According preliminary information collected by Point Carbon, a carbon market-research and consulting firm, EU GHG emissions from sectors covered by the EU’s Emission Trading Scheme rose last year by 1.1% to 1.914 billion metric tons.
Some 11,500 factories, oil refineries, steel mills and other installations are covered by the EU scheme, accounting for about half of Europe’s total emissions. There is still no limit on the other half, produced by everything from cars and planes to buildings and retail outlets.
Europe’s cap-and-trade system has been plagued with design and implementation problems from the start. Chief among them: national government issued too many carbon permits to regulated industries. As a result, companies had no real incentive to limit their emissions.
As a result, instead of shrinking as was originally envisaged, emissions in these industries have increased by about 1% per year since the program began. Regulators have tried to get the scheme back on track by forcing governments to ratchet down the number of permits they issue during the program’s second phase, from 2008 to 2012.
Source: WSJ, 03/04/08
