Norway to develop climate gas trading scheme

Expert panel set up to devise national quota system for energy-intensive industries

A Norwegian expert group has been created to devise a national quota system for trading greenhouse gases, the government has announced. In a statement released on Friday, the Norwegian environment ministry said that a future trading system would cover industry sectors not currently subject to national carbon dioxide taxes, in line with recommendations in a white paper on climate change and associated proposals for tax reforms.

"In these documents, the government states categorically that it is important to make an early start on a national climate initiative in order to fulfil the obligations of Kyoto", Norwegian environment minister Guro Fjellanger told a news conference. "Use of national quota regulations can be an important measure in this context."

The 11-member working group will be expected to link any national quota system to future international systems for tradable permits, joint implementation and the clean development mechanism. It will report its findings to the environment and finance ministries by the end of 1999. The ministry has set out a number of other conditions and objectives in its "mandate" to the panel:

* The aim is to reduce emissions of all climate gases covered by the Kyoto protocol by about 30% from 1990 levels. Emissions levels for new businesses or industrial activities will be determined by the purchase of quotas through the national system or the use of flexible mechanisms.

* Sectors to be covered by any new system include the metallurgic industries, gas power stations, cement and composite production, petrochemicals, and oil processing and refining. The panel may also consider including other sectors, provided that this does not reduce state revenues.

* Quotas, albeit long-term, will have time limits. Businesses will be allowed to save up quotas for later use, but the sale of quotas by a business that is shutting down will be restricted. The panel's mandate emphasises the need for openness and transparency in the allocation of national quotas and calls for "measures to ensure a smoothly functioning market with no opportunities for manipulation or exploitation of market power".

* Development of the quota system will proceed through "active dialogue" with the business and commercial interests concerned.

* Emissions regulated through quotas will not be taxed or regulated through existing pollution statutes.

* The panel will consider the economic consequences of alternative national quota systems, including effects on profit and loss, competition, employment, individual business enterprises and regional finances, on the assumption that total state revenues remain unchanged.

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