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The Court of First Instance Decision

24 Sep 2009 1:35 PM | Anonymous

Press Release
24 September 2009

Contact: Henry Derwent derwent@ieta.org

Yesterday’s decision by the European Court of First Instance (CFI), to annul the European Commission’s decision to reduce the number of allowances in some EU Emissions Trading Scheme Phase 2 National Allocation Plans, has potentially serious consequences for the scheme, and for EU leadership in global climate policy in the runup to the Copenhagen UN negotiations.

It is well understood that the success of the second phase of the EUETS, and the avoidance of the over-supply that caused problems for the first, was the firm control exercised by the European Commission on national authorities’ proposals for emissions requirements. It now appears that the implementation of this control was not sound based in law, a prospect that opens up the possibility of considerable additional supply coming onto the market in an uncoordinated manner. Such an outcome would be contrary to decisions properly taken by the European Council about the level of European emissions reduction ambition.

IETA calls on the Commission to confirm as soon as possible that action will be taken to mend this apparent hole in the fabric of the EUETS and, potentially, in the contribution that the ETS was intended to make to Europe’s targets for 2020. The reaction of the market so far has been moderate, reflecting its confidence that such action will be taken, and that assumptions on supply which have underpinned the market for some considerable time will be re-confirmed. The Commission must also confirm that Phase 3 of the EUETS, based on different legislation, will not be affected. We also call on all Member States to hold back from attempting to make use of a loophole that simply has to be closed for the carbon market, and European climate policy, to continue on a sound footing.

Without early clarification of how one of the key parameters of today’s market will be re-established, there is a danger of a real loss of confidence and a reduction in the effectiveness of the emissions market that Europe rightly considers to be the centerpiece of its successful climate policy.

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