Thursday, 4 March 2004

Questions (31, 32)

Eamon Gilmore

Question:

24 Mr. Gilmore asked the Minister for the Environment, Heritage and Local Government the industries to which it is proposed to allocate CO2 emissions which are in excess of those industries’ current emission levels; the reason such increased levels of allowances are being granted to those industries; the way in which he can reconcile these increases with the requirement to reduce CO2 emission levels; and if he will make a statement on the matter. [7127/04]

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Seán Crowe

Question:

64 Mr. Crowe asked the Minister for the Environment, Heritage and Local Government if he will address the criticism that the targets contained in the recently announced national allocation plan on emissions are weak and inadequate, thus eliminating the economic inducement that is necessary in order for emissions trading to be an effective tool in reducing emissions output and that the State’s taxpayers and not the big industrial polluters will end up carrying the financial burden which will result from the State’s failure to reduce emissions output in line with Kyoto commitments; and if he will make a statement on the matter. [7174/04]

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Written answers (Question to Minister for the Environment, Heritage and Local Government)

I propose to take Questions Nos. 24 and 64 together.

I refer to the reply to Question No. 436 of 10 February 2004. The Government has decided that the EPA will be responsible in Ireland for implementing Directive 2003/87/EC, establishing a scheme for greenhouse gas emission allowance trading within the Community. The agency is the designated national allocation authority to design and submit to the European Commission a national allocation plan, NAP, allocating the total quantity of allowances approved by Government for purposes of emissions trading by individual eligible installations. The EPA published its draft NAP on 23 February 2004 for public consultation in the period to 10 March 2004. The draft NAP listing allocations to individual installations is available on the EPA's website, and it would not be appropriate for me to comment on individual allocations to installations, given the EPA's responsibility in this regard.

The Government is making available an average of 22.5 million allowances per annum for the pilot phase of emissions trading over the three-year period 2005 to 2007. This represents, on average, an estimated 96% to 98% of expected emissions by the trading sector and is also less than the expected outturn in emissions for 2003 for the sector. The overall allocation to the emissions trading sector is designed to be consistent with achieving our national obligations to limit annual emissions in the period 2008 to 2012 to 13% above 1990 levels which becomes obligatory at that time under the Kyoto Protocol.

The indicative allocation of an average 22 million allowances per annum announced by Government for the Kyoto phase is estimated to be 83% of installations' base case emissions averaged over the period. The allocation for this period takes account of the progressive reductions of emissions required towards achievement of the national Kyoto obligation while also recognising the learning by doing nature of the pilot phase. I am satisfied also that the creation of a market in CO2 allowances will provide an incentive, irrespective of the allocation made, for companies in the scheme, representing about one third of total national emissions, to achieve all reductions at up to and including the prevailing market price.

The indicative announcement of annual purchases by the State of 3.7 million allowances on the international market is in respect of reductions in emissions from sectors of the economy outside emissions trading at costs above the projected market price of €10 and will not lessen the burden on the emissions trading sector. The consultancy study underpinning the Government's allocation to the trading sector estimated that participants in emissions trading will make purchases of circa 2.1 million allowances during the same phase after in-house reductions up to the projected market price of €10 per tonne are implemented.