MARGARET BECKETT is expected to challenge Brussels today by announcing a plan for dealing with emissions from power generators and manufacturers that the European Commission has already rejected.

The Environment Secretary will publish new carbon allowances that are more generous to intensive energy users and power generators even though the Commission is insisting that Britain should go back to its first, far tougher, plan for dealing with greenhouse gases.

Negotiations between the Department for the Environment, Food and Rural Affairs (Defra) and the European Commission continue, but Mrs Beckett has warned Stavros Dimas, the Environment Commissioner, that the UK will take Brussels to the European Court if he does not approve the revised British plan.

The Government’s move comes two days before the Kyoto Protocol, the world’s first attempt to control climate change, finally comes into force on Wednesday.

Europe’s Emissions Trading Scheme is a key part of the EU’s strategy to fight climate change, but six weeks into the scheme it is already in disarray with only two countries, Denmark and the Netherlands, actually trading emissions. Seventeen of the 25 EU countries have not yet agreed plans with Brussels.

“When we made the revised national allocation plan we thought that we were on solid ground and we have no reason to think otherwise,” a spokesman for Defra said. Trading is supposed to start in all countries at the end of this month, but Defra said that April was a more realistic date for the UK.

The EEF, the manufacturers’ organisation, has warned ministers that delays to the scheme, including legal action, will mean further uncertainty for industries whose energy costs this year are expected to rise to about £6 billion, compared with £4.2 billion in 2003. Emissions trading accounts for 30 per cent of the rise in costs.

However, the EEF is prepared to back the Government in its tough stance because it believes that the original allocation plan, submitted last April on the understanding that it could be revised, would devastate the competitiveness of British industry. An EEF spokesman said: “We support the Government taking a robust position with the European Commission and would encourage them to continue to do so. That would meet industry’s need for a result that maintains competitiveness, while at the same time allowing the Government to meet its Kyoto commitments.”

Last October Mrs Beckett said: “Projections suggested that if we stuck with the original formula, it would have had a devastating effect on our industry. None of us wanted to do that, but all of us wanted to get the emissions trading scheme off the ground.”

Each government’s national allocation plan sets out how much carbon dioxide companies or industrial plants may emit in a given year and enables them to trade allowances on the open market. About 12,000 large industrial plants, including power stations and energy-intensive sectors such as steel, aluminium, cement and oil refineries are covered by the new market.

Britain submitted a draft allocation plan last April, in part to help to shore up the emissions trading scheme when support from other EU countries was wavering. However, it was criticised for moving too early, especially as many EU members did not manage to submit an allocation plan till Christmas.

The Commission is thought to be concerned that if national allowances are too generous, there will be no scarcity to allow a market to develop. It is also wary that others would follow if it allows Britain to change its plan.

THE COST TO INDUSTRY

Seventeen of the 25 EU members are yet to agree their plans with Brussels

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