I recently blogged about the fact that EU member states have not agreed to binding national or EU-wide greenhouse gas emission limits for 2020—in spite of frequent reports otherwise. The member state have agreed to implement a series of important product standards, compliance with which could (but might not) achieve the European Commission’s "goal" of cutting EU-wide Greenhouse Gases (GHGs) 20% below 1990 levels by 2020.

The difficult experience that EU member states have had with the binding national targets they agreed to for the Kyoto First Budget period is largely responsible for the member states’ refusals to bind, again, to legally enforceable national GHG limits. As I pointed out in the story, the 2008 – 2012 GHG limit that the aggregate EU27 agreed to in Kyoto in 1997 was 14% ABOVE 1997 actual GHG discharges from the community. Obviously, trying to live with a commitment to reduce aggregate GHGs, absolutely (as opposed to living with a cap on the rate of growth) will prove a much larger challenge.

While I was writing, a European court ruled in favour of Poland and Estonia—two member states that challenged the European Commission’s constitutional authority to dictate CO2 allowance allocations for member states. An article by the New York Times mentions that six similar cases have been brought by other EU member states. The other states that have brought or threatened to bring cases include France, Germany and Italy.

"But the question of how much governments can intervene problem should disappear during the next decade,” the article says. “E.U. governments agreed last year that the commission, and not governments, will have the right, after 2012, to decide on its own how many carbon allowances are allocated to each industry sector across the 27-nation trade bloc." 

I do not agree with the reporter’s assessment that the question of how much authority the European Commission/Union has will disappear post-2013. Over the last two years, EU governments agreed, effectively:

•    That the European Commission does not have the authority to assign or enforce binding national GHG limits;

•    Will be authorized to operate an EU CO2 cap and trade system, including the authority to dictate the formulae for free CO2 (not GHG) allowance allocations by sector (not by member state, as is the procedure for 2005 through 2012);

•    The EU CO2 cap and trade regime will cover a theoretical maximum of 60% of member states’ national GHG inventories (after accounting for exemptions, the EU CO2 cap and trade system coverage will likely prove to be somewhere between 30% and 40% of national GHG inventories); and

•    EU member states cannot, in domestic law, opt more sectors into the EU CO2 market than the EU rule elects to cover, but;

•    EU member states retain the right, in domestic law, to exempt plants and sectors from the EU CO2 cap and obligation to surrender CO2 allowances;

•    EU member states retain the right to block or limit inter-state and international trading in EU CO2 allowances;

•    EU member states retain the right to block entities that do not operate regulated plants within their boundaries from participation in any member state’s EU CO2 allowance auction, and/or to limit any bidder’s right to acquire CO2 allowances at auction; and

•    While member states have granted the European Commission the authority to administer an EU-wide CO2 allowance market, which market will cover a portion but not all of the EU-wide GHG inventory, a consensus does not exist that the the EU has authority to impose material penalties on any member state whose covered sectors fail to comply with the EU CO2 market caps or trading rules.