Yesterday, the European Commission adopted a climate change package, which includes a draft directive on emissions trading, an instrument of EU ratification of the Kyoto Protocol and policies and measures to reduce greenhouse gas emissions.  Please the attached press release outlining the package.
 
Major provisions of the draft emissions trading directive include:


The emissions trading scheme has two phases -- first phase (2005 - 2007), second phase (2008 - 2012) 

Penalties for non-compliance in first phase are 50 Euros per tonne or twice the average market price, whichever is higher; beyond 2008 the penalty would be 100 Euros per tonne or twice the average market price between 2008 and 2012 ,whichever is higher.

Permits are required in first phase for industrial and energy activities covered, chemicals and waste incinerators are not included in first phase (see Annex I of draft directive for the sectors covered)

Unrestricted access to the market by intermediaries

Banking allowed, but could be limited by individual Member States in first phase

National allocation (for free) in first phase, with provisions for new entrants (unspecificed); harmonized allocation rules by 2008

Possibilty to link with non-EU national emissions trading programs by MOU in first phase (aimed at accession states)

Only CO2 emissions are covered in the first phase, expanded to all GHG gases covered by 2008

Renewable energy certificates are not integrated with GHG allowances under the program

Emissions credits not incorporated into program, but desireable in future.  The EC will address this under a separate directive

I will work with Peter, Nailia, Diana and others to further analyse its implications for Enron.
 
Link to Draft Emissions Trading Directive:
 
<http://europa.eu.int/comm/environment/climat/com/01581_en.pdf>