ence the ﬁnal directive only to a very limitedextent. A mandatory emission trading scheme was agreed by all member-states inthe common position adopted by the Environment Council in December 2002.22 Thecore elements of the scheme included its binding nature, the compulsory listing ofthe sectors of activity to be covered, the initial focus on CO2 only, and the emphasison harmonized rules for allocating emission allowances and adequate monitoring,reporting, and veriﬁcation of emissions, as well as penalty for non-compliance. Theﬁrst phase of the scheme covers the period between 2005 and 2007, which precedesthe Kyoto Protocol’s ﬁrst commitment period from 2008 to 2012 corresponding tothe second phase of the scheme. All this was in line with the proposed directive.The Council’s political agreement also shows that the member-states were ableto affect the outcome. The agreement provided member-states with:•••
•
•
the possibility to apply to the Commission for temporary exclusions of certaininstallations and activities until 31 December 2007 (opt-out);the possibility of unilateral additions of certain activities and gases from 2008(opt-in);free-of-charge allocation of allowances for the ﬁrst phase and at least 90 percent free-of-charge allocation in the second phase, thereby making the use ofsome auctioning possible for member-states who choose to do so;‘pooling of installations’: member-states may allow operators carrying thesame activity to voluntarily form a ‘pool’ and nominate a trustee responsiblefor managing the allowances on their behalf;adjustment of penalties to operators – €40 in the ﬁrst phase and €100 in thesecond phase for each extra tonne of carbon dioxide emitted and not coveredby sufﬁcient allowances.
The main concession given to Germany for its acceptance of a mandatory schemewas the ‘pooling’ provision, which ended up as a new Article 28 in the ET Directive.As noted, Germany proposed the inclusion of a provision that would permit sectorsor all industry to pool their allowances and allow the German government, as atrustee, to manage the pool. Participation in the pool should be mandatory for thesectors participating in EU ETS. This proposal would imply that no emission tradingwould take place within Germany: it would have taken the system from the level20 Council (17 October 2002), 12976/02, 2457th Council Meeting Environment. Presse320, 2002. Luxemburg, 18.21 ENDS Daily (27 November 2002), ‘Germany Digs in over EU Emission TradingPlans’, Issue 1338; Watanabe 2005.22 Council (9 December 2002), 15101/02, 2473th Council Meeting Environment. Presse379, 2002. Brussels, 7.
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of installations to the state level, and German industry out of the emission tradingmarket (Lefevere 2005, 104). According to Article 28, member-states may apply tothe Commission to allow pools that are not mandatory. Moreover, if a trustee failsto comply with the penalties under the regime, ‘each operator of an installation inthe pool shall be responsible…in respect of emissions from its own installation’.23Article 28 weakened the pooling provisions to the extent that they have not provenpopular in practice and it is unlikely that the provision will be extended (Lefevere2005, 105; Meadows 2006, 111).24 In essence, Germany had to accept an EU ETSthat differed signiﬁcantly from its own preferences.The UK The UK was the other main opponent to a mandatory EU ETS, but fordifferent reasons than Germany. The UK domestic ETS started as planned in April2002 after 34 companies took on reduction targets at an auction in return for incentivepayment.25 The UK ETS would run to 2007, two years after the introduction ofEU ETS. In November 2001, the European Commission cleared the UK planswhile warning that there were substantial differences between the British and EUsystems.26 One key difference was that the British scheme was voluntary. Additionaldifferences included ﬁnancial incentives to companies to participate, exclusion ofelectricity and heat generators, and coverage of all six greenhouse gases. The UK’sprimary negotiation strategy was to persuade the Commission to develop the EUETS in line with the British approach, but in this it was unsuccessful (NAO 2004).Like Germany, the UK then worked for a voluntary scheme which would allow forsufﬁcient ﬂexibility for the British scheme. In the end, however, the UK had to givein and support a mandatory EU ET scheme – which in turn meant amending itsexisting voluntary trading scheme to ﬁt in with the EU trading rules.The concession made to the UK (and others) to ease the transition was the timeconstrained opt-out provision in the common position set forth in a new Article 27 ofthe ET Directive on the temporary exclusion of certain installations (Lefevere 2005,104).27 As we shall see below, the European Parliament was able to change the scopeof this provision from opt-out for both installations and activities, to installationsonly. For the ﬁrst period of the EU ETS, the ET Directive allows for an opt-out at23 European Parliament (25 October 2003), Directive 2003/87/EC of the EuropeanParliament and of the Council of 13 October 2003 Establishing a Scheme for GreenhouseGas Emission Allowance Trading within the Community and Amending Council Directive96/61/EC, Ofﬁcial Journal of the European Union L 275, 32–46.24 Article 30(2)(j) provides for an assessment and possible change in the poolingclause.25 The UK scheme was immediately criticized for low environmental effectiveness. Forexample, it was argued that signiﬁcant companies had already met their targets as a result ofpollution control permit requirements. ENDS Daily (3 April 2002), ‘“Hot Air” UnderminesUK Emission Trading Scheme’, Issue 1188.26 ENDS Daily (28 November 2001), ‘EU Gives Amber Light to UK Emission Trading’,Issue 1112; Roeser and Jackson 2005.27 However, it was actually re-introduced by Germany in the Council (Meadows 2006,108). Re-introduced, because it had been removed by the Commission in the ﬁnal round ofpreparing for the ET directive proposal.
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the request of an EU member-state. UK companies that wish to opt-out of the EUETS can ask British authorities to put forward their request to the Commission.28Approval under this provision is subject to a range of conditions, including thatthe UK provides evidence that domestic climate change policies are as stringent asunder the EU ETS. In the ﬁnal negotiations on the common position, the UK’s mainobjection to the proposed directive was that the Commission had the power to rejectNational Allocation Plans and applications to opt-out installations. The UK preferreda scheme that would leave application of the opt-out clause to the discretion of themember-states. However, the Commission retained the right of veto over NAPs, asper Article 9 of the ET Directive. As with the German pooling arrangement, the ﬁnalopt-out provision is thus very limited. In practice, only three member-states havesought to use the opt-out clause: the UK, the Netherlands and Poland (Meadows2006, 109).A second concession was speciﬁed in the new Article 29 of the ET Directive.Here, governments were given the right to apply to the Commission for extraallowances during the ﬁrst three years in force majeure circumstances. It would be upto the Commission to determine whether force majeure was demonstrated. Despitethese limited concessions, which left the ﬁnal word to the Commission, in essencealso the UK had to accept a system signiﬁcantly different from its preferences. Thisinterpretation is reinforced by a report of the UK National Audit Ofﬁce concludingthat integration with the European Scheme would be difﬁcult (NAO 2004).Also other member-states had to adapt to the ET directive proposal. In February2002, a multi-stakeholder Dutch panel recommended a national trading scheme. TheDutch trading commission was convened in mid-2000; it proposed a system close tothe UK ETS.29 In April, the Dutch cabinet agreed to reject the Dutch proposal and toproceed within the EU framework.30 Some minor concessions were, however, givento other member-states. France, for example, had argued for a lower penalty forfailing to meet the trading targets; the ﬁne was reduced from €50 per tonne of CO2in the ET directive proposal to €40 in the ﬁnal ET Directive.The Danish Presidency As pointed out in Chapter 2, the EU Presidency can playan important role in crafting political solutions. On assuming the presidency in thesummer of 2002, Denmark announced that climate policy and political agreementon the conditions for emissions trading were among the government’s aims withinthe area of environmental policy (Danish Ministry of Foreign Affairs 2002, 20).Agreement on the common position of the ET Directive was originally scheduled forthe October Environment Council meeting, but had to be postponed due to Germanresistance. The compromise between the proposed ET directive and the commonposition was based on a draft prepared by the Danish presidency, including tradingpools and limited opt-out the three ﬁrst years.31 Denmark was in an exceptionally28 Germany also supported the opt-out clause.29 ENDS Daily (5 February 2002), ‘Dutch CO2 Trading System Proposed’, Issue 1151.30 ENDS Daily (16 April 2002), ‘Netherlands Backs CO2 Emissions Trading’, Issue 1197.31 ENDS Daily (9 December 2002), ‘Ministers Agree EU Climate Gas Trading Scheme’,Issue 1346.
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good position to lead the negotiations, due to experience with its national emissiontrading system. As it turned out, the ET directive proposal was much closer to theDanish domestic ET system than the British one. The Danish system was mandatory;it included the power sector; and focused on CO2 emissions only.The role played by the Danish presidency in crafting the common position hasbeen acknowledged as one important condition for the political agreement reached inDecember 2002.32 First, the Danes had the will – they really wanted an EU emissionstrading system that was close to the Danish domestic one. Second, the Danes had indepth knowledge of the ET directive proposal. Third, the Danish representatives wereable to establish good relations with other countries and the Commission. Fourth, theDanes knew Brussels well and they knew that the Ministers could manage to dealsuccessfully with only a limited number of outstanding issues. In the summer of2002, three main important issues remained: whether the system should be mandatoryof voluntary, coverage (scope of application), and how rights to pollute should beallocated.33 In a background note submitted prior to the December negotiations, theDanish presidency took for granted the binding nature, compulsory listing of sectorsand the initial focus on CO2, and listed four issues as open to debate:34••••
temporary exclusion of certain installations and activities;unilateral addition of certain installations and gases;the method for allocation in the second phase;pooling of installations.
The Danish strategy thus appears to have been to focus on the big issues ofdisagreement, given a binding system. Before Denmark, Spain held the EUPresidency (January–June 2002), with Greece coming after Denmark (January–June2003). These countries did not push for an EU ETS and would probably not havemanaged to craft a solution in the autumn of 2002.35The decision-making process on the proposed ET directive should also be seen inlight of rising emission trends in the EU.36 In April 2002, the European EnvironmentalAgency published new greenhouse gas inventory ﬁgures showing a 0.3 per cent risein total GHG emissions from 1990 to 2000. EU emissions from 1990 to 2000 weredown by 3.5 per cent of the percentage point committed by Kyoto, which implied 0.5points from target midway between 1990 (Kyoto protocol base year) and the 2008–12 compliance period. This trend continued in 2001, when overall emissions rose byone percentage point compared to 2000, and CO2 emission rose by 1.6 percentagepoints.3732 Interviews in Brussels, 15 May 2006.33 Council (25 June 2002), 10013/02, 2439th Council Meeting Environment, Presse-180,2002. Luxemburg.34 See The Danish EU Presidency, Background note on ‘Environment’, <http://eu2002.dk/EU2002/news/news_read.asp?iInformationID=25642>.35 Inteviews in Brussels, January 12 and May 15 2006.36 ENDS Daily (29 April 2002), ‘EU Climate Emissions Take Wrong Turning’, Issue1206.37 ENDS Daily (6 May 2003), ‘EU Greenhouse Emissions Up Again in 2001’, Issue 1437.
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The Linking DirectiveAs noted in Chapter 3, the Commission proposed a linking directive only a fewdays after the Council of Ministers agreed on the main directive. The aim was tospecify the link between the EU ETS and the Kyoto Protocol’s ﬂexible mechanismsJoint Implementation (JI) and the Clean Development Mechanism (CDM). DuringCouncil negotiations, several changes were made to the proposal: a quantitative capon JI/CDM credits as a percentage of the total quantity of member-state allowances,that CDM could not be used until 2008 (timing), and that neither sinks nor nuclearpower would be included as eligible projects. Hydropower projects were consideredlegitimate if they took account of environmental and social impacts (qualitativerestrictions).Table 5.1
The Commission’s proposal and the ﬁnal Linking DirectiveQuantitative cap
Qualitativerestrictions
Timing
Commission’sproposal inJuly 2003
Review of credit– No nuclear power.import at 6%, ﬁnal cap – No sinks tillat ‘for example 8%’. after 2012.– Hydro-projectswould have totake account of‘environmental andsocial impacts’.
The Directive wouldbe dependent onthe Kyoto Protocolentering into force.Wait until 2008before any creditscould be used.
LinkingDirectiveadopted inOctober 2004
No common cap.Limits to be set byeach member-state.
No longer dependenton the Kyoto Protocolentering into force.CDM credits couldbe used from 2005.
– No nuclear powertill after 2012.– No sinks till 2008.– Hydro-projectsover 20MW wouldhave to comply withWorld Commissionof Dams rules.
Sources: European Commission (23 July 2003), COM (2003)403, Commision Proposal for aDirective of the European Parliament and of the Council amending the Directive establishinga scheme for greenhouse gas emission allowance trading within the Community, in respectof the Kyoto Protocol’s project mechanisms (Brussels). Available at <http://www.climnet.org/pubs/PropDirectiveJICDM.pdf> accessed 22 May 2007.
Most of the member-state work on the Linking Directive was conducted in the WorkingParty on the Environment,38 where delegates gathered for discussions on the linking38 The Working Party on the Environment is one of many Council working parties (formore information on these, see for example Larsson 2003). Usually at least one ofﬁcial from
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issue close to every second week, from the ﬁrst meeting on 29 July onwards till earlyApril 2004. The delegates seemed to have plenty to talk about. There were ‘majorconcerns’ about the form and content of the Commission’s proposal: A majoritywanted a link established from 2005 instead of 2008.39 Similarly, a majority opposeda quantitative cap.40 Germany and the Netherlands, however, argued in favour of theCommission’s proposal on this issue, while the UK and later Austria wanted the capset at installation level rather than at member-state level.41As for the qualitative restrictions, delegates were more divided. Only Franceproposed that nuclear projects should be admitted, ‘at least after 2012’, while severalstates (particularly the southern ones) questioned the ban on sink credits.42 On thehydro-provision, two separate coalitions formed; on one side Germany, which wouldeventually gain support from the Netherlands and Sweden, demanding stricter
the ministry responsible for the matter in every member-state participates in such meetings. Inthe Working Party on the Environment, different participants join the meetings, depending onthe agenda (Ibid., 94).39 Council (25 September 2003), Note 12896/03 regarding: Proposal for a Directive ofthe European Parliament and of the Council Amending the Directive Establishing a Schemefor Greenhouse Gas Emission Allowance Trading within the Community, in Respect of theKyoto Protocol’s Project Mechanisms (Brussels: Council of the European Union, GeneralSecretariat); Council (9 October 2003), Note 13377/03 regarding: Preparation for the Council(Environment) Meeting on 27 October 2003, Proposal for a Directive of the EuropeanParliament and of the Council Amending the Directive Establishing a Scheme for GreenhouseGas Emission Allowance Trading within the Community, in Respect of the Kyoto Protocol’sProject Mechanisms – Policy Debate. (Brussels: Council of the European Union, GeneralSecretariat).40 Ibid.41 See, for instance: Council (23 December 2003), Note 16379/03 regarding: Proposal fora Directive of the European Parliament and of the Council Amending the Directive Establishinga Scheme for Greenhouse Gas Emission Allowance Trading within the Community, in Respectof the Kyoto Protocol’s Project Mechanisms. (Brussels: Council of the European Union,Presidency/General Secretariat); and Council (13 February 2004), Report 6235/04 regarding:Preparation of the Council Meeting (Environment) on 2 March 2004, Proposal for a Directiveof the European Parliament and of the Council Amending the Directive Establishing a Schemefor Greenhouse Gas Emission Allowance Trading within the Community, in Respect of theKyoto Protocol’s Project Mechanisms – Progress Report. (Brussels: Council of the EuropeanUnion, General Secretariat).42 Council (25 September 2003), Note 12896/03 regarding: Proposal for a Directive ofthe European Parliament and of the Council Amending the Directive Establishing a Schemefor Greenhouse Gas Emission Allowance Trading within the Community, in Respect of theKyoto Protocol’s Project Mechanisms (Brussels: Council of the European Union, GeneralSecretariat); Council (9 October 2003), Note 13377/03 regarding: Preparation for the Council(Environment) Meeting on 27 October 2003, Proposal for a Directive of the EuropeanParliament and of the Council Amending the Directive Establishing a Scheme for GreenhouseGas Emission Allowance Trading within the Community, in Respect of the Kyoto Protocol’sProject Mechanisms – Policy Debate. (Brussels: Council of the European Union, GeneralSecretariat).
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wording and an explicit reference to the World Commission on Dams;43 on the otherside, France, Spain and Portugal, which opposed the German proposal.44 They wereeventually backed by Italy, Greece, Austria and Finland.45Clearly, not all member-state positions could be heard in the negotiations.Still, during the informal trilogues46 of spring 2004, member-states came to gainconsiderable acceptance for their demands, even on issues not backed by a majority.First of all, they got their way with the cap.47 While the Parliament’s rapporteur hadsuggested that the domestic action should constitute ‘at least half of the reduction(…) effort made’,48 this was not included in the ﬁnal wording, which simply statedthat limits would be set by each member-state.49 Second, demands for an early link43 Council (6 February 2004), Note 5975/04 regarding: Proposal for a Directive of theEuropean Parliament and of the Council Amending the Directive Establishing a Schemefor Greenhouse Gas Emission Allowance Trading within the Community, in Respect of theKyoto Protocol’s Project Mechanisms. (Brussels, Council of the European Union, GeneralSecretariat).44 Council (21 November 2003), Note 15082/03 regarding: Proposal for a Directive ofthe European Parliament and of the Council Amending the Directive Establishing a Schemefor Greenhouse Gas Emission Allowance Trading within the Community, in Respect of theKyoto Protocol’s Project Mechanisms – Revised Presidency Text (Brussels: Council of theEuropean Union, Presidency/General Secretariat).45 Council (2 December 2003), Note 15475/03 regarding: Proposal for a Directive of theEuropean Parliament and of the Council Amending the Directive Establishing a Scheme forGreenhouse Gas Emission Allowance Trading within the Community, in Respect of the KyotoProtocol’s Project Mechanisms (Brussels: Council of the European Union, Presidency/GeneralSecretariat); and Council (23 December 2003), Note 16379/03 regarding: Proposal for aDirective of the European Parliament and of the Council Amending the Directive Establishinga Scheme for Greenhouse Gas Emission Allowance Trading within the Community, in Respectof the Kyoto Protocol’s Project Mechanisms. (Brussels: Council of the European Union,Presidency/General Secretariat).46 Informal meetings with the Council Presidency, the Commission and the Parliamentrapporteur. Council (4 March 2004), Note 6490/04 regarding: Proposal for a Directive ofthe European Parliament and of the Council Amending the Directive Establishing a Schemefor Greenhouse Gas Emission Allowance Trading within the Community, in Respect of theKyoto Protocol’s Project Mechanisms – Revised Presidency Compromise Proposal. (Brussels:Council of the European Union, General Secretariat); and Council (26 March 2004), WorkingDocument 7844/04 regarding: Proposal for a Directive of the European Parliament and ofthe Council Amending the Directive Establishing a Scheme for Greenhouse Gas EmissionAllowance Trading within the Community, in Respect of the Kyoto Protocol’s ProjectMechanisms – Revised Presidency Compromise Proposal (Brussels: Council of the EuropeanUnion, General Secretariat).47 Council (31 March 2004), Working Document 7931/04 regarding: Proposal for aDirective of the European Parliament and of the Council Amending the Directive Establishinga Scheme for Greenhouse Gas Emission Allowance Trading within the Community, in Respectof the Kyoto Protocol’s Project Mechanisms (Brussels: Council of the European Union,General Secretariat).48 Ibid.49 The member-states were also heard on the issue of conversion. The Commission hadoriginally proposed that CDM and JI credits had to be converted into EU allowances before
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also seemed to pay off.50 And while the Parliament was eager to amend changesin the hydro-provisions, it was the German coalition that got its way with the ﬁnalwording on this issue.51Finally, the French demand for including nuclear projects yielded results– possibly because French opposition to the German hydro-proposal had beenignored. Their plea for allowing nuclear credits ‘at least after 2012,’ was heard, asthe ﬁnal directive excluded such credits only until 2012.52 The southern states, whichhad voiced a proposition on including sinks, were heard to a lesser degree.53 Theironly gain was that possible inclusion of sinks for 2008–12 would be reconsidered in2006. A majority of the member-states, along with the Parliament, had been againstsinks altogether.54All in all, the Linking Directive became noticeably marked by member-stateinterests. The changes in timing, the quantitative cap and partly qualitative restrictionscan largely be credited to member-state demands.ConclusionIn this section we have seen, ﬁrst, that after the 2000 Green Paper the memberstates changed their preferences to increasing collective support for the 2001 ETthey could be traded in the EU ETS. However, at the insistence of several member-states, led bythe UK (see, for instance, Council (8 December 2003), Note 15673/03 regarding: Preparationfor the Council Meeting (Environment) on 22 December 2003, Proposal for a Directive of theEuropean Parliament and of the Council Amending the Directive Establishing a Scheme forGreenhouse Gas Emission Allowance Trading within the Community, in Respect of the KyotoProtocol’s Project Mechanisms – Policy Debate. (Brussels: Council of the European Union,General Secretariat); and Council (4 March 2004), Note 6490/04 regarding: Proposal for aDirective of the European Parliament and of the Council Amending the Directive Establishinga Scheme for Greenhouse Gas Emission Allowance Trading within the Community, in Respectof the Kyoto Protocol’s Project Mechanisms – Revised Presidency Compromise Proposal(Brussels: Council of the European Union, General Secretariat) the conversion concept wasremoved. The ﬁnal directive permitted direct use of credits.50 Council (31 March 2004), Working Document 7931/04 regarding: Proposal for aDirective of the European Parliament and of the Council Amending the Directive Establishinga Scheme for Greenhouse Gas Emission Allowance Trading within the Community, in Respectof the Kyoto Protocol’s Project Mechanisms (Brussels: Council of the European Union,General Secretariat).51 The EP had proposed that ‘credits resulting from large hydro-electric power (…)should only be [accepted] if the project complies with the criteria and guidelines establishedby the World Commission on Dams.’ They also wanted the deﬁnition of ‘large’ to be set at 10MW. The presidency’s proposal was worded differently, and proposed setting the limit at 20MW, both of which prevailed in the ﬁnal directive.52 France, however, still voted against the ﬁnal directive, wanting a swifter adoption fornuclear projects. EU Energy (23 April 2004), ‘EP Adopts Kyoto Emissions Linking Directive’,Issue 81.53 ENDS Daily (5 February 2004), ‘MEP Offers Businesses Kyoto Trading Incentive’.54 Point Carbon (19 February 2004), ‘Feature: Linking Directive Divides MemberStates’.
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proposal. As this instrument was new, some states continued to adjust their positionsin Council negotiations along with new information and increased understanding ofthe consequences of this policy instrument. Second, it shows that some basic designfeatures favoured by the majority were included in the proposal at the outset. Themost important of these was that the Commission proposed a decentralized systembased on allocation of allowances at national level. Both these observations supportthe proposition that the EU ETS came to reﬂect the positions of the member-statesto a signiﬁcant degree. The negotiations on the Linking Directive also show that themember-states had signiﬁcant impact on the cap and timing.However, the third observation opens up for the possibility that supranationalinstitutions have had an independent impact on decision-making. Although the UKand Germany were able to affect the ﬁnal directive to some (limited) extent, they hadto yield and accept the ﬁnal directive, even though it differed signiﬁcantly from theirpreferences for a voluntary system. As these two major countries represent one thirdof the whole EU market for allowances from 2005 to 2007, this impact is far fromtrivial. The main reason for this institutional effect is that the directive was proposedunder the EU’s co-decision procedure that required support by qualiﬁed majority. Asa qualiﬁed majority supported the binding nature of the scheme, there was a real riskthat Germany and the UK could be outvoted even though the directive was adoptedby unanimity. This shows that the formal opportunity to vote by qualiﬁed majoritycreated pressure to make concessions in the ‘shadow of the vote’ (see Chapter 2).In addition, particularly Germany’s negotiating position appeared to have beenweakened by internal rivalry and the Danish Presidency was able to develop apolitical solution that became acceptable to all member-states.The line of reasoning above is based on an understanding of institutions asarenas, in this case determining how decisions are made – the decision procedureapplied. In the next section, institutions will be understood as organizationalactors.EU Institutions and Non-state ActorsIn this section, we analyse the inﬂuence of the EU institutions in the decision-makingphase. To what extent and how was the ﬁnal ET Directive shaped by the EuropeanParliament? What role did the Commission play in this process? As noted above,institutions will here be understood as organizational actors rather than arenas. Wewill also address the role of non-state actors and their relationship with the EUinstitutions. Above, we saw how member-states were able to make several imprintson the EU ETS, including the Linking Directive. However, at least four changesto the ET directive proposal are difﬁcult to understand against the backdrop of themember-state perspective:•••
Why was an option for more auctioning included in the ﬁnal directive?Why were more restrictions on the member-states autonomy to allocateallowances included?Why did the opt-out provision exclude sectors or ‘activities’?
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Why was the chemical industry, which was included in the Green Paper,excluded from the EU ETS?
This perspective can also increase our understanding of the speedy decision-makingprocess, with just two years between the Commission proposal and the directive’sformal entry into law.The Commission and Non-state ActorsAt the end of January 2001, the Commission started drafting the directive proposal.At the same time, Working Group 1 on emissions trading under the EuropeanClimate Change Programme (ECCP) continued with representatives from industry,the green movement, the Commission and some member-states (see Chapter 4).55The WG1 meetings contributed to further knowledge and capacity-building amongstakeholders. On the other hand, the minutes of the meetings show that this processended on a split note on many design issues, and not with a clear input to the furtherproposal design process. This is hardly surprising, given the variation of actors andinterests present. It is quite illustrative that Germany’s resistance to a mandatorysystem popped up at a meeting in mid-March when representatives of the BDIstrongly opposed a mandatory system.56With the US rejection of the Kyoto Protocol in March 2001, the Commissionsigniﬁcantly stepped up its work on bringing out a proposal. EnvironmentCommissioner Wallström felt that it was important for the Community to give aclear signal to the outside world that it was still taking the Kyoto Protocol seriously.The Climate Change Unit was instructed to prepare a