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EU expands its own ETS -

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EU expands its own ETS

The World Today - Friday, 4 July , 2008 12:32:00

Reporter: Rafael Epstein

ELEANOR HALL: The European Union has had an emissions trading scheme since 2005.

It didn't auction permits and has had a few teething problems but it is expanding and member states
have just signed an informal agreement to include airline emissions.

As Chief of Staff to the European Union's Environment Commissioner, Pierre Schellekens, is one of
the senior public servants in charge of the EU's emissions trading system and he's been speaking to
the ABC's Europe correspondent, Rafael Epstein.

PIERRE SCHELLEKENS: At this stage our emission trading scheme covers something like 10,000, 11,000
installations, but these are only companies.

In the field of energy and the industrial field, we have just decided to include aviation into the
emission trading scheme.

RAFAEL EPSTEIN: So that is a direct cost that's going to be passed onto the consumer, isn't it,
once you include plane travel?

PIERRE SCHELLEKENS: Depends on the competition between the airlines but certainly part of the cost
will be passed onto consumers. That's for sure, yes.

RAFAEL EPSTEIN: But how far away do you think European Governments are politically from including
petrol, people's personal petrol use in this scheme?

PIERRE SCHELLEKENS: At this stage, at this stage there is debate about it but no discussion. Some
favourites, some would favour simply including road transport into the emissions trading scheme
but, you know, that we have gone down, for the moment we have gone down a different line of
imposing an average fuel efficiency standard for all cars sold on the European market.

RAFAEL EPSTEIN: Do you think there is a risk for governments in going further down the emissions
trading path than other countries? I mean Europe went down this path before anybody else.

PIERRE SCHELLEKENS: That's right.

RAFAEL EPSTEIN: There is a feeling in Australia that if Australia sets up a comprehensive emissions
trading scheme before everyone else, that we might lose something. We might be punishing ourselves
economically.

PIERRE SCHELLEKENS: That is not how we see it in Europe. We see it the other way round. We see it
as an advantage.

RAFAEL EPSTEIN: Why?

PIERRE SCHELLEKENS: We see it as an advantage because we believe that there will be a deal on ... an
international climate deal, that that international climate agreement will have as one of its main
components, carbon trading and that countries like, counties or regions like Europe that have gone
down this road first, will have an advantage, will have a first move advantage of having set up a
system, pushing our economies towards more energy efficiency, towards more environmental
production, will be an environmental benefit, it will be a political benefit and there will be an
economic benefit for Europe.

RAFAEL EPSTEIN: Pushing ahead with an emissions trading scheme gives you a direct economic benefit?

PIERRE SCHELLEKENS: Yeah, we look forward to being able to discuss with Australia how we in the
future can link up the European system with a possible decision in Australia.

But I understand that the plans are pretty far reaching in Australia, with a possible emission
trading system in Australia.

RAFAEL EPSTEIN: When you set up the scheme in Europe, did you compensate power stations for the
loss in the value of their assets? There are reports in Australian newspapers that power companies
won't be compensated in that way. Did you see a need for that in Europe?

PIERRE SCHELLEKENS: Not really, no. We simply left it to the market to decide where the reductions
would be. We estimated quite a big share of (inaudible) would be met by the cap that we have put on
emission trading but we have not ... and it's then up to the market, it's up to the installations to
decide whether they want to reduce their emissions or whether they want to buy emissions. That's up
to them, and that's -

RAFAEL EPSTEIN: But they don't get any money from national governments just for the loss, the
perceived loss in the value of their assets?

PIERRE SCHELLEKENS: Not that I am aware of, no.

ELEANOR HALL: Pierre Schellekens is Chief of Staff to the European Union's Environment Commissioner
and he was speaking to the ABC's Europe correspondent, Rafael Epstein.