Brussels, 06 April 2006
The European Commission has decided to take infringement procedures against a number of Member States over violations of four separate pieces of EU climate change legislation. The aim is to ensure that the EU and its Member States meet all their various reporting obligations under the UN Climate Change Convention and the Kyoto Protocol. Part of the Commission’s legal action also aims to ensure that the EU Emissions Trading Scheme becomes fully operational. Five Member States have still not linked up to the EU-wide electronic registries system for emissions trading despite a December 2004 deadline to do so.
"The EU is committed to international efforts to combat climate change, which requires that we meet all our reporting obligations," said Environment Commissioner Stavros Dimas. "This is particularly important now that global talks on future actions are starting.. Our emissions trading system should function successfully in order to achieve cost-effective emissions’ reductions in the EU. A number of Member States are still not linked up to the EU-wide system of registries, which means that their companies cannot participate fully in emission trading. I invite member states to put the situation right rapidly."
Failure to link national registries with the EU-wide registry system
The 11,500 installations that are participating in the EU emissions trading scheme are not given emission allowances in printed form, but these are held in accounts in electronic registries set up by Member States. These registries are linked up so that companies can directly trade with each other. The registries system keeps track of the ownership of allowances in the same way as a banking system keeps track of the ownership of money. All transactions also go through the 'Community independent transaction log' to allow a central administrator at EU level to check each transaction for irregularities.
In order to link up to the registries system, each Member State must establish a national registry in the form of a standardised electronic database as well as a communication link. This should have happened by 31 December 2004 under the Regulation establishing the registries system. Due to delays in obtaining and assessing national allocation plans, the Commission has only now decided to initiate infringement procedures for failure to do so. It has sent first warning letters to Cyprus, Greece, Luxembourg, Malta and Poland. While the companies in these countries can trade allowances on a forward basis, they are deprived of spot trading until the link up is made.
Failure to submit information on policies & measures and on emission projections
Under the UN Climate Change Convention and the Kyoto Protocol, the EU and Member States must regularly report their greenhouse gas emissions and the policies and measures taken to reduce them so that progress can be monitored. Decision 280/2004/EC specifies the reporting obligations. The Commission has now sent Austria, Cyprus, Luxembourg, Malta and Poland a second and final written warning because they did not communicate, by 15 March 2005, which policies and measures they have taken and their impacts, nor did they assess their greenhouse gas emissions in the future. The first warning was sent in October 2005.
Failure to submit information on greenhouse gas emissions
The same Decision also requires Member States to report, by 15 January each year, their greenhouse gas emissions during the year before the previous year. Cyprus, Italy, Malta and Spain have not submitted any of the required information for the year 2004. The Commission has therefore sent them first written warnings.
Failure to prepare for international emissions trading under the Kyoto Protocol
During the Kyoto Protocol's first commitment period 2008-2012, an international emissions trading regime will be established allowing countries with Kyoto targets to buy and sell emission credits amongst themselves. The aim is to reduce the costs of cutting emissions.
Under Decision 2005/166/EC, EU-15 Member States were required, by 15 January 2006, to submit to the Commission the information necessary to determine the total amount they will be permitted to emit in line with their Kyoto target during 2008-2012 - the so-called "assigned amount". (The deadline for the ten Member States that joined in 2004 is 15 June 2006.) The "assigned amount" is set by the UN on the basis of information submitted by Member States.
Once the assigned amount is fixed, an equivalent number of "Assigned Amount Units" (AAUs) will be issued into the registry of that Member State so that they can participate in international emissions trading from 2008. Each AAU is equivalent to 1 tonne of CO2 eq. The fixing of the assigned amount is also a condition for a Member State's eligibility to participate in the other flexible mechanisms of the Kyoto Protocol: the Clean Development Mechanism and Joint Implementation, which allow countries to invest in emission-saving projects in third countries that generate emission credits.
Germany, Italy, Luxembourg and Spain have failed to submit the information necessary to determine their assigned amounts, which is why the Commission has now sent them first warning letters.
Article 226 of the Treaty gives the Commission powers to take legal action against a Member State that is not respecting its obligations.
If the Commission considers that there may be an infringement of EU law that warrants the opening of an infringement procedure, it addresses a "Letter of Formal Notice" (first written warning) to the Member State concerned, requesting it to submit its observations by a specified date, usually two months.
In the light of the reply or absence of a reply from the Member State concerned, the Commission may decide to address a "Reasoned Opinion" (second and final written warning) to the Member State. This clearly and definitively sets out the reasons why it considers there to have been an infringement of EU law, and calls upon the Member State to comply within a specified period, usually two months.
If the Member State fails to comply with the Reasoned Opinion, the Commission may decide to bring the case before the Court of Justice. Where the Court of Justice finds that the Treaty has been infringed, the offending Member State is required to take the measures necessary to conform.
Article 228 of the Treaty gives the Commission power to act against a Member
State that does not comply with a previous judgement of the European Court of
Justice. The article also allows the Commission to ask the Court to impose a
financial penalty on the Member State concerned.
 Regulation No. 2216/2004