UK wins European battle over emissions

The Government won a legal battle against the European Commission over greenhouse gas emissions today.

The verdict follows a row between Brussels and London about the EU's " emissions trading" scheme, under which national authorities set CO ₂ emission quotas to companies.

The UK Government was among the first to submit its National Allocation Plan (NAP) to the Commission under the scheme.

But it went to court when the Commission refused to let the DTI increase its original estimate of the total emission allowance required for UK industry.

The change was tiny - a 20 million tonne increase on the first UK estimate of 736 million tonnes of CO2 emissions - but it was vetoed by the Commission as inadmissible.

Today the European Court of Justice said the Commission did not have the right to refuse to allow the British Government to alter its plans and had failed to prove that the relatively small adjustment would affect the working of the scheme.

The idea is that the national quotas mark maximum permitted CO2 output from factories and can be traded between European companies as long as the overall EU-wide emissions pollution ceiling is not breached. Those whose emissions are below the permitted level can sell the difference to companies exceeding their limit.

If the Commission had won the case, the Government would have been forced to apply stricter curbs on carbon dioxide emissions from the power sector than it wanted.

The first estimate of a UK ceiling of 736 million tonnes of CO2 had been approved by the Commission when the revised figure of 756 million tonnes was submitted.

That was seven weeks before the emissions trading scheme was due in force, but the Commission said it had already worked out all the figures and changing them could destabilise " the good functioning of the trading market".

The verdict by the European Court of First Instance in Luxembourg rejected that claim, declaring: "The UK expressly indicated its 'provisional' intention to allocate a total allowance quantity of 736 million tonnes of CO2.

"The proposed increase represented only 2.7% of UK allowances.

"The court considers that the Commission has failed to explain how that increase, announced seven weeks before the opening of the market, could destabilise the market, in particular as, on the date on which the UK proposed the amendments, the Commission had still not taken a decision on the NAPs of nine Member States."

The ruling will disappoint environmental campaigners. Friends of the Earth had welcomed the tough Commission stand, saying awarding fewer " pollution permits" to UK industry would encourage innovation and benefit cleaner companies by reducing CO2 emissions by an extra 20 million tonnes between 2005 and 2008.