The Arhus School of Business M.Sc. in EU
Business & Law
Emission Trading Lobbying in the EU
Submitted by: Nerijus
Program: M.Sc. EU Business & Law
Term: Fall Semester 2004
Student ID:
E-mail: knerkus@yahoo.com
Supervisor: Gert Tingard Svendsen
Associate Professor, PhD (Econ.)
Department of Economics
Table of Contents
1. Introduction 2
1.1 Background 3
1.2 Statement of the problem 3
2. Theory (lobbyism) 4
3. Why would have interest to lobby? 5
4. Lobbying 8
4.1 The idea is debated 8
4.2 Proactive attitude helps 10
4.3 The drafting stage and implementation 10
Conclusions 13
Literature: 15
1. Introduction
Global warming is one of the most challenging threats that the mankind has been facing for the last two decades. The Earth’s surface temperature has reached its highest in the last millennium, the precipitation patterns are changing, the see level is increasing, the glaciers are melting, the extreme weather events have become more frequent and severe.
Even though, the causes and consequences of global warming are still disputed by some parties, in general scientists agree that it is caused by the emission of greenhouse gasses and principally by carbon dioxide (CO2) which stems from burning fossil fuels (coal, oil and gas). Of course, other factors of human activities such as deforestation, agricultural activities come in to play as well.
Unfortunately, the greenhouse gases impact is global and those countries that suffer most have well underdeveloped industries and contributed significantly less compared to the major rich ‘culprits’. Thus, climate policy is very much linked to equity and international climate process takes notice of that. So, it seems fair that major world economic powers with the EU leadership take initiative to combat global worming.
Despite this overreaching threat, solutions to tackle the problem are not that easy to implement. The environmental organizations and increasingly conscious populations of states are those agents that bring up the problem and exert the pressure on their governments to act on it by implementing environment friendly policies.
The political process reflects these pressures in those countries where environmental awareness is high, such as Germany and Scandinavian countries have been the forerunners in pushing for action to be taken (Pedler, 2002). Apparently, climate policies are not environmental policies any more – they are pure economics as there is strong involvement industrial part. The cost at stake is of significant importance to the industrials and societies in whole. As industrials claim, introducing drastic environmental solutions to reduce
CO2 emission implies incurring substantial cost, thereby jeopardizing economic growth and prosperity. So industrials take initiative – the political reaction to introduce EU wide energy tax was massively opposed by fossil fuel producers and many industrial groups. In this way the bureaucratic incentive to tax was counterweighted by industrial interests
(Svendsen, 2003). To find the solution the EU Commission had launched the
Green Paper (CEU, 2001a) initiating the discussion on greenhouse emission trading that eventually led to producing the Directive Proposal (CEU,
2001b) and the final Directive (CEU, 2001c).
1.1 Background
The first initiative to combat climate changes started in 1991 when the
EU Commission introduced first Community Strategy to limit CO2 emissions and improve energy efficiency. The initially suggested measure was to introduce taxation on the CO2 emissions. But it turned out rather difficult to implement due to the strong opposition by industrials and voting rules in the EU for the introduction of common CO2 tax (the unanimity rule for fiscal measures, Art. 175 of the Maastricht Treaty) has failed as CO2
taxation implies fiscal character (Svendsen 2003). Thus, in response to
European Climate Change Program launched by the Commission in June 2000, a decision to introduce a permit market, which is an integral part of the
Program, seems to be a feasible solution because it must be settled upon by qualified majority meaning that no single member state can object the implementation of the Directive Proposal.
According to the final Directive CO2 emission trading allows companies to trade emission permits that have been allocated on historical basis (grandfathered emission allowance based on the levels in 1990). The trade takes place if cutting in CO2 emission is too costly rather than buying permits on the market.
A permit is the right to emit one tone of CO2. Once the permit has been used, it will be withdrawn from the market in compliance to the reduction level. The idea is that the aggregate emission level is reduced to agreed levels, but this reduction takes place where it cost least to do so.
According to the Kyoto protocol the EU committed itself to meet 8%
greenhouse gas reduction during the period 2008-2012 in comparison with their levels in 1990 In practice, this implies an estimate reduction of 14%
compared to ‘business as usual” forecast (CEU, 2001b) . The Kyoto Protocol emission trading is planed to “kick off” in 2008. For this purpose the EU
Commission has introduced the Directive establishing a framework for CO2
trading within the EU (CEU, 2001c). Together with other policies and measures, emission trading will be an integral and major part of the
Community’s implementation strategy. The Directive is the final outcome of the process that was initiated by the Commission when it introduced The
Green Paper and had numerous dialogs with parties concerned. This framework should be operational in the year 2005 subsequently leading to the reduction of CO2 emission by the year 2012.
1.2 Statement of the problem
Among other forms of allocation of CO2 quotas the Green Paper states that auctioning-off permits is technically preferable, gives full transparency to the emission trading, fair competition among incumbents and new entrants.
But, as it can be seen from the final Directive the optimal solution of auctioning-off the permits was politically unattainable as it was the case in introducing uniform CO2 tax across EU.
The upshot off all this deliberation process is that from 2005 to 2008 all Member States will allocate 95% and 90% for the period of 2008-2013 allowances to participating installations for free of charge. (CEU, 2001c). That is, the core principle is chosen to be grandfathering and for auctioning allocation is left only a marginal part. That implies that this is a clear victory of industrials as rent gains are obvious for participants of the CO2 market.
This paper concerns the interaction between policy makers and interest groups in the process of introducing the emission trading within EU. The
Lafarge case can be useful example of how interest group pursues its objectives in affecting the EU legislation in the emission trade area. The main question I will attempt to answer is how the concerned interest group influences the EU decision making progress and to what extent the final
Directive reflects the influence of this lobbying group.
2. Theory (lobbyism)
As institutional theory suggests, the way the interest groups act to achieve their goals is determent by institutional set up of any political entity, in this case EU. It can be assumed that both political and economic agents interact towards well specified utility function, while at the same time being constrained by the institutional setup to regulate this interaction. In other words, the valuation of the process determining political decision trend can be based on utility-maximizing behavioral assumption of economics. (Svendsen, 2003, p.6) The institutional setup in
EU is highly dynamic, complex, multi-level and consensus building orientated, and thus this complexity provides a variety of formal and informal channels trough which the interest groups can influence the decision making.
Lobbying in the EU institutions is not possible without thorough understanding of how they work, what their competences are and were sources of power and action are located. Two out of the three pillars on which EU
is based on are quite resistible to the influence from the interest groups.
That is: common foreign and security policy and police and judicial co-
operation in criminal matters. This intergovernmental playground featured by the European Council or the Council of Ministers is relatively closed to lobbying. The only way to influence these policies is by getting around and exerting pressure on national government domestically or internationally.
Obviously, the EC pillar provides the greatest potential to lobby the
EU institutions because it comprises the big share of the Union’s regulative policies including environmental. The main institutions that attract lobbyist’s attention are: The Commission, The Council, The European
Court of Justice, The European Parliament and the Economic and Social
Committee. The magnitude of influence applied on these institutions depends on their political powers receptiveness to initiate, draft and finally approve and implement regulations EU wide (Cini, 2003).
My point is to make the inductive analysis how lobbying pursued by certain interest groups fits in the theoretical framework of lobbyism conducted at the EU level.
3. Why would have interest to lobby?
As it has been noted, the Directive (CEU, 2003a), proposes CO2 emission trading based on grandfathering system which was preferred by industrials to auctioning allocation. In theory, allowing companies to trade emission permits cuts the cost of compliance overall.
If it has an emission cap, the benefits of trading from a company’s point of view are clear, since it can purchase a permit representing a tone of CO2 if it costs less than the company’s own cost of reducing a tone of CO2. So the emission cut takes place were it cost least to so while the overall reduction of emission is the same.
According to Svendsen, in this system the winners are all existing firms because the permit limits are granted for free on historical levels, whereas the looses are future firms who have to by all their permits from existing firms.
The loser is also the society assuming that proceeds raised from auctioning by governments could be redistributed in a number of ways to enhance social welfare.
It could be argued that the grandfathering systems is detrimental to new entrants by questioning equal distribution in Member States, by enhanced accessibility to capital as incumbents are granted a realizable asset, by threat of exercising market power by incumbents (CEU, 2001b),
Even more, Svendsen argues that grandfathered regulation is economically advantageous for incumbents even compared to the situation without any CO2 regulation, let alone compared to CO2 taxes (Svendson,
2003, p.105-106) where it claims that total reduction cost and lobbying cost possibly be lower than the rent from grandfathering and thus, net gain from trade.
The paper by Svendsen (Svendsen 2) also clearly indicates the potential
‘losers’ and ‘winners’ (respectively households and industrials) when choosing between grandfathering and auctioning permits in the EU. The result of the analysis presented in this paper lead to a hypothesis on rational interest group behavior in the EU and an asymmetrical political pressure in favor of grandfathering. It is so because large group of households have difficulties in becoming organized as net benefits for individual household action are negative so it does not pay to get organized and reap the total net benefits (Svendsen, 2003, p. 126).
Not all industrial sectors are supposed to participate in the CO2
market. The Commission takes view to environmental effectiveness, economic efficiency, the potential effects on competition, administrative feasibility and possible existence of alternatives policies and measures
(CEU 2001b). The initial participating sectors should cover approximately
45% of EU carbon dioxide emissions. Table 1 illustrates the participant sectors that include all plants with thermal capacity of greater the 50
MWth :
Table 1: Possible industries to include in the emission trading system
|Sector |Percentage of EU 15 CO2 |
| |Emissions |
| |(EUROSTAT 1997 figures) |
|Electricity and heat production |29.9 % |
|Iron and Steel |5.4 % |
|Refining |3.6 % |
|Chemicals |2.5 % |
|Glass, pottery and building materials |2.7 % |
|(including cement) | |
|Paper and printing (including paper |1.0 % |
|pulping) | |
|Total |45.1 % |
Source: CEU (2001b)
It has to be mentioned that leaving out some sectors or smaller emission sources within the covered sector should be covered by equivalent policies and measures in order to avoid competitive distortions.
From the table above is clear that EU electricity producers are the main emitters of CO2 with almost a third of total CO2 emission in the EU, and therefore their participation is crucial to the liquidity of the market and environmental success. The interests of the electricity producers are mainly represented by Eurelectric.
Eurelectric is clearly in favor of grandfathered emission trading (Svendsen, 2003, p. 114-117). As it was stated by Elsam, Danish energy producer and member of Eurelectric, the climate change and Kyoto protocol is a fact and in the presence of already existing national regulations (Danish CO2 cap and trade regulation) having
EU regulation is less detrimental to competition (Peter Markussen)
Iron and Steel industry is represented by the European Confederation of
Iron and Steel industries (EUROFER). As it is energy intensive sector, enhancing energy efficiency implies increased productivity and thus, reduced production costs. For this reason it also favors for emission trading based on historical levels (Svendsen, 2003, p. 114-117).
International Association of Gas and Oil Producers (OGP) represents the oil and gas industry. It is highly motivated to implement the Kyoto
Protocol as it implies gas market booming when one of the options for industries to reduce CO2 is to switch from coal inputs to less CO2 omitting gas inputs. The position of gas and oil industry is identical to those mentioned above, namely they prefer permit trade and grandfathering as the allocation rule (Svendsen, 2003, p. 114-117).
The only industry from the table above is the chemicals that will not participate in the emission trading system. Their motivation is that it constrains their competitiveness and ability to grow. Besides, any reduction for them is not economically feasible as they have already improved efficiency through a Voluntary Energy Efficiency programme.
Besides, the insignificant emission of CO2 and vast amount of plants in the industry (administrative burden) made the Commission to succumb and exclude chemicals from the emission market (Svendsen, 2003, p. 114-117).
Indeed, the exclusion of chemicals in the emission reduction process can be seen as a victory for the industries concerned (aluminum), compared to other industries like cement which has conceptually very similar process emission (Pedler, 2002).
The paper and pulp industry is represented by the Confederation of
European Paper Industry also favors allocation rule which is based on common guidelines at the EU-level through grandfathering based on common baseline. In a sense, the industry has partly lost as they initially wanted the targets to be set by negotiation and compliance on a community level –
still, they are winners as the system includes grandfathering as the allocation rule (Svendsen, 2003, p. 114-117).
Building materials comprise two industries that are cement industry and ceramic industry represented respectively by CAMBUREU and CERAMIE-UNIE
(Svendsen, 2003, p. 114-117). The ceramic industry is the only that favors auctioning allocation not like cement industry. Cement industry is of particular interest for me as I want to look with greater detail how lobbying pursued by particular company can bring substantial benefits for it. My targeted interest group is a French Lafarge cement company which is to be affected by policies to mitigate climate change. Cement manufacturing is among major contributors to CO2 emissions, hence in the interests of
Lafarge which is world leader in producing constructional materials, including cement. The company is aware that some policies would be very harmful to their business, others less so. Lafarge’s public affairs objective is to get the least harmful policies (Pedler, 2002).
It is helpful to look how the company adapts to these new conditions early, how it even might squeeze some gain out of it by lobbying for reasonable policies and preparing the company to cut greenhouse gas emissions. I will make an attempt to look were the company lobbying at EU level is succeeding and what insight can be inferred.
4. Lobbying
Lobbying on emission trading has concentrated in Brussels and Paris as far Lafarge is concerned. For that reason it useful to distinguish a number of different stages in the process of passing any EU legislation and which require different tactics to lobby. These tactics apply as much to the EU
emission trading as other issues.
4.1 The idea is debated
Interest groups do need to participate in the discussion by presenting own arguments on issues that will have direct effect. An effective lobbyist will start to influence the Commission before they begin drafting any particular proposal.
Among the EU institutions the Commission is the most important to lobby for interest groups as it has wide mandate in policy initiation within the EC pillar. Furthermore, the EU Commission highly exposed to affection by interest groups in the process of policy formulation.
This is due the fact that EU Commission is understaffed and clearly lacks expertise knowledge on certain aspects. Officials are therefore happy to dialogue and receive information on issue policies, especially if it is constructive (Pedler, R.H., 2002, p. 80). As it has been noted, the contacts between interest take several ways. Mainly these include :
– face-to-face meetings between Commission officials and interest groups representatives
– conference and workshops
– permanent and ad hock advisory committees
– telephone conversation and correspondence
When interest groups are not able to present their arguments face-to-
face is also efficient to influence opinion by providing arguments in the form of research reports, policy documents, and briefings on matters of interests (George, S. and I. Bache, 2001, p.296).
It is also important not to neglect relations with public, politicians, non governmental organizations (NGO) in shaping public opinion on certain policy matters.
The Lafarge lobbying policy is no exception here – its view is that the way to persuade someone of its ideas is through rational argument. In turn, getting the right results requires not only good arguments, but they must be well presented to the right people at the right time. The company’s executives, either at the level of Bertrand Collomb, the Chairman and CEO
of Lafarge, or others use these windows to get their messages heard.
Letters to the press, public interviews, participation in conferences and working groups, formal position papers and other means are also part of
Lafarge lobbying activities. That helps publicity, especially some environmental NGO, to see the merits of moving forward in to action to reduce emission, rather continuing for their ideal solution. Lafarge’s partnership with Worldwide Fund of Nature (WWF) which is involved in nature conservation and has a strong influential presence in Brussels has helped persuade them of the advantages of emission trading, while at the same time showing serious intents in ensuring environmental integrity in the system.
Lafarge also have contacts with Environmental Defense, a Washington-based
NGO that has set up an initiative to encourage companies to take voluntary measures to reduce greenhouse gas emissions linked to trading CO2. Through the membership of the World Business Council for Sustanable development
(WBCD) and other business organizations, Lafarge also has contacts with numerous other environmental NGOs active in the climate change debate worlwide.
Even though a big company as Lafarge, currently employing 66 000
people, is far from being influential to debate on its own. Thus, being a member of industry federations and other groupings play especially prominent role in having the weight to influence meters. As has been mentioned, the cement industry is represented by CEMBUREU, the European cement industry federation. At the European level, another important grouping is the European Roundtable of Industrialists (ERT). The WBCSD and
ERT are especially important since both these organizations have built credibility from the past actions that help add weight to the messages they give. Finally, at the national level, Lafarge is active in national cement industries wherever they are present. Plant directors are encouraged to develop contacts and carry the same climate change message with local communities and politicians. In this way, the time spend ensures that citizens understand Lafarge’s position on environmental policies and why it has been adopted.
4.2 Proactive attitude helps
The arguments provided by industries are quite compelling and even accepted by some but only resisting to every measure proposal to mitigate the climate change is a stalemate with loses eventually on both sides. The energy tax was the main issue that hovered on EU political agenda and was a subject of great resistance by industrials. Matter a fact, the allocation rule based on auctioning by many industries is perceived to be tantamount to additional taxation and is countervailed by industrials as well.
In general, the European industry has taken a more proactive line.
On the other hand, the US companies still opt for planting trees and buying
Hot Air in Russia or receiving emission credits for simple forest conservation in the Amazon basin (Pedler, R.H., 2002, p. 93). But sooner or latter, emission of greenhouse gases will be constrained, so it might be less costly to move early and be prepared, than to resist and be forced to move later. Thus, Lafarge is realizing that by moving beyond the basic anti tax resistance is for their own interest. They go quite explicit on indicating which strategies should be put in place instead of energy taxes.
They advocate a system which is based voluntary or negotiated commitments as the right way forward. That is somewhat of policy measures as indicated in the final directive (CEU, 2003c). Of course, accepting commitments, especially accompanied by sanctions is a bitter ‘peace of cake’ to take upon companies. They are worried about the cost of meeting the commitments and hope to avoid it.
Thus, a prompt respond to the evolution of the debate is important. The debate evolves in time and different levels, so the approach must be well-matched to the circumstances.
The institutions and organizations targeted are the same as those mentioned in the first stage only the delicate issue is how to present well matched arguments.
“Moving to early to a proactive stance can fog the message of opposition, moving late can compromise a proactive strategy” (Pedler, 2002) Above all, hard work in preparation future positions is essential. If this hard work is not put in, then it will not be surprising that poor decisions are made.
4.3 The drafting stage and implementation
Here the European Commission takes the outstanding position as the exclusive initial drafter of legislation, which is the principal source of its influence on the Brussels scene. It also has important powers to re-
examine a document draft in the light of the EU Parliament’s amendments under both the co-operation and co-decision procedure. As has been mentioned above, the European Commission is relatively transparent as it promotes the inclusion of affected interests groups in policy formulation.
The proactive attitude in lobbying for one’s interests comes in play again.
The key issue is to come up with well prepared arguments and gear those arguments in to the objectives of the drafter. These arguments have to follow all the levels starting from individual officials involved in drafting the text then following to cabinets and finally Commissioners.
After a draft proposal leaves the Commission, lobbying efforts need to move to the national capitals and the European Parliament where argumentation often needs to start from the beginning ones more.
Influencing national governments is important as it might be the only way to influence the Council. The political developments at the national level should not be neglected if interests are to be well presented and defended.
Besides, interests groups in one member state might seek to influence governments in other member states.
The proposal put forward by the Commission is a subject of approval by the Council of Ministers where members are nationally elected. Thus, the environmental ministers have worked on the new directive for greenhouse gas trade in the EU.
While the environmental policy falls under qualified majority rule it is important to have national support because the weight of the votes ensures that only measures that are supported by governments representing a substantial majority of the Community’s population can be passed or blocked.
Therefore, owing to its importance, the EU Council is a highly relevant contact for interests groups. However, it doesn’t happen often that the Council and its administrative machinery, the Committee and
Permanent Representatives (COREPER) and the Council Working Groups, would be lobbied directly (Cini, 2003). Although, influencing the Council through the COREPER might be realized from the national interests basis.
COREPER is in charge of the preparatory work for Council meetings, and provide a link between the European Council and national governments. The COREPER staff will likely have good expertise in a wide range of the subjects being legislated in Brussels.
Members of Working Groups also are clearly very important allies to have since these groups consist of national civil servants whose role is to represent the national interests at EU level and will naturally be inclined to represent interest essential in their own country in proper direction as well as providing valuable intelligence about the course of negotiations that are taking within the working groups.
To sum up, the Council keeps a close eye on the developments in the EU, therefore a full scale lobbying campaign should involve lobbying the bureaucrats at all Member States (Stern 19941, p.100-101)
As European Parliament does not wield much power it is less important for industrial groups like Lafarge, although, it is getting momentum to accumulate its influence in EU policy shaping. Until the introduction of the Single European Act the Parliament was seen a consultative body whose influence on the outcome of legislative proposal was minimal. The SEA has completely changed this, and as a consequence the attitude of lobbyists to the Parliament (Stern 1994, p.101). Based on this, I would presume that the influence exerted by Lafarge on the parliament is not adequate.
Interestingly, as the Parliament is elected by citizens, most likely it will be prone to support consumer and environmental organizations to gain popularity among electorate. For this reason, some analysts perceive the links between interests groups and Members of the European Parliament
(MEPs) as ‘coalitions of the weak’ (Cini, 2003, p.195)
Within the Parliament, the heads of the Standing Committees and the repporteurs responsible for particular dossiers are the most important addressees for interest groups. Lobbying the European Parliament starts when Commission proposals are debated first by a Parliamentary Committee, selected by the president of the Parliament. In this stage a repporteur is chosen by the committee coordinators to study the proposal in detail who will prepare a draft report on the proposal in question. There are also
Shadow reporters appointed by each political group in the Parliament to monitor the activities of the Parliamentary Committee and to develop their own positions on the proposal. Clearly, the most important person for the lobbyist to influence in the parliament will be the rapporteur. It is important, therefore for the lobbyist to get in contact with the repporteur and shadow repporteur and to identify who will be potential supporters of the interest he or she is representing (Stern, 1994, p.102)
Most likely the rapporteur and his assisting team will be under-resourced and would welcome any assistance i.e. gathering information and event drafting reports. Not like the Commission official why may have expert technical knowledge of his or her area of specialty, the MEP is a career politician and will not have the same grasp of technical detail (Stern,
1994, p.103). It is also essential to have understanding of the political grouping and the positions most likely assumed by these groupings on different issues. With this knowledge potential allies in the committees can be located to exert influence. National political parties in Member
States of MEP can be also targeted for considerable influence to support certain views.
To sum up, if the European Parliament is viewed as a lobbying organization itself, rather then an EC institution, and its key parliamentarians can be persuaded to support a lobbyist cause then its power emerges large indeed. Nevertheless, the European Parliament is not a major player in the emission trading debate; although the Parliament will issue resolutions on climate issues but these are followed up and are not formally influential in shaping EU policies (Pedler, R.H., 2002, p. 97).
As the EU’s judiciary, the European Court of justice (ECJ) monitors the observance and interprets the EU law. The only way for interests groups to exert their influence is by challenging the compatibility of domestic and
EU law. And even when this is the case, the outcome of such litigation is uncertain, the process is lengthy and expensive, which means that this channel is not clearly available to all citizens and interest groups, and will only be worthwhile when the stakes are high (Cini, 2003, p.195).
Definitely, the stakes in emission trading which starts in 2005 will be high and close eye will be kept on how the Final Directive is transposed in to national law of Member States. The national allocation discretion retained by Member States might also be subject to be challenge before ECJ
as Member States could be tempted in one other form to favor national industries in the regulation of emission market. It will be interesting to monitor how the implementation of the single emission market will be enforced by ECJ if challenged by industrials or any other interested party.
Finally, there is one more institution worth mentioning as being potential for lobbyism. It is the Economic and Social Committee (ESC). As it consists of representative of producers, farmers, workers, professionals, and of general public to channel the opinions of organized interests within the European policy process, it should be seen as a place attracting a lot of lobbying interests. Nevertheless, direct contacts between the EU institutions and interest organizations make this potential lobbyism redundant or at least, of marginal importance. Much the same can be said about Committee of Regions (CoR) (Cini, 2003, p.195).
Conclusions
One may ask, what did the stakeholders get for all lobbying? In getting understanding of a complex emission lobbying process I can assume that any regulation (taxes, grandfathered quotas, or auctioned permits) will bring down to any level of pollution in a cost efficient way. But due to intense lobbyism efforts by industrials the grandfathering system was chosen as a starting point. Although, some environmentalists claim that policies and measures agreed until now are far from being capable to stabilize climate changes, for the time being it is most advanced politically feasible compromise between economic optimality and political feasibility. The
Lafarge case shows that practical approach to combat global warming should be applied as it helps to reach best trade-off among parties and bring benefits. The benefits achieved by industrials can be summed up in the following way:
– Avoided higher application of energy tax on energy-intensive industries, although, the draft proposal remains on the Commission’s desk and one may question how long will it take for finance ministries looking for resources to come up with energy taxes again.
– Grandfathered permit system is chosen as a base for allocation CO2
permits. This is favored by industry as it minimizes private emission reduction costs, creates a rent for existing firms and to certain extent gives the edge over new entrants in the market. Although, some allocation percentage based on auctioning will be implemented in the system but it is much lower in the final Directive than it was proposed in the Directive Proposal (respectively 5 and 10 percents).
– Number of sectors participating in the emission market is reduced to fife by excluding chemical industry. That could be attributed to the wining by chemical industry as they clearly were against such emission trading. However, the main reason for excluding chemical sector is rather administrative then political but the future, as emission market evolves, most likely will bring up this question again.
– Not only did industrial groups promoted for establishing grandfathering system, they also achieved implementation and settlement of permit allocation among sectors at the national level.
This leaves open possibility to influence national governments and achieve favorable allocation.
– Clear progress in convincing skeptics and environmental organizations that emission trading system can work to the benefit of the environment, in particular when the European Commission now takes a clear line in favor of emission trading
From Lafarge case it is clear that proactive approach in lobbying can be very fruitful; it implies the recognition that changes are necessary and is about influencing the choice of policy measures, for example by proposing voluntary commitments to reduce emission instead of taxes.
The EU emission trading and afterwards the Kyoto protocol is expected to be only the first step in a much longer process that will need to last for years to come if global warming is to be kept under control. In particular the developing world will need to take on reduction commitments as their emissions are set to overtake those of the richer countries by
2010. Thus many of the elements of EU emission market and Kyoto protocol will stay on the political agenda much beyond 2010, which only adds to the significance of lobbying efforts in this field.
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