;VAs preferable
Unclear
Unclear; proet contra
Unclear
Yes, but preferablyat global level
Unclear; Mixed?
EUROFER(steel)CEMBUREAU(cement)CEPI (pulpand paper)CEFIC(chemicals)a
ImplicitlySource: European Commission (14 May 2001), Green Paper on Greenhouse Gas Emissions Trading within the European Union: Summary of Submissions.Part I: Non-governmental submissions (Brussels: Peter Vis, Climate Change Unit, European Commission).
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Wallström emphasized that the Commission wanted to have an open mind towardsthe trading instrument and advocated a prudent, cautious, step-wise developmentwith a target date of 2005.69As mentioned, the 2000 Green Paper included ten questions to stakeholders,directed mainly toward the level of harmonization. Some 70 non-state actorscommented upon the Green Paper and replied to the questions. The responses ofrepresentatives of main EU ETS non-state actors are summarized in Table 4.1.The central ENGO Climate Action Network Europe (CNE) stated in its Octoberposition paper: ‘CNE considers that a well-designed EU emissions trading system isa potentially useful measure towards meeting the EU’s vital Kyoto Protocol target’.70Beyond that, the CNE echoed the critical perspectives voiced by the EuropeanParliament’s rapporteur. According to the CNE, the Commission’s ET plan was ‘toonarrow’. Instead of conﬁning itself to a downstream approach covering intensiveenergy users, a more comprehensive upstream system should be considered, asemissions were increasing alarmingly – for instance in the transport and domesticand tertiary sectors. Similar to the European Parliament, CNE also expressed fearsthat emissions trading could relegate policies and measures to the back seat.71 Ingeneral, ENGOs argued in favour of robust environmental effectiveness, requiringstrict targets and good monitoring, veriﬁcation and compliance functions to beexercised at Community level. They generally favoured auctioning of allowances,and trading with absolute targets for participating entities.72Somewhat more soothing for the Commission and the BEST group was theresponse to the Green Paper from some industry federations that were included astarget groups for the EU ETS in the Green Paper. Apart from the chemicals industry,all industries welcomed the Commission’s idea of an ETS. However, business wasunited in not wanting an emissions trading system to place European businesses ata competitive disadvantage. They were also concerned that industry should not bearan unreasonable burden in relation to other sectors (like transport and households),for which other policies and measures should be developed. As to sectoral scope,industry was fairly united in wanting as broad coverage as possible, in terms ofsectors and of greenhouse gases. With regard to the allocation of permits, industrysaw auctioning as equivalent to taxation, and generally preferred allocation bygrandfathering.As to differences within the industry group, the power industry (EURELECTRIC)submitted one of the most elaborate responses, partly drawing upon experience fromthe GETS simulations. Also the response from CEMBUREAU was quite elaborate.In general, the electricity industry leaned somewhat more towards a centralized69 Europe Environment (31 October 2000), ‘Climate Change: Parliament Urges EU toTake Lead in Kyoto Follow-up’, 577, 1–2; International Environment Reporter (8 November2000), ‘European Parliament Backs EU Move on Climate Strategy Despite U.S. Stance’,23:23, 853–4.70 CNE (2000), ‘Emissions Trading in the EU’, position paper, October (Brussels: CNE), 1.71 Ibid.72 European Commission (14 May 2001), Green Paper on Greenhouse Gas EmissionsTrading within the European Union: Summary of Submissions. Part I: Non-governmentalsubmissions (Brussels: Peter Vis, Climate Change Unit, European Commission).
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approach, while the others leaned more towards decentralization. It was the oilindustry (EUROPIA) that stressed decentralization and ﬂexibility most strongly,arguing for voluntary participation and for no penalties in cases of non-compliance.The main industrial sceptic to EU emissions trading was clearly CEFIC, representingthe chemicals industry. CEFIC argued that exposure to international competition,along with dependence on energy, made this industry particularly vulnerable. Longterm voluntary agreements towards energy efﬁciency would be better.Responses to the Green Paper were eventually published on the Commission’swebsite and ran to over 700 pages, with the vast majority coming from businessesand industrial associations likely to be affected by the system. Ten member-statesplus Norway had also submitted position papers (see Table 4.2), as had a fewENGOs. The Commission’s summary of submissions from non-state stakeholdersconcludes: ‘Given the considerable number of submissions, and the diversity of theviews expressed within them, it is difﬁcult to “distil” any over-riding conclusions ofa very speciﬁc kind. Beyond the basic favouring of trading as an instrument, thereare few areas of consensus among the opinions expressed’.73 As indicated above,however, some patterns of agreement and disagreement may be discerned.ConclusionsWe may conclude that the European Commission took the initiative, built upknowledge based on external expertise, and crafted support among stakeholders.One important reason behind the Commission initiative was the change in personnelwithin the Commission’s environment directorate which took place shortly after theadoption of the Kyoto Protocol. Most of the ‘command-and-control’ staff who hadworked on the climate change unit left, including the staff leader. Economist JosDelbeke moved into a leading position within the group working on climate change,and other economists were recruited to Delbeke’s new ‘Bureaucrats for EmissionsTrading’ (BEST) team. Major industry federations cautiously supported emissionstrading, and oil major BP adopted its own company internal emissions tradingsystem.The Commission built up its knowledge base on emissions trading by contractingthe external consultants FIELD and CCAP, which produced seven scoping papersand two summary reports on design issues. Most of their recommendations foundtheir way into the 2000 Green Paper. Finally, the Commission crafted support byaffected actors. Compared to for instance taxes, emissions trading was clearly easierto sell to industry. Between March 2000 and January 2001, important learning andlegitimization took place in the ECCP WG1. This group was partly handpicked bythe BEST group to promote consensus on main EU ETS design issues which couldunderpin the ﬂeshing out of a speciﬁc and comprehensive directive proposal, althoughall participants were not initially expected to favour emissions trading. Responses tothe Green Paper showed that most industries and ENGOs welcomed an EU ETS inprinciple as a good idea. Beyond that, views differed on design and harmonization.For instance, ENGOs were generally somewhat more cautious, preferring a more73 Ibid., 1.
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centralized approach than industry. Most sceptical among the industrialized nonstate actors was the chemicals industry.Positions of EU Member-statesThe international climate regime introduced the idea of emissions trading to the EU.This was picked up by the European Commission, which initiated and developedthe idea of an EU ETS in alliance with experts and parts of the industry. What roledid the member-states play in this process? The extent to which the Commission’sentrepreneurial behaviour can be seen as independent depends on whether theCommission acted on a request from speciﬁc member-states and anticipatedbroad-based support for emission trading. In that case, it could be argued that theCommission primarily served as an agent for national governments rather thanproviding autonomous input.In order to assess the role of the member-states in the initiation phase, we willanalyse their positions individually and jointly in the Council of Ministers. Inexamining the change in interests and preferences, we will distinguish between theperiod from the 1997 Kyoto Protocol to the 2000 Green Paper and the memberstates’ response to the Green Paper. The preferences of the member-states becamemore speciﬁc in the latter period, as they then had to take a stance on different designoptions.From Kyoto to Green PaperIn contrast to the case of the USA, the EU member-states had scant knowledgeand no experience with emissions trading in the ﬁeld of environmental policy. Thismeant that they had to form their preferences after the Kyoto Protocol, which inturn means that the preferences of most of the member-states evolved, rather thanchanged, in this phase. Here we focus particularly on the three largest EU members– France, Germany and the UK – as they count more than smaller states in terms ofnumber of votes in the Council of Ministers and share of the emissions-allowancemarket.74 Member-states will be categorized as to whether they supported, opposedor were indifferent to emissions trading.Supporters Shortly after the Kyoto Protocol, the UK, the Netherlands andDenmark paid signiﬁcant attention to emissions trading, clearly supporting it as aviable policy instrument. The UK and Denmark developed domestic ET systemsand the Netherlands planned to do so. The most outspoken proponent was the UK,which had been most positive to international emissions trading during the Kyotonegotiations and had proposed the compromise leading to Article 17 on emissionstrading in the Kyoto Protocol. Ever since the early 1990s, the UK had been veryactive in international and domestic climate policies. This activity and the ambitiousdomestic target of 20 per cent GHG reduction by 2010 must be seen in light of74 It has also been argued that these states roughly represent the main groups of interestsin EU climate policy (Schjølseth 1999).
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steadily decreasing emission projections. The UK had also increased its ambitionfrom the initial Burden-sharing Agreement before Kyoto (–10 per cent) to the ﬁnalagreement after Kyoto (–12.5 per cent). With the privatization of the electricitysector in 1990, subsidies to the British coal industry were removed, and in newgas-ﬁred power plants replaced old coal installations. Britain’s decreasing emissionsprojections and actual emissions during the 1990s were thus mainly unrelated toclimate policy (Collier 1997).The initiative to establish a domestic emissions trading system in the UKcame from industry as it searched for alternatives to the government’s plan for adomestic carbon/energy tax (Jordan et al. 2003a, 189). In 1998, the Government’sAdvisory Committee on Business and the Environment (ACBE) – composed ofprominent members of UK business appointed by the Deputy Prime Minister andthe Department of Trade and Industry – concluded that it was positive to exploreemissions trading with the government (ACBE 1998). A task force establishedin March 1998 recommended a business-led initiative to design a ‘dry-run pilot’domestic trading scheme with interested players as soon as possible, as a means oflearning lessons for industry in the international scheme (Marshall 1998, 2).In 1999, British industry associations formed an Emissions Trading Group (ETG)to produce a blueprint for a fully functional scheme (Jordan et al. 2003a, 189). Bythis time, one prominent member of the group – BP – already had developed its owninternal ET scheme. Emissions trading also assumed growing importance in ofﬁcialthinking as governmental ofﬁcials started with practical discussions over emissionstrading.75 In February 2000, the British Prime Minister and Deputy Minister gavetheir support for a domestic scheme.76 Launched in November 2001, the UK’semissions trading system largely reﬂected the ideas developed by the ETG. Afterseveral delays, the UK started emissions trading in 2002.The UK was the principal leader on emissions trading within the EU, but the UKdid not initiate or request a Community-wide emissions trading system, even thoughit had the opportunity to do so. The UK held the EU Presidency of the Council ofMinisters from January to June 1998 and could have used this position to introduceemissions trading through the Council of Ministers. According to Deputy PrimeMinister John Prescott, who chaired the Cabinet Committee on the Environment,the priorities for the UK Presidency were employment, crime and the environment,particularly climate change and air pollution.77 Agreement on EU burden sharing,emissions trading and carbon sinks like forests were priority climate-change issues.With regard to emissions trading, attention was directed towards private sectorinvolvement in developing a domestic system.78 In contrast, the Council of Ministerswas the preferred channel with regard to air pollution.
75 ENDS Report (October 1999), ‘Emissions Trading Proposals Keep Climate ChangePolicy in the Move’, Issue 297.76 ENDS Daily (29 February 2000), ‘UK Environmental Tax Plans Panned’, Issue 711.77 Financial Times (7 January 1998), ‘Green Light for the EU Presidency’.78 Ibid.
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The UK had called together a Joint Council of Environment and TransportMinisters to discuss air pollution and transport policy.79 This indicates that the UK didnot use the Council to request the Commission to take action on an EU ETS. In fact,the UK could not address emissions trading within the EU until the member-statesagreed on the new burden-sharing system for the Community as a whole (Chasek etal. 1998). This agreement on how to divide the 8 per cent emissions reduction in theKyoto Protocol was reached at the June 1998 meeting of the Environment Council.In June 1998, Austria assumed the Presidency of the Council of Ministers after theUK – but Austria was not enthusiastic about emissions trading (ibid.).The country holding the EU Presidency could also inﬂuence EU climate policyby chairing the meetings of the Ad Hoc Working Group on Climate Change. Thisinformal group consisted of representatives from the climate unit in DG Environmentand expert representatives from the member-states. In practice, however, it actedmore as an instrument for the Commission than for the member-states. Therecommendations of the Commission generally served as the starting point fordiscussions in the Ad Hoc group, as they were perceived as presenting the mostmember-state neutral propositions (ibid.).The UK government did not engage fully in the ET plans until 1999; moreover,the initial focus of the UK was a domestic system, not a Community system.The 2000 UK Climate Change Programme barely mentioned EU planning of aCommunity-wide system. However, it stated that the UK was working closely withthe Commission and other member-states to take the Commission’s Green Paper onemissions trading further in the most appropriate way, on the basis of experiencegained in setting up its own scheme (DETR 2000). In its comments to the 2000Green Paper, the UK made it clear that it preferred a decentralized system withlinking of national schemes rather than a harmonized system at Community level.Despite the UK’s emphasis on a domestic ETS, the early support of the Britishgovernment and industry to the idea of emissions trading was politically importantfor the Commission. The UK has generally pushed for high member-state autonomywithin the EU, and the UK contributed to kill the EU carbon/energy tax proposal inthe early 1990s (Skjærseth 1994).Why then did the UK prefer emissions trading as a policy instrument forreducing emissions of greenhouse gases? First, many have underlined that Britainwas generally open to market-based and ﬂexible policy instruments in the 1990s.This has been explained by the market-led beliefs of governing political parties,economic recession in the early 1990s