EU cuts Finnish emission quota

Pekkarinen pleased, business community irritated

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The European Commission decided on Monday to cut the free carbon dioxide emission quotas that Finland can distribute to its companies by more than five per cent in the coming years.
      In spite of the reduction, Finland's Minister of Trade and Industry Mauri Pekkarinen (Centre) said that he was "very pleased" with the decision, because the Commission took into account Finland's special conditions. Otherwise the reductions could have been significantly higher.
     
Not everybody shared Pekkarinen's positive feelings, however. The Confederation of Finnish Industry (EK) called the decision "unfortunate". The cuts are expected to have their greatest effect on electricity production.
      "Companies involved in trading in emissions will be getting significantly less emission rights than they need, so they will bear the greatest burden for the reduction in emissions", says EK expert Jouni Tolonen.
      The Association of Energy Industries in Finland said that the decision was "very challenging for Finland, and especially for the energy industry". The Finnish Forest Industries Federation said that "the reduction of emissions rights will raise costs in the forest industry and weaken competitiveness". According to the Association of Energy Industries, the decision will cost EUR 50 million a year.
      Greenpeace, for its part, is disappointed with how low the cuts were, saying that it expected a reduction of "at least ten per cent".
     
The focus of criticism in the business community is that the Commission used the situation in 2005 as its benchmark - a year in which Finland's emissions were exceptionally low. Emissions from energy production were affected by the fact that there was a good deal of rain, and much hydroelectric power was imported from Sweden and Norway. Also reducing emissions was a labour dispute in the paper industry that lasted for nearly two months.
      Pekkarinen was happy that the Commission took into account the special conditions that prevailed in 2005, whereas representatives of Finnish business felt that this was not done to a sufficient degree. The Commission took into consideration the effects of the exceptional precipitation, but ignored the impact of the paper industry lockout.
      Pekkarinen would not comment on the issue of the paper dispute.
     
Compared with other EU member states, Finland can be said to have got off lightly. Emissions quotas have been cut by an average of nearly ten per cent. Of all of the 22 member states examined so far, only the quotas put forward by France, Slovenia, and the United Kingdom were not reduced.
      In Finland's own plan, the aim was for an annual emissions quota of 39.6 million tonnes of carbon dioxide by Finnish industry. The Commission reduced this to 37.6 million tonnes for 2008-2012.
      The quotas are linked with the Kyoto Climate Treaty, in which member states of the EU have committed themselves to reducing their emissions of carbon dioxide by eight per cent from the benchmark level in 1990 by 2012.
      In order to achieve the goal, the EU has initiated an emissions trading scheme. According to the rules of the scheme, a company can sell another company carbon dioxide emission rights, if its own quota is not exceeded. A company can also buy quotas from other companies if it exceeds its annual emission quotas.
      Critics of the emissions trading system say that it will weaken the competitiveness of European companies. There are plans to change the EU directive on emissions trading.


Previously in HS International Edition:
  Over 500 emission quotas allocated in Finland (15.2.2005)
  New mission for Jorma Ollila: fighting climate change (30.1.2007)
  WWF report: Finns´ ecological footprint third-heaviest in world (25.10.2006)

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