Issue description
There is a worldwide consensus that emissions of greenhouse gases are the cause behind the average temperature increase during the 20th century. Agreements were made at the UN Climate Conference in Kyoto in 1997 to reduce emissions of greenhouse gases.
The Kyoto Protocol was worked out in more detail in July 2001 and entered into force 16 February 2005. The current agreement is a first step to reduce the global emission of greenhouse gases during the 2008-2012 period by 5,2 percent compared with the reference year 1990. Among those who have committed themselves to reduce the level for the six greenhouse gases the European Union has committed itself to 8 percent, Japan and Canada to 6 percent.
The Kyoto Protocol includes the possibility of trading emissions to achieve emission reductions cost-effectively. The European Commission has presented a Directive establishing a mandatory scheme for greenhouse gas trading within the European Community. The Directive involves two phases: a preliminary phase from before the first Kyoto compliance period 2005-2007 and a second phase from 2008 onwards.
National emissions trading programmes for the first period 2005-2007 have also recently been launched in all EU25 countries. Trading is now done at special marketplaces and between companies. The Prototype Carbon Fund has been founded by the World Bank to promote project-based trading.
Impact on the Volvo Group
Each Member State in the EU have decided on the total quantity of allowances and the allocation of those to each industry site covered by the Directive, taking into account its overall commitment under the Burden Sharing Agreement from 1998. Volvo is involved in the emission trading through six production plants with power and heat production above 20 MW.
The allocation of allowances does not meet the needs of Volvo. There will be a small shortage of allowances. However, Volvo is working actively to reduce energy consumption and CO2-emissions.
Volvo Group’s position
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Volvo supports the system of emission trading which permits industry to reduce greenhouse gases where it is least costly
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Volvo therefore supports the fast introduction of project based mechanisms Joint Implementation (JI) and Clean Development Mechanisms (CDM)
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Due to the uncertainties of the effects of the emission trading for industry and economy other related economic instruments should be adjusted
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Distortion of competition by different national implementations of the emission trading should be avoided
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Volvo is aiming to continue to be in the forefront in energy efficiency within our own plants and in our products’ performance
Public Affairs, Ira Thilén, 2005-02-17