Mr President, ladies and gentlemen, today we are voting on the directive on emissions trading in Europe. The European Union committed itself to reducing its greenhouse gas emissions under the Kyoto Protocol. The Commission has now been working on a preliminary proposal on how to regulate emissions trading between European companies. It will set cap-and-trade values for our energy-dominated industry that are to be reduced annually in accordance with the Kyoto targets. It goes without saying that we in the European Union want to make our contribution to an improved environment and a reduction in emissions worldwide. I am in favour of the notion of global emissions trading as one way of cutting greenhouse gas emissions. The emissions market would, with all the natural efficiency of the free market, channel the reductions into those areas where the emissions are cheapest to cut. The overall cost of climate policy to the EU would also remain low as a consequence. The Commission proposal, however, contains several problem areas that need changing. Owing to the costs of making reductions in emissions, industrial competitiveness in EU countries will suffer in comparison with those countries that are outside the Kyoto agreement. There is a very clear danger that instead of actual cuts in emissions we will end up with emission leakage on a global scale, when European installations move their operations to countries that have not submitted to the burden sharing agreement that is Kyoto. The number of single companies that would have to buy allowances depends on how the initial allocation is made. The initial allocation must definitely be free of charge. An allocation that is auctioned and therefore paid for would mean EU companies would have the burden of an additional cost which their competitors outside the EU and operating in the international markets would not have. The initial allocation must not punish companies that deal with their own emissions effectively, and the measures that a company has already taken must be taken into account. For example, in my country, Finland, there have already been voluntary cuts in carbon dioxide emissions for more than a decade. 85% of industry and power plants have already concluded a voluntary energy saving agreement with the government. The initial allocation process must also take account of a company’s real potential technically and financially for limiting their emissions. For example, the steel industry in the area I come from cannot be allowed to get into a disadvantageous position merely because it is impossible to manufacture steel without producing a certain volume of carbon dioxide emissions. Coal is not used in the steel industry to produce energy but as part of the production process. Emissions have been effectively reduced by investing in modern technology. For this reason I, together with my colleagues in our group, have tabled an amendment that would make it possible to exclude carbonaceous products from the cap-and-trade system up to a limit that can be achieved with the best available technology. The Commission’s proposal for a directive is more problematic for Finland than for many other countries. The sectors of industry it covers account for a large proportion of emissions in Finland, larger than in other countries. On the other hand, Finland would get just a small share of the allowances in the allocation, as national targets are stringent. In other words the total allowance will be small. This is not the case with other countries where there are no commitments whatsoever and where climate objectives even permit an increase in emissions. Although emissions trading is a cost-effective way to reduce emissions in theory, the proposal for a directive must not be allowed to impose any restrictions on commerce so that its benefits are not realised. In theory emissions trading is most advantageous for those whose own measures to reduce emissions are more expensive than buying emissions allowances from others. In practice the outcome, however, depends on how the allowances are allocated to the individual installations themselves, that is to say, how many installations will have to pay for emission allowances and what their market price will be. Distorting the competition structure within the same industrial sector both in Europe and in a global context is a danger, which must be closely looked at in any future debate on the proposal. IN THE CHAIR: MR PROVANVice-President

Political group: PPE-DE