The European Commission  agreed on a far-reaching package of proposals on the 23 January 2008, that will deliver the European Council's commitments to fight climate change and promote renewable energy. The proposals demonstrate that the targets agreed last year are technologically and economically possible and provide a unique business opportunity for thousands of European companies. These measures will dramatically increase the use of renewable energy in each country and set legally enforceable targets for governments to achieve them.

All major CO2 emitters will be given an incentive to develop clean production technologies through a thorough reform of the Emissions Trading System (ETS) that will impose an EU-wide cap on emissions. The package seeks to deliver the European Union to reduce greenhouse gases by at least 20% and increases to 20% the share of renewable energies in the energy consumption by 2020, as agreed by EU leaders in March 2007. The emissions reduction will be increased to 30% by 2020 when a new global climate change agreement is reached.

Building on the EU Emission Trading System (ETS), the Commission proposes to strengthen the single, EU-wide carbon market which will include more greenhouse gases (currently only CO2 is included), and involve all major industrial emitters. The emission allowances put on the market will be reduced year-on-year to allow for emissions covered by the ETS to be reduced by 21% from 2005 levels in 2020.

Revenues resulting from the ETS will accrue to Member States and should be used to help the EU to adjust to an environment friendly economy by supporting innovation in areas such as renewables, carbon capture and storage and R&D. Part of the revenues should also go towards helping developing countries adapt to climate change. The Commission estimates that the revenues from the auctioning could amount to €50 billion annually by 2020.

The EU Emissions Trading System, now in its fourth year of operation, has proved an effective instrument to find a market-based solution to provide incentives for cuts in greenhouse gas emissions. At present the system covers some 10,000 industrial plants across the EU – including power plants, oil refineries, and steel mills – accounting for almost half the EU's CO2 emissions. Under the new system over 40% of total emissions will be covered by the ETS. To reduce the administrative burden, industrial plants emitting less than 10,000 tonnes of CO2 will not have to participate in the ETS.

In sectors not covered by the ETS such as buildings, transport, agriculture and waste, the EU will reduce emissions to 10% below 2005 levels by 2020. For each Member State the Commission is proposing a specific target by which it must reduce or, in the case of new Member States, may increase its emissions up to 2020. These changes range from -20% to +20%.

More information
The complete press pack and a copy of the Commission's proposals can be found at this site.