Concerns over carbon trading

London, May 1:

The European Commission is concerned about the early release of figures on greenhouse gas emission levels from a number of member states, which has caused sharp movements in the price of carbon permits.

The commission is likely to look at the way information about whether states have over- or undershot their national allocation targets for the current yearis released, according to a spokeswoman.

Under the EU’s emission trading scheme (ETS), member states are given targets about how much carbon dioxide they are pe-rmitted to emit as part of the EU’s drive to reduce overall levels.

Each country’s national allocation is divided among industrial users and power generators.

Under the ETS, if companies exceed permitted levels they have to buy carbon permits from companies that have not used their full allocation.

The scheme has created a thriving market in permits, with the price topping Euro30 a tonne of carbon emission at one point last week before collapsing to less than half that figure after news of the performance of a number of countries, including France, the Netherlands and the Czech Republic, reached the market.

Market sources said the price had fallen because the figures were below expectations, leading some to conclude that there would be lower demand for permits. The carbon price fall contributed to a reduction in wholesale power prices and hit the share price of energy companies.

The commission spokeswoman said countries had four months from the year end to report 2005 emission levels to the commission, which would then make an announcement on the position across the 25-nation bloc this month. “The idea was that member states are supposed to report to us,” she said. Market sources suggested that Brussels may have asked the countries still to report to keep the data private until May 15.