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EU Emissions Trading

Volume 454: debated on Thursday 14 December 2006

7. What contribution he expects the European Union’s emissions trading scheme to make to tackling climate change. (109021)

Under phase 1 of the EU emissions trading scheme, the UK is set to reduce carbon dioxide emissions by 65 million tonnes. Our proposals for phase 2 should deliver extra savings of 29.3 million tonnes a year. All EU member states are required to set emission caps that take account of their Kyoto commitments.

We can no longer be one-nation or one-generation environmentalists, and the European Commission has said that only one member state’s plans—the UK’s—are tough enough. What, therefore, can we say to the British people to convince them that the phase 2 plans—we are now in phase 2—can be sufficiently ambitious and will work, given that we have yet to convince our neighbours to produce good enough plans, and to do the right job?

I am very encouraged by the robust approach that the Commission is taking in assessing the phase 2 national allocation plans. Member states understand that they need to meet their Kyoto commitments, and that the NAPs for all member states will be sufficiently robust. The EU ETS is working. Phase 1 has been a trial period but, according to recent estimates, it is already producing significant CO2 savings. I have no doubt that phase 2, given the tighter caps that will be introduced, will be even more successful and that emissions trading will play a key part in reducing CO2 emissions in the European economy.

When does the Minister expect phase 2 of the EU’s emissions trading scheme to be fully in place, and does he agree with me that until we have a longterm and robust system under the banner of the ETS, necessary investment in the UK energy market—such as renewables but also nuclear—cannot proceed?

Very shortly, we will produce detailed figures on our national allocation plan installation-level amounts for companies to comment on. We will submit the final plan to the Commission in a few weeks’ time, which will be in plenty of time for the start of phase 2 of the scheme. The hon. Lady will be aware that the ETS is being reviewed in the first half of next year in order to assess what will happen after 2012. The UK will play a leading role in that, just as we played a leading role in the original design of the ETS.