Europe refuses British emissions plea

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The Independent Online

British business warned yesterday it risks suffering a major competitive disadvantage from the new trading allowances scheme for carbon dioxide emissions, after it emerged that the European Commission will not consider an UK request for an increased allowance.

British business warned yesterday it risks suffering a major competitive disadvantage from the new trading allowances scheme for carbon dioxide emissions, after it emerged that the European Commission will not consider an UK request for an increased allowance.

The Government asked for a more generous emission allowance allocation in October, but Brussels said yesterday its request came after the deadline. The Commission is implementing a system to reduce the emissions of greenhouse gases such as CO 2 to meet Europe's obligations under the Kyoto treaty.

Gillian Simmonds, the senior policy adviser at the Confederation of British Industry, said the difference between the emissions cuts required under the original British submission and the revised request were "significant". "The [original] submission represents a significant burden for British industry," she said.

The lower the level of emissions allowed, the more expensive it is for industry to comply as it must invest in less polluting power stations, machinery and factories or buy allowances from others under an allowance trading system.

Analysts believe the original UK submission to the Commission required bigger cuts than the plans of other member states. David Porter, the chief executive of the Association of Electricity Producers, said any extra cost incurred by electricity producers would have be passed on to electricity consumers. "It [the original submission] would hurt. It would mean reductions we'd have to make would be much more substantial ... we are an industry whose investment time horizons are quite distant. We are desperate for clarity," he said.

Brussels said Britain must stick to the original total number of greenhouse gas emission allowances that the Government requested in spring last year. This figure was accepted by the commission in July but Government told Brussels in October that its request had been too harsh on UK industry.

The Government said in October it had underestimated likely carbon dioxide emissions under a "business as usual" scenario by 7.6 per cent, for the 2005-07 period, so the cut it offered to make would be much harder to achieve than it had thought. The UK requested an extra 20 million allowances, to take its total to 756 million. Each allowance is worth one tonne of CO 2. The Commission said yesterday that Britain was trying to act outside the rules, as the request in October was too late. Barbara Helfferich, a spokeswoman for the Environment Commissioner, said: "All the procedures had been exhausted by October. We have an allocation for the UK that was approved [in July] and that is the plan we're working with."

Ms Helfferich said the UK government had two months from 7 July to submit proposed revisions and it failed to meet this deadline. She said there were "informal" talks between the Commission and the UK government but they had "no procedure attached to them". She added that no other member state was in the same position as the UK.

The Department for the Environment, Food and Rural Affairs, led by Margaret Beckett, said discussions were ongoing with Brussels. A spokesman said the Government would make no allowance allocations to businesses until it reached an agreement with the Commission.

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