Overview

There is no shortage of targets when it comes to Europe’s climate change policy. In addition to commitments under the Kyoto Protocol, the European Union (EU) aims to achieve a 20% reduction (from 1990 levels) of greenhouse gas (GHG) emissions by 2020 (rising to 30% if other countries commit to similar levels in ongoing negotiations). By the same date, the EU wants to see 20% of all its energy come from renewable sources. In the UK, the Climate Change Act 2008 requires a 34% cut in GHG emissions by 2020, and a cut of 80% by 2050. The concern is whether the mechanisms used by European governments will work to deliver these targets.

One such mechanism has been the development of a price for carbon. This has largely been achieved, in Europe, through the EU Emissions Trading Scheme (EU ETS), a cap and trade scheme linked to the global carbon market created by the Kyoto Protocol’s flexible mechanisms. The level of the
cap and the market in allowances to emit carbon dioxide create a price for carbon emissions.

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