The European Commission has set the maximum number CO2 emission allowances that will be traded in 2013 at a little less than 1.93 billion units, it said Friday.
The European Commission has set the maximum number CO2 emission allowances that will be traded in 2013 at a little less than 1.93 billion units, it said Friday.

This move puts a cap on the number of permits to emit carbon dioxide that will be part of the Emissions Trading System, or ETS, the EU market where these permits are traded. However, the number will be revised this year, as the aluminum sector and other polluting gases, such as nitrous oxide, will become part of the ETS, the commission said.

Emissions of CO2 within the ETS reached 1.87 billion metric tons--each allowance represents a ton of CO2--in 2009, marking a fall of 11.6% on the year, but mainly because the economic downturn slowed industrial activity in the 27 country bloc.

The ETS --which has been working since 2005-- will undergo an overhaul in 2013, with more industrial sectors joining the program, and fewer allowances given out for free to companies.

The ETS is designed to contribute to reducing EU greenhouse-gas emissions by 20% by 2020 from 1990 levels, setting caps on the number of permits, and creating a price for CO2.

The commission is keen to have a strong price for the CO2, so that companies are encouraged to invest in green technologies, which wouldn't be economically interesting nor profitable with a low CO2 price and the possibility of buying more allowances.

The 2013 cap is based on an average of the allowances allocated between 2008 and 2012, taking into account that a 1.74% annual reduction will have to start in 2013 to reach the 2020 target, the commission said.

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