EU says emissions down, but pollution scheme falters

(BRUSSELS) - EU greenhouse gas emissions, blamed for global warming, dropped slightly last year but the much-vaunted system for cutting such pollution ran into even more trouble, the European Commission said on Thursday.

It said that total carbon dioxide output from industrial installations covered by the EU's Emissions Trading System (ETS) was down 2.0 percent in 2012, reflecting the economic slowdown.

At the same time, a massive surplus of ETS pollution credits was building up, depressing prices.

With companies able to buy the credits so cheaply to cover their emissions, they have even less incentive to make the investment in upgraded technology to reduce their pollution, as intended by the ETS.

"The good news is that emissions declined again in 2012," EU Climate Action Commissioner Connie Hedegaard said in a statement.

"The bad news is that the supply-demand imbalance has further worsened," Hedegaard said, urging EU leaders and lawmakers to back a Commission plan to freeze credits for 900 million tonnes of CO2 in an effort to boost the price.

Last month, the European Parliament narrowly voted down the planned freeze, sending pollution credit prices tumbling even more to the point where some analysts said the ETS risked collapsing.

Hedegaard said the ETS began its third phase, 2013-20, with a pollution credit surplus of nearly 2.0 billion tonnes of CO2.

"These facts underline the need for the European Parliament and (EU leaders) to act swiftly" on the freeze proposal, she added.

The ETS covers more than 12,000 power plants and manufacturing installations in the 27 EU member states, Norway and Liechtenstein, according to the Commission.

It also includes, in a controversial move disputed by non-EU airlines flying into the bloc, aircraft emissions since 2012.

The ETS is a key part of EU efforts to reduce its CO2 emissions by some 20 percent by 2020, compared with 2005 levels.