Proposal for a Directive on a Greenhouse Gas Emission Allowance Trading Scheme Com (2001) 581 Final

Dear Mrs Wallström,

I refer to the proposal for a Directive on a European CO ₂-emissions trading scheme. I am aware that discussions are taking place in the Council and in the Parliament on these issues, and would like to put forward some comments concerning the proposal.

Norway welcomes the approach to establish greenhouse gas emissions trading scheme, and is pleased to see that the EU-based system could be linked with emissions trading systems in third countries. Norway has over a number of years prepared a national trading system for greenhouse gas emissions. An important part of the rationale for choosing this instrument is our special energy, industry and emissions profile, which has made it politically impossible to apply carbon taxes on all emissions over the more than ten years such taxes have been used. About 30 per cent of our greenhouse gas emissions are related to the process industry where carbon taxes are not applied. We have practically no emissions from mainland production of electricity due to the availability of hydropower, which also forms the base for much of the industry. The main component in emissions growth over the last decades has been related to the development of the offshore petroleum industry, which is a major source of energy supply for Europe.

White Paper no 54 (2000-2001), which is presently under consideration by the Parliament (Stortinget), put forward a proposal for a broad national emissions trading system that will ensure that we will meet the Kyoto Protocol commitments related to emissions in the period 2008-2012. The new Norwegian Government has made it clear that they want to go further than this and will implement a number of policies and measures and establishes a national quota system from 2005. The outline of this system will be presented in a supplementary report (White Paper) to the Parliament in March this year, and will be considered by the Norwegian Parliament this spring. Both the quota system and other policies will have as effects that significant measures are being taken domestically.

The proposal for a Directive is a very important step towards making emissions trading a key policy instrument to combat climate change internationally. However, it is important that the Directive gives the participating States more flexibility than the present proposal, i.e. freedom to include other sectors and greenhouse gases in the trading scheme, to allow auctioning of quotas and a full use of the flexible mechanisms under the Kyoto Protocol. I refer to the enclosed PM, where a presentation of the Norwegian views concerning these issues is given.

I hope the Norwegian views will be taken into consideration in the further process of designing a trading system for greenhouse gases. A Directive on this issue will have great influence on Norway’s climate policy, and we will therefore emphasise our wish to continue a close contact with the European Union and its member states on this. Finally, I would like to express my appreciation for the efforts of the Commission on this subject.

This letter with attached Promemoria has also been forwarded to the EU-Presidency and to Mrs Caroline Jackson, Chairperson of the Environment Committee of the European Parliament, and to all the Environment Ministers of the EEA.

Yours sincerely,

Børge Brende

Minister of the Environment