Four major utilities in Germany are estimated to have raked in 8 billion euros among them within a year of the ETS launch.

Cap and trade has become one of the stock phrases that one is almost guaranteed to hear at any European conference on climate change these days.
As reported by Ipsnews.net, the underlying concept is simple enough: a ceiling is placed on the total amount of carbon dioxide (CO2), the main gas blamed by scientists for global warming, that a country may emit. This is then divided between the most polluting companies operating in that country. Companies that release more CO2 than they are allowed to must buy extra permits; those that emit less than their allocation may sell their unused permits.
Yet like many ideas that work fine on paper, difficulties can arise when the system is put into practice, as the European Union’s main institutions have found out. In 2005, the EU’s Emissions Trade Scheme (ETS) came into operation as part of a battery of measures designed to prove the bloc’s bonafides in tackling the most pressing ecological challenge of modern times.
So far, the scheme has not exactly worked a treat. Few countries have issued less licenses than industry wanted, thereby losing an opportunity to drive up the price of carbon and coax firms into investing in cleaner technology. And because most permits were awarded free of charge, power companies were able to reap windfall profits by selling unused permits.
Four major utilities in Germany are estimated to have raked in 8 billion euros among them within a year of the ETS launch. To address the flaws that have been detected in the scheme, the European Commission published proposals for a revamped ETS earlier this year.
Auctioning will also apply to some other industrial sectors that guzzle large quantities of energy. But special treatment can be given to companies within Europe that would be put at a disadvantage because other parts of the world lack similar measures.
That the scheme has attracted a huge level of interest from industrialists was proven May 15 when the European Parliament held a hearing on the subject. Members of the Parliament (MEPs) are currently deliberating over what stance they should take on the plans for a revised ETS and are being heavily lobbied by corporate interests to ensure that it does not harm their profitability.
Matthias Duwe, director of the campaign group Climate Action Network Europe, was one of the few participants in the hearing who criticized the proposals from an environmental, rather than a commercial, perspective. He argued that the revamped system would still have serious shortcomings.
The overall aim of the Commission’s blueprint is to ensure that companies covered by it reduce their emissions by 21 percent by 2020, compared to 2005 levels. This target, according to Duwe, is “no way near what is necessary“ to prevent climate change from having increasingly dire consequences for humanity.
Another weakness pinpointed by environmentalists is that rather than requiring that all reductions take place within Europe, the ETS provides for a form of ’off-setting’. EU governments will be able to give companies on their territories credits for emission-reduction projects that take place in the wider world, such as projects that promote the use of low-polluting technologies in poor countries.
Peter Carl, head of the Commission’s environment department, said it would be “patently absurd“ to incur the risk that European companies would relocate to foreign countries which do not have emissions trading.

The price of oil rocketed to a record high of $127.82 per barrel on Friday, as US President George W. Bush prepared to urge Saudi Arabia to pump more crude, analysts said.
According to AFP, Friday’s record run for New York’s light sweet crude beat the previous all-time peak of $126.98, which was set Tuesday on worries about tight supplies despite an official downgrade to global oil demand growth.
After peaking at $127.98, New York’s main oil futures contract, light sweet crude for June delivery, stood at $127.43, up 3.31 dollars from Thursday’s close.
London’s Brent crude contract for June spiked to its own historic peak of $126.34 on Friday, beating the record of $125.90 reached on May 9. It later Friday stood at $126.07, up $3.44.
Oil prices have risen by more than a quarter since the start of 2008, when they surged past $100 a barrel for the first time.

Ukraine became the 152nd country to join the World Trade Organization on Friday after 14 years of negotiations, getting in ahead of bigger neighbor Russia and committing the former Soviet republic to economic reforms and opening new trade channels.
According to International Herald Tribune, experts expect new economic ties to boost chiefly agricultural, chemical and metals exports.
A membership protocol ratified by parliament last month officially came into effect Friday, according to a statement from President Viktor Yushchenko’s office.
Over the 14 years of accession negotiations, Ukraine implemented a range of economic reforms and amended more than 50 laws to bring the country into line with WTO norms. Membership obliges Kiev to further reforms.
Russia, its main trade partner, is the only major economy yet to join. Ukraine will have veto power over Russian accession but may be eager to see Moscow bound by the same trade rules amid political tension.
Many believe Russia’s inclusion in the trade club would be beneficial to Ukraine because it would prevent Moscow from applying tariffs that are against WTO rules.
Key Ukrainian exports to Russia include spirits, oil, sugar and various raw materials.

Indian mobile firm Bharti Airtel and South African phone business MTN are continuing exploratory talks about a tie-up, according to media reports.
Experts estimate a deal could be worth $20 billion, making it India’s largest takeover of a foreign firm, BBC said.
Earlier this week Bharti said talks were aimed at combining the strengths of the two “leading emerging markets“ firms but that it had not made a bid.
Any tie-up would create the world’s sixth-largest mobile operator.
Combined together, the firms would have more than 130 million subscribers across more than 20 nations.
After China, India is the second-largest market for wireless services.
Jan Meintjes, a fund manager at South Africa’s Gryphon Asset Management, said there were other options beyond a merger.
“It can be joint venture or it can be one of a number of other structures ... Both sides will want something that will bring the best value to shareholders,“ he said.

US Treasury Secretary Henry Paulson said Friday he believes the financial crisis is winding down, but that it would take some time to fully emerge from the economic malaise.
“In my judgment we are closer to the end of the market turmoil than the beginning,“ Paulson said in a speech in Washington to business leaders, AFP reported.
“Looking forward, I expect that financial markets will be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the recovery of the housing sector,“ he said in remarks prepared for delivery.
Paulson, a former chief executive of Wall Street investment bank Goldman Sachs, said that more time was needed for markets and investors to regain confidence and that they were re-evaluating risks.
“We should not expect to work through this process quickly and we should expect some bumps in the road ahead,“ he added. But “we are seeing signs of progress as capital and credit markets stabilize,“ he said. “The markets are considerably calmer now than they were in March.“ He also predicted a faster pace of economic growth before the end of the year.