draft proposal for adoptionby the Commission before the start of the international climate change meetingin Bonn in mid-July. The draft proposal of the EU ET directive was sent to otherCommission services for informal consultation in mid-May 2001 and went tointerservice consultations at the end of May. This draft proposed a mandatory butstill rather decentralized system, with allowance quantities mainly determined bythe member-states. Sectoral and GHG coverage was in line with proposals in theGreen Paper, except that the chemicals sector had now been excluded. Memberstates would be able to propose other sectors for inclusion in the system (‘opt-in’).Furthermore, as long as allocations complied with state aid rules, member-stateswould be free to choose the method of allocation – which potentially opened the wayfor the auctioning of allowances, as per the Green Paper. The penalty level for noncompliance was set at €200 for every excess tonne of CO2 emitted – and that was tentimes the allowance price anticipated by the Commission.57
55 The 7th and 8th ECCP WG1 meeting were held on 14 February and 14 March. Theﬁnal ordinary WG1 meetings were then held on 4 April and 2 May.56 European Commission (15 March 2001), ECCP Working Group 1, Summary Recordof Meeting February 14 2001 (Brussels), 2.57 ENDS Daily (25 June 2001), ‘EU Climate Trading Scheme Set to Emerge’, Issue1016; Reuters/Planetark (25 June 2001), ‘EU Drafts Ambitious Emissions Trade Plan’.
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Up to this point there had not been very much ETS disagreement within theCommission.58 But this proposal was widely leaked, caused considerable uproaramong industrial lobby groups who had anticipated another round of stakeholderconsultations before a ﬁnal proposal would be presented. Industry then did someheavy lobbying of the Commission, to delay adoption of the proposal (Lefevere2005). Several commissioners, including DG Enterprise Commissioner Liikanenand DG Competition Commissioner Monti, blocked the proposal.59 So, at the endof June, the Environment Commissioner decided to postpone the ET proposal untilOctober at the earliest. The Commissioner had hoped to bolster the EU’s positionat the up-coming Bonn UNFCCC meeting on implementation rules for the KyotoProtocol. Explaining the opposition from industry, UNICE’s Cloquet stated: ‘youcan’t jump from a green paper to a technical proposal without a proper consultationwith those supposed to implement’.60 There was uncertainty as to the method ofallowance allocation, and worries in DG Competition that market distortions mightemanate from the decentralized approach put forward in the draft proposal.61The ﬁnal report of the ECCP WG 1 was then presented at an ECCP Conferencein July 2001. The group was now unanimous on the need to introduce emissionstrading as soon as practicable. However, differences of opinion remained on suchkey design issues as whether participation should be mandatory or voluntary, andwhether allocations should be ‘indirect’ or ‘direct’. The latter is particularly relevantfor whether allocation and monitoring among electricity producers should be basedon emissions from particular installations, or should take into account emissionsfrom electricity consumed by a country or installation.62 The UK, which participatedin the ECCP WG 1, favoured an indirect approach in line with its domestic ETS.There was also some disagreement on whether the system should be based on tradingbetween member-states or companies, and on the role of relative versus absolutetargets. From a GHG emissions perspective, the relative target approach (‘baselineand credit’) is more vulnerable to production growth than absolute targets (seeChapter 2). If there was going to be emissions trading, the relative target approachwas strongly preferred by the chemical industry, which was represented in WG 1by the European Chemical Industry Council (CEFIC) (see Table 4.1).63 The groupagreed on several recommendations that reﬂected differences of opinion among theparticipants. For example, ‘Absolute targets must be at the core of any EC-wide
58 Interviews in Brussels, 15–16 May 2006.59 ENDS Daily (29 June 2001), ‘EU Emission Trading Scheme Proposal Delayed’, Issue1020; Reuters/Planetark (2 July 2001), ‘EU Delays Discussion of Climate Emissions Plan’.60 Ibid. ENDS Daily (29 June 2001).61 Ibid.62 For example, under the direct approach, if Denmark emits more by producingelectricity which is exported to Norway, the emissions of the exported electricity are not takeninto account. See Vis (2006a).63 European Chemical Industry Council [website], <http://www.ceﬁc.be/Templates/shwStory.asp?NID=537&HID=538>.
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emissions trading scheme. But with appropriate safeguards built in, there can also bea limited role for relative targets’.64Encouraged by the outcome of the Bonn UNFCCC meeting in July 2001, theCommission stepped up its efforts to ensure that the ET proposal would be adoptedby the end of the year. To counter the criticism concerning inadequate consultation,two ‘stakeholder consultation meetings’ were, as noted, held in September. The ﬁrstone targeted industry and ENGOs and was held on 4 September.65 It was chaired byJos Delbeke and attended by 15 Commission ofﬁcials, representing DG ENV (four),DG ECFIN (one), DG Enterprise (four), DG TREN (four), DG Market (one), andDG Trade (one). From the stakeholder side, there were 52 representatives, mostlyfrom the industrial side (close to 50). These included the European Roundtable ofIndustrialists, European Chambers of Commerce, UNICE, various Euro-federationslike EURELECTRIC and EUROPIA, as well as national members of UNICE, like theConfederations of British and German industries. From the ENGO side, the WWF,Climate Action Network Europe and FIELD were represented by the same personsas in ECCP WG 1. Attendance by industry was much broader than in the ECCPWG1 meetings. This meeting also points up the dramatic difference in resourcesand numbers between industry and ENGOs. A further difference was that memberstate representatives did not attend. The Commission described the meeting as beingmuch tougher than the consultation meeting with member-state representatives heldsome days later.A central item was the mandatory nature of the system, including the relationshipbetween existing voluntary ‘long-term’ agreements and emissions trading. If suchagreements did what was necessary, why should other approaches be needed? Thisissue reﬂected the position of German industry, which strongly opposed a mandatoryEU ETS. This position was reiterated by German governmental representatives at the10 September consultation meeting with the member-states. Others maintained thatemissions trading offered a far more transparent and equitable distribution of effortswithin and between sectors than voluntary agreements.66 With regard to allocation,it was stressed that transparency was crucial. Member-states were to decide uponexact allocations, on the basis of criteria established at EU level.67 The Chairmanconcluded that there was an overwhelming majority in favour of going ahead withemissions trading sooner rather than later. In contrast to ECCP WG 1 where UKrepresentatives participated, there was also a decisive majority in favour of a ‘direct’emissions approach for electricity producers, which was considered simpler. A key‘take-away message’ was the wish ‘to see greater distinction between the period
64 European Commission (2 May 2001), ECCP Working Group 1, Final report(Brussels), 4.65 European Commission (17 September 2001), Chairman’s Summary Record ofStakeholder Consultation Meeting (with industry and environmental NGOs) 4 September2001 (Brussels).66 Ibid., 2.67 Ibid., 3, 4.
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prior to 2008 compared to the period post-2008’, meaning that the scheme should bemore ﬂexible in the period prior to the Kyoto commitments.68A revised draft ET directive proposal was ready by mid-September. At least fourchanges in the policy direction of ﬂexibility emphasized and preferred by industrywere evident here. First, opt-out clauses had been added, enabling member-states totemporarily exclude installations from the system before 2008. Second, governmentscould issue extra allowances to companies likely to exceed their original allowanceallocation in ‘unforeseen circumstances’ and due to ‘market conditions’. Both thesesteps would be subject to Commission approval, however, and would also need to bein line with EU rules on state aid. Third, free-of-charge allocation was put forwardas the standard approach in the pilot phase, ruling out the option of auctioning in thisphase. Fourth, the proposed penalty for exceeding the allowed emission quantitywas reduced considerably, from €200 to €50 per tonne additional CO2 until 2008,and €100 thereafter – or double the average market price of allowances, if this washigher.69Comparing these changes with the positions of the member-states at theconsultation meeting six days later, we ﬁnd little to suggest that the changes wererequired by a majority of the member-states – with the possible exception of freeallocation, which was preferred by a majority of the member-states as well. Similarly,several observers concluded that many of these changes were a direct result ofbusiness pressure.70 For instance Enterprise Commissioner Liikanen had come underheavy pressure from German industry, which claimed that the ETS would disruptexisting voluntary agreements in Germany.71As CoP-7 in Marrakech was to start in late October, pressure was now buildingup on the Commission to reach agreement on the ET proposal prior to CoP-7. TheWorld Wildlife Fund appealed to Romano Prodi to break the ‘logjam’ and not let‘petty disagreements among European Commissioners’ lead to ‘the EU shootingitself in the foot’.72 Such a political accident was avoided when the formal EU ETdirective proposal was in fact put forward on 23 October 2001 – six days beforeCoP-7.73 Compared with the mid-September draft proposal, there was a reversion68 Ibid., 7.69 European Commission (14 September 2001), Proposal for a Directive of the EuropeanParliament and of the Council Establishing a Framework for Greenhouse Gas EmissionsTrading within the European Community and Amending Council Directive 96/61/EC, (draft)version for interservice re-consultation (Brussels).70 ENDS Daily (2 October 2001), ‘Wallstrom Sweetens Emission Trading Pill’, Issue1072; Reuters/Planetark (2 October 2001), ‘EU Eases CO2 Trading Rules After IndustryPressure’.71 ENDS Daily (23 October 2001), ‘EU Makes Its Move to Ratify Kyoto Protocol’, Issue1087.72 WWF (22 October 2001), ‘EU: Don’t Shoot Yourself in the Foot over ClimateChange’, press release.73 European Commission (23 October 2001), COM(2001)581, Proposal for a Directiveof the European Parliament and of the Council Establishing a Framework for GreenhouseGas Emissions Trading within the European Community and Amending Council Directive96/61/EC (Brussels).
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to some of the concessions to industry. Both the opt-out clause and the openingfor issuing additional allowances due to ‘market conditions’ had been deleted.Worried about loopholes and competition concerns within the internal market, keyﬁgures likes Competition Commissioner Monti and Internal Market CommissionerBolkestein backed Environment Commissioner Wallström in the ﬁght with EnterpriseCommissioner Liikanen. A deal had been made at the Commissioner level and‘Wallström had cut through’, surprising both industry and even the BEST groupitself.74The exclusion of the chemical sector, was, however, upheld.75 The Commission’sofﬁcial reasons were, ﬁrst, that the sector’s direct emissions of CO2 were ‘not sosigniﬁcant’.76 Second, the number of installations was high, in the order of 34,000plants, which would increase the administrative complexity of the scheme. The ﬁrstof these arguments is not very persuasive. Emissions from the chemicals sector werehigher than for pulp and paper and about the same as from the mineral industry– both of which were included in the proposal.77A third reason for excluding this sector was political: the European chemicalindustry represented by CEFIC is powerful. According to the European Commission,the chemicals industry is the third largest manufacturing industry in the EU, employing1.9 million people and with a leading international position – all of which make itimportant to the EU economy.78 As noted in Chapter 4, the chemical industry has notbeen very supportive of emissions trading and has been a strong advocate of relativetargets, arguing that it is particularly vulnerable to international competition.79 It isillustrative that the chemical industry walked out of the German working group onemissions trading in late 2001. The Chemical Industry Associations (VCI) is oneof the strongest and most powerful industry associations in Germany. Excludingthe chemical industry would serve to silence the VCI and thereby weaken internalopposition to emissions trading within Germany.
74 ENDS Daily (23 October 2001), ‘EU Makes Its Move to Ratify Kyoto Protocol’, Issue1087; interviews in Brussels, 15–16 May 2006.75 Although CO2 emissions from on-site power and heat generation would be included ifthey exceed 20 MW.76 European Commission (23 October 2001), COM(2001)581, Proposal for a Directiveof the European Parliament and of the Council Establishing a Framework for GreenhouseGas Emissions Trading within the European Community and Amending Council Directive96/61/EC (Brussels), 10.77 Notice that 1990 emissions ﬁgures are used in the directive proposal, where it is arguedthat emissions from the chemicals sector represent 1 per cent of the EU’s total emissions (26million tonnes). In the 2000 Green Paper, however, 1997 ﬁgures are used, showing that paperand pulp represents 1 per cent, chemicals 2.5 and minerals 2.7 per cent of CO2 emissions fromthe EU 15.78 European Commission (February 2006), Environment fact sheet: REACH – a newchemicals policy for the EU, <http://ec.europa.eu/environment/chemicals/reach/fact_sheet.pdf> accessed 15 June 2007.79 European Chemical Industry Council [website], <http://www.ceﬁc.be/Templates/shwStory.asp?NID=537&HID=538>
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The chemical industry was also singled out for another major policy initiative atthis time. In February 2001, the plan for a new chemicals policy was introduced to thechemical industry by the White Paper on EU Chemicals Policy Review (the REACHprocess). 80 To make this major policy initiative function, requiring producers andimporters of chemicals to register them, the DGs for the environment and enterprisewould need a certain degree of cooperation from CEFIC. It is reasonable to assumethat excluding the chemical industry from the EU ETS would make them morecooperative in the development of REACH.The Commission managed to maintain its main design ideas throughout thedrafting process. This shows that DG Environment can withstand industry pressureaimed at weakening environmental policy instruments when it can make allianceswith other powerful parts of the Commission. On the other hand, it also points upthe limitations of the Commission when it comes to withstanding pressure fromindustry. This is particularly visible in the continued exclusion of the chemicalssector. Although veriﬁcation is difﬁcult, there is much to suggest that the exclusionof the chemicals sector was also tactically motivated, related to weakening Germanopposition to emissions trading and strengthening cooperation with the chemicalindustry in the upcoming REACH process.The Parliament’s First Reading and the Common PositionIn Chapter 3, we saw that the European Parliament suggested some 80 amendmentsto the ET directive proposal at its ﬁrst reading. To what extent – and why – was theParliament able to affect the common position to be adopted by the member-statesin the Council in December 2002? Changes introduced to the common position,such as an opening for more auctioning, are difﬁcult to understand on the basis ofthe intergovernmental perspective discussed earlier. According to the co-decisionprocedure applied in this case, the Parliament has the right to propose amendmentsto the Commission proposal.81 The Parliament can veto the adoption of the wholeproposal if it thinks that its amendments have not been taken sufﬁciently into accountin the ﬁnal text. This gives the Parliament signiﬁcant formal power in the decisionmaking process. Amendments are proposed through ‘readings’. The proposal canbe adopted at the ﬁrst reading if the Council accepts the Parliament’s amendments.If not, the Council adopts a ‘common position’, as in the case of the EU ETS. Theproposal then goes to a second reading, which will be assessed in the next section.In the ﬁrst part, we assess the amendments proposed and the degree of unitybehind them. In the second part, we analyse the Parliament’s actual impact on thecommon position and discuss the reasons for its inﬂuence, particularly in light of therole of the European Commission.First reading In the autumn of 2001, the proposed ET directive was immediatelycriticized by the Green Party in the European Parliament. Green Party MEP Alexander80 The REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals)Regulation was formally adopted on 18 December 2006, to enter into force on 1 June 2007.81 This description of the co-decision procedure is based on Lefevere (2005, 100).
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de Roo particularly disagreed with handing out allowances free of charge, statingthat ‘the US experience in sulphur emissions trading has proven that, if you startwith a bad model, it is politically impossible to switch back later on’.82Warming up to the ﬁrst reading process in the European Parliament, ETrapporteur Jorge Moreira da Silva, EPP-ED83 Portugal outlined his provisional ETposition at a Brussels sustainable energy conference in mid-February 2002. Da Silvatold the conference that he would urge the Parliament to push for a more centralizedtrading scheme than that proposed by the Commission. He stated that there was ‘toomuch subsidiarity’ in the proposal and that he would not ‘follow the line of givingfreedom to member-states to set a cap’. Instead, the EU should set an overall capon emissions from the sectors concerned, and either distribute these to companiesdirectly or share the cap between the 15 member-states for governments to distribute.As to allocation of allowances, da Silva indicated a preference for a mixture of freeallocation (grandfathering) and for payment (auctioning). Otherwise, he praised theproposal as ‘90% very good’ and indicated that he would not propose extendingits coverage either to include more gases or industry sectors.84 With this statement,more centralized Community level control over national allocation of allowances andmore auctioning in the allocation of allowances were to become the two major issuesfor the European Parliament. In fact, however, the EP came to develop amendmentproposals on most aspects of the proposed ET directive.The ﬁrst reading process in the European Parliament got underway in late March2002 with a discussion on the ET proposal in the EP Legal Affairs Committee.The interests of the UK, Germany and Finland could immediately be seen in theopposition of British, German and Finnish MEPs to a mandatory pilot phase 2005–07.85 The Parliament’s Environment Committee debated a preliminary report putforward by rapporteur da Silva in mid-April 2002. By then, da Silva had abandonedthe idea of setting allowance caps at EU rather than national level. However, heproposed introducing a limit on the distribution of allowances in order to prevent‘over-allocation’ distorting the market. With regard to method of allocation, in thepilot phase of the EU ETS, 70 per cent of the allowances should be handed out freeof charge, while 30 per cent should be auctioned. In the second phase (2008–12), allallowances should be auctioned.At this stage, it was clear that the ‘90% good’ view was withering, as da Silva alsoproposed signiﬁcant changes in coverage: the scheme’s scope should be broadenedto include other gases and sectors ‘at the earliest possible stage’.86 Most Committee82 International Environment Reporter (24 October 2001), ‘EU Commission AdvancesLegislation Including Emissions Trading Scheme’, 24:22, 907.83 EPP-ED is the Group of the European People’s Party (Christian Democrats) andEuropean Democrats. From 1999 to June 2004, it was the largest group in the EuropeanParliament, with 232 of the total of 625 seats.84 ENDS Daily (21 February 2002), ‘MEP Outlines Plans for EU Carbon Trading’, Issue1163.85 ENDS Daily (27 March, 2002), ‘MEPs Debate EU Climate Gas Trading Plan’, Issue1187.86 Moreover, it was suggested to ban CDM credits derived from sinks, nuclear or largescale fossil sources.
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members speaking in the debate called for coverage of more gases and more sectors,and especially the chemicals sector. German, British and Finnish MEPs againquestioned the need for a mandatory system in the pilot phase.87The Environment Committee then adopted its main positions at its meeting on 10September, in what was described as ‘a marathon voting session involving hundredsof amendments’.88 In fact, nearly 500 amendments were tabled in the Committee.89The Committee backed the Commission’s proposal for a mandatory system from theoutset. This means that British, German and Finnish MEPs did not get their way witha voluntary scheme in the pilot phase. As a concession, however, the Committeeopened up for member-states to temporarily exempt individual installations (opt-out)if they put in equivalent efforts to limit emissions, subject to Commission approval(Amendment 50). As in the negotiations among the member-states, the question ofmandatory participation was reported as ‘the thorniest issue in the Committee’.90This exemption clearly responded to the interests of the UK in particular, but alsoGermany and Finland. Even though the MEPs from these countries belonged todifferent party groups in the EP, they stood together behind the proposal to givecountries the opt-out possibility in the pilot phase. This proposed amendment was toend up as an actual amendment in the common position.Furthermore, it was suggested that there be a cap on the total quantity ofallowances to be allocated to each member-states, representing roughly half of theemissions forecast in the relevant period in each member-state (Amendment 24).As to coverage, the Committee sought a signiﬁcant broadening of the scope of thescheme, in terms of sectors and gases. The two new ‘activities’/sectors of chemicalsand aluminium were suggested for inclusion, as well as all six Kyoto gases, providedthat data quality and ‘acceptable measurement, monitoring and calculation methods’were developed by the Commission (Amendments 17, 54 and 61). Moreover,the inclusion (voluntary opt-in) in some member-states of additional sectors andactivities that would not distort competition should also be allowed from 2005 on(Amendment 16). Also this ended up as a change in the common position.With regard to method of allocation, the rapporteur’s plea for more auctioningdid not win the support of the Committee, and the Commission’s proposal wasleft unaltered on this point (distribution free of charge). This indicates successful87 ENDS Daily (23 April 2002), ‘EU Climate Trading Scheme in the Spotlight’, Issue1202; International Environment Reporter (8 May 2002), ‘Euro Parliament’s EnvironmentCommittee Calls for Changes to GHG Trading Proposal’, 25:10, 471–2.88 European Parliament (13 September 2002), Report on the Proposal for a Directive ofthe European Parliament and of the Council Establishing a Framework for Greenhouse GasEmissions Trading within the European Community and Amending Council Directive 96/61/EC, COM(2001)581 (Committee on the Environment, Public Health and Consumer Policy,Final, A5-0303/2002); ENDS Daily (11 September 2002), ‘MEPs Back Mandatory ClimateEmission Trading’, Issue 1284; International Environment Reporter (25 September 2002),‘EU Parliamentary Committee Approves Industry Exemptions for Kyoto Trading’, 25:20,897–8.89 Europe Environment (20 September 2002), ‘Climate Change: MEPs Vote onEmissions Trading Plan’, 618, 1.90 Ibid.
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lobbying by industry which generally opposed allocation for payment. As to linksto the Kyoto ﬂexible mechanisms (JI and CDM), the Committee did not agree thatcredits from such projects would ‘fall within the scope of the directive’ in the pilotphase. Such credits could be used in the period 2008–12, on the condition that theprojects did not ‘include carbon sinks or sources of energy which use nuclear power’(Amendment 53). All in all, 74 amendments were adopted, and the draft legislativeresolution was adopted by 39 votes to 7, with 6 abstentions.91 Rapporteur da Silvawas quoted as being ‘delighted with the outcome of the vote’.92In the run-up to the Parliament’s plenary ﬁrst reading, environmental NGOssought to inﬂuence particularly the part about allocation, and four ENGOs lent theirsupport to the EP rapporteur’s plea for signiﬁcant room for auctioning of allowancesin order to ‘provide an incentive for early action to improve energy efﬁciency’.93The ﬁrst reading then took place on 10 October.94 All the Environment Committeeamendments listed above were approved by the plenary, including the backing ofa mandatory scheme from the start, a broad scope including all six Kyoto Protocolgases and emissions from chemicals and aluminium plants, and a cap on the totalquantity of allowances to be allocated to each member-state.A few additional amendments were adopted as well, bringing the total numberup to around 80. The major addition was a proposal for allowance auctioning, inline with the wishes of both the rapporteur and several ENGOs (although da Silva’sinitial proposal called for twice as much auctioning). For both the pilot period 2005–07 and the Kyoto commitment period 2008–12, member-states were to (‘shall’)allocate 15 per cent of the allowances ‘against payment’ (Amendment 102, Article10). This proposal was clearly contentious, and was passed by a majority of onlythree votes.95 Otherwise, the Parliament adopted the rapporteur’s ET draft reportwith a large majority: 381 to 66 votes, with 38 abstentions.96
91 European Parliament (13 September 2002), Report on the Proposal for a Directive ofthe European Parliament and of the Council Establishing a Framework for Greenhouse GasEmissions Trading within the European Community and Amending Council Directive 96/61/EC, COM(2001)581 (Committee on the Environment, Public Health and Consumer Policy,Final, A5-0303/2002).92 Europe Environment (20 September 2002), ‘Climate Change: MEPs Vote on EmissionsTrading Plan’, 618, 1.93 These four ENGOs were Birdlife International, Climate Action Network Europe,Friends of the Earth Europe and WWF. ENDS Daily (7 October 2002), ‘NGOs Keep UpPressure on Emissions Trading’, Issue 1302; EurActiv (10 October 2002), ‘EU EmissionsTrading Scheme on Parliament’s Agenda’.94 European Parliament (10 October 2002), Greenhouse Gas Emission Allowance Trading– European Parliament Legislative Resolution on the Proposal for a European Parliament andCouncil Directive Establishing a Scheme for Greenhouse Gas Emissions Allowance Tradingwithin the Community and Amending Council Directive 96/61/EC, COM(2001)581, P5_TAPROV(2002)0461.95 ENDS Daily (10 October 2002), ‘MEPs Back Early Mandatory Climate Trading’,Issue 1305.96 Euractiv (11 October 2002), ‘Parliament Ups Ambitions for Greenhouse GasEmissions Scheme’.
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The outcome of the Parliament’s ﬁrst reading shows that it pressed for a higherdegree of harmonization at EU level, functioning mainly as a watchdog for theenvironmental integrity of the proposal. The main notable exception to this picture isthe opening up for a temporary opt-out of individual installations. The Commission’sET proposal and the changes suggested in the Parliament’s ﬁrst reading are summedup in Table 5.2.Most of these suggested changes were backed by large majorities in theEuropean Parliament. With regard to method of allocation, however, the call forTable 5.2
Key changes suggested in the Parliament’s ﬁrst readingType of system
Commission Mandatoryproposalsystem butOctober 2001 decentralizedsetting ofemission caps
Changessuggested inParliamentﬁrst reading
Cap on totalquantity ofallowances tobe allocatedto each MS
Coverage/scope
Method ofallocation
Complianceandenforcement
Penalty:either €50(pilot phase)/€100 (Kyotophase) or twicethe averagemarket price‘whicheveris higher’MandatoryNo changesAll six Kyotoauctioning of 15% suggestedgasesof allowances inChemicals andaluminium sectors both pilot andKyoto phasesalso includedTemporaryexemption/optout of individualinstallationsOpt-in ofadditional sectorsand activitiesalready from 2005Start withCO2 only andfour targeted‘activities’aOpt-in ofadditional sectorsand activitiesfrom 2008 on
Free of chargeallocation in pilotphase; next phaseto be decided in2006 review
aThese were (a) energy (combustion, reﬁneries and coke ovens); (b) ferrous metals; (c) mineralindustry (cement, glass, ceramic) and (d) other activities (pulp and paper).
a signiﬁcant element of auctioning was controversial, and was passed by only avery slight majority. According to Brussels insiders, ET rapporteur da Silva did avery good job, exerting skilful leadership in facilitating a high degree of unity inthe EP.97 This included the creation of a small group of dedicated ‘trading MEPs’comprising 10 to 12 key people – in a way, the EP counterpart to the BEST group97 Interviews in Brussels,