Press release 11 October 2007
Ministry of the Environment

The Government has decided on allocations for emissions trading

The Government today decided to amend the Emissions Trading Ordinance. The amendment applies to allocation of emission allowances to Swedish companies in the trading period 2008-2012.

"We are now reducing the allocation of emission allowances. This complies with the Commission´s decision on the allocation plan, and is completely in line with the Government´s ambition to reduce emissions," says Minister for the Environment Andreas Carlgren.

The number of emission allowances allocated to companies has been reduced from 24.9 million tonnes to 22.5 million tonnes per year compared with the allocation plan presented to the European Commission by the previous government. The reduction is approximately one-tenth.

"I welcome the fact that the Commission is reducing the European emission trading bubble. Swedish emissions will be reduced as part of the European reductions," says Mr Carlgren.

The amended regulations for emissions trading are based on the principles established by the Riksdag, which stated, among other things, that the allocation to existing installations in the energy sector should be more restrictive than allocations to installations in other sectors.

The Government has decided that existing installations in the electricity and district heating sectors will not be allocated any emission allowances in the trading period. This means that existing installations in the energy sector will have to rely entirely on the market to buy emission allowances equivalent to their emissions.

"This will have the same effect as if these installations were already subject to auctioning of emissions allowances," says Mr Carlgren.

Installations with fuel-related emissions in industry will receive a somewhat reduced allocation, which will be cut down proportionally to achieve the reduction decided.

Allocations to new entrants in the trading system will not be affected by the reductions.

The amended ordinance also regulates the extent to which companies may use emission credits from climate projects outside Sweden´s borders within the framework of the trading system (the Joint Implementation and Clean Development Mechanism projects). The margin has been reduced from 20 per cent to 10 per cent of the total allocation.

Emission trading involves some 700 facilities and 40 per cent of Swedish carbon dioxide emissions.