Source: OsterDowJones Select
Date of Publication: December 21, 2004

(Dow Jones)--The European Union Tuesday said it is making headway in the fight against global warming and will meet its emission reduction targets under the Kyoto Protocol on climate change.

A report published Tuesday by the European Environmental Agency said a number of caveats would apply if the E.U. was to achieve its target of cutting so-called greenhouse gas emissions by 8% from 1990 levels by 2010.

E.U. governments must fully implement existing and planned domestic policies as well as complete energy-efficiency projects oversees.

In addition, several E.U. nations would have to cut emissions by more than they are required to under Kyoto in order to compensate for laggard nations such as Germany, Europe's largest economy, which will likely miss its targets, the E.E.A.'s report said.

Without these measures the E.U. will succeed only in cutting emissions by 0.6% by 2010 compared with 1990 levels.

The E.U. has been the most vocal supporter of the treaty, negotiated in 1997 in the Japanese city of Kyoto, and it criticized U.S. President George W. Bush for pulling out of the agreement in 2002.

The E.U. has promised to cut so-called greenhouse gases such as carbon dioxide by a combined 8% from 1990 levels by the end of the decade. Based on current trends, the E.E.A. predicts emissions will fall 7.7% compared with 1990s levels by the time the targets become binding between 2008 and 2012.

A further 1.1% reduction is expected to come from the credits six E.U. countries - Austria, Belgium, Denmark, Ireland, Luxembourg and the Netherlands - expect to earn from building EUR1.3 billion worth of emission saving projects in eastern Europe and Africa - resulting in an overall reduction of 8.8%.

"This progress report gives grounds for optimism," said E.U. Environment Commissioner Stavros Dimas.

But the data shows that at present Germany, Denmark, Italy, Portugal and Spain are falling short of their individual targets. At the moment, other countries are making deeper cuts than required to compensate. The E.E.A. warns that this "over-delivery" shouldn't be taken for granted.

However, the projections fail to take account of some important measures that may start to deliver emissions cuts over the next few years, including trading schemes.

The E.U. is due in January to launch the world's first system allowing companies to trade so-called emissions credits as a cheaper way to meet antipollution standards. To improve the transparency and efficiency of this plan, the E.U. also Tuesday passed legislation setting up an electronic registries system that will keep track of the ownership of emission credits as they are change hands on the market.

The projections are based on a figure for 2002, a year when the E.U. reduced emissions by 2.9% compared with 1990's levels. Emissions decreased from most sectors, including energy supply, industry, agriculture and waste management. However, emissions from transport - especially cars and trucks - increased by nearly 22% in the same period.

The data excludes the 10 countries that joined the E.U. in May. Although some of these countries don't have binding targets, they still reduced their combined emissions by 33% with the introduction of market economies and the consequent restructuring or closure of heavily polluting and energy-intensive industries.

-By Victoria Knight, Dow Jones Newswires; +32 2 741 14 88; victoria.knight@dowjones.com

(C) Copyright 2004 ODJ