LONDON - Britain's power industry on Monday called for swift clarification of the government's plans to curb utilities' greenhouse gas emissions under the Kyoto Protocol.
Tensions are running high among power generators as they wait to hear about the level of emissions caps to be imposed on utilities and other industrial firms in the period 2008-2012 - phase two of the European Union's emissions trading scheme.
"Generators are nervous," said David Porter, chief executive of the London-based Association of Electricity Producers.
"They don't like the heightened uncertainty surrounding phase two (of the trading scheme)," he told Reuters.
"The sooner we have a clear indication on this the better - this has a bearing on how companies invest," Porter added.
Broad figures on the size of the overall cap on industry are expected to be included in a revised climate strategy due to be issued by the government later this month, though it is unclear when detailed breakdowns will emerge.
A government source said publication of the climate policy was still at least a week away.
The government has until June to hand draft plans to the European Commission.
The emissions trading scheme was launched in January last year as the mainstay of Europe's bid to meet its targets under the Kyoto Protocol.
Under the scheme, about 12,000 factories and power plants are set limits on their emissions of carbon dioxide, the main greenhouse gas blamed for global warming.
At the start of the scheme, companies are given a certain number of credits which sets their CO2 limits. Companies can bust their limits by buying extra credits in trading that is expected to grow to be worth billions of euros a year.
TOUGH TARGETS
Power firms, the biggest industrial emitters of carbon dioxide (CO2) face the toughest emissions reduction under phase one of the scheme.
The UK'S power industry fears it will be hit by similarly tough targets in phase two, though Porter said the government had given no indication of its intentions. "We don't know what to expect," he said.
"The government needs to spread the burden rather than clobbering power stations," he said. Britain is on track to meet its Kyoto targets but it is also chasing far more ambitious domestic goals, which the government admits it cannot meet without an overhaul of climate change policy.
Porter rejected claims that the power industry has cashed in on the emissions scheme and bagged big windfall profits by passing through the cost of CO2 to soaring energy bills.
"I don't recognise the windfall," said Porter. "Generators can only emit up to a certain level. Above that level they have to switch to other generation plants that may be more expensive, scale back their production, or buy allowances in a volatile market."
Story by Stuart Penson
REUTERS NEWS SERVICE
