By Henrietta Billings - 14th February 2005
Brussels has rejected UK requests to increase its industry sector allocation for companies taking part in the EU's emission trading scheme, warning that changes to their plans at this stage are "illegal".
Britain has asked the European Commission to increase carbon dioxide allowances by 2.7 per cent above a plan previously submitted to the EU executive in July.
The Commission said on Monday that there were no longer "any legal means to change that particular plan", and warned that launching a new plan could trigger legal proceedings at the European Court of Justice.
"What stands is the plan from July," said a European Commission spokeswoman. "If the UK launches its emissions trading system and if the allowances that it places into the system match the allowances foreseen in the plan, we are very happy."
"If not then we consider that illegal."
The emissions trading scheme, which started in January is part of the EU's commitment to reduce CO2 emissions under the Kyoto Protocol.
Under the scheme, companies have to meet targets to cut CO2 or buy and trade permits on the market. Companies that use less than their quotas can sell unused credit.
The commission is keen to limit permits and encourage trading, but UK industry groups have welcomed their government's pledge to increase its allocations.
"The government's decision to allocate emissions permits on the basis of the revised NAP (National Allocation Plan), achieves the right balance, helping the UK to meet its Kyoto targets while helping industry to maintain competitiveness," said Martin Temple from UK manufacturing organisation EEF.
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