Malta escapes EU ire over gas emissions

The European Commission has decided not to take legal action against Malta for failing to submit its national allocation plan (NAP) for greenhouse gas emissions by Wednesday's deadline.

Sources in Brussels said the Commission took the decision after receiving assurances that the official Maltese NAP would be submitted very soon.

But the government on Wednesday received an official letter from the Commission requesting it to transpose the EU directives on the internal market in electricity and gas into national law.

Under the EU Emissions Trading Directive, Malta must set limits to the greenhouse gas emissions produced by industrial installations of a significant size. These limits had to be presented in the form of a national allocation plan by yesterday.

In Malta's case, limits are to be applied to the two Enemalta power plants for the period 2005-2007.

The Cabinet is set to discuss Malta's NAP at Monday's meeting after which the plan will be sent to the Commission.

Sources said the Commission's initial deadline for the submission of the report was October 20 and, once Cabinet planned to discus it on October 18, Malta would have submitted the report on time. But at one point, the Commission shifted the deadline and the report had to be submitted by October 13.

The government has been assured that Malta "will not be in for any bad publicity when the Commission announces the commencement of infringement action" on Monday.

Each EU member state has to adopt a plan allocating emission allowances to entities that produce significant volumes of greenhouse gases. An entity that exceeds its annual allowance will be fined.

Through emissions trading, an entity that has an allowance in excess of its actual needs may sell its surplus to an entity that expects to overshoot its allowance. Depending on the market price for the transaction, the latter thus has the option of buying its way out of a higher financial penalty.

Each NAP is subject to scrutiny by both the Commission and the other member states, in particular to guard against the allocation to enterprises of overly generous allowances that would infringe competition rules.

In the formal notice, sent to 18 member states including Malta, Loyola de Palacio, the European Commission's vice-president who is also responsible for energy and transport, said the legislation was "an essential step towards the completion of a genuine competitive EU energy market, which is essential for the success of the Lisbon strategy. Since July 1, 2004, the law entitles all non-domestic consumers of gas and electricity to choose their own supplier.

"The Commission needs to ensure delivery of the legitimate expectations it has itself fostered on the markets and among the public."

The Commission was reacting following the lack of transposition of directive 2003/54/EC of June 26, 2003 and the internal market in gas directive 2003/55/EC of June 26, 2003.

The two directives are essential to guarantee the opening up of the electricity and gas markets in the EU. In practice, they have provided freedom of choice of supplier for industrial customers since July 1, 2004 and provide this for domestic customers as from July 1, 2007.

The directives combine the opening up to competition with maintaining service quality, universal service, protection of vulnerable customers and the objectives of security of supply.

The Commission said the actual opening up to competition was not something that could be appreciated right from the moment the directives were transposed but would be reflected by indicators such as the number of changes of suppliers.

To date, only an average of 25 per cent of major users have changed electricity suppliers in the EU since the market started to be opened up at the end of the 1990s.