Newton Dunn (ELDR), draftsman of the opinion of the Committee on Industry, External Trade, Research and Energy. – There was a broad spread of opinions in the Industry Committee, as I shall briefly describe ... First of all, perhaps most importantly, should the scheme be compulsory or should there be opt-outs or exemptions? There were a number of voices from certain national quarters asking for exemptions. Other committee members believed that if we allowed exemptions, everyone would ask for one and there would be no directive, so there was a dilemma there.

There was also a concern that the benefits that the cutbacks already achieved in certain Member States will not necessarily be rewarded adequately. This should be taken care of.

There was general agreement that from 2008 the directive should be compulsory. Regarding allocation of allowances, the Committee is against auctioning. It seems to be a waste of resources when the industry should be using it to cut back. The Committee is interested in including other sectors, even perhaps in transport and private housing, although this will be difficult to achieve. We are in favour of including the other five greenhouse gases, although measurement is an important question.

On comitology and whether the Commission should be allowed to decide the future details, we are firmly, unanimously against. We want full co-decision for the next directive when it is proposed. We want the other parts of the world to pay attention because what we do is useless unless the Americans, Russians and Asians are involved as well.

Finally, a personal point, the public should be allowed to buy quotas because we want to involve the citizens in European activities and in saving the world.

Davies (ELDR). – Mr President, a few weeks ago we returned from the Johannesburg Summit with the demands ringing in our ears that fine words should be turned into real action in the knowledge that Europe's pledges were being greeted with cynicism by journalists and the public. Yet if those same critics look to the issue of climate change they will find that such cynicism is unwarranted. From the beginning, the EU has led from the front. It confounded the cynics by securing agreement for implementation of the Kyoto Protocol and by pushing the US and its head-in-the-sand administration into the sidelines.

We now see words being turned into action, with an emissions trading scheme which may well prove the basis for meeting up to 50% of the reductions we have pledged to achieve.

I first read about emissions trading and about harnessing market forces to encourage industry to meet environmental objectives a decade or so ago in pressure group magazines. Now those ideas, then so easily dismissed as crazy and impractical, are being given positive form.

I commend the Commission for its draft directive. In many ways, however, it is a timid document and thanks to the work of our rapporteur we have all-party agreement to press for it to be made more ambitious. Liberal Democrats in the Parliament will be joining in supporting a range of measures to broaden its scope, to extend it to include additional industrial sectors and require it to include other global warming gases in addition to CO2. Personally, I absolutely accept the need for a cap in allowances in each Member State although I acknowledge that some of my colleagues in my group are concerned that the requirements being placed upon their nations by the burden-sharing agreement are already onerous.

After the successful conclusion of the Kyoto conference in Bonn, the Commissioner told the press that we could now tell our grandchildren that we did something to tackle the problem of climate change. All of us, Commissioners, Ministers, and parliamentarians want to be able to endorse those words. It will not be easy. There are some understandable national concerns but also some narrow, commercial interests wishing to dilute these measures. We must keep our eyes on the long term and the enormity of the challenge. If we do not take action now, we turn our back on the very future of the planet.

Bowe (PES). – Mr President, like many here I welcome the report and congratulate the rapporteur on the work he has done so far. The compromise we have agreed and voted in the environment committee has resolved many points of difference between various colleagues in the Parliament, but not all of them, as we know. Like many, if not all here, I am a strong supporter of this proposal. It is developing into a flexible measure, it is market-based and it will definitely help the EU to achieve the CO2 reduction targets that we have in front of us. This will also be at a reasonable cost, which must not be overlooked.

With existing nationally-based schemes we are learning by doing, and we must continue to do so. Therefore we must allow the schemes in front of us to come to a natural conclusion and allow some industrial installations to opt out and opt in, at least in the earliest phases of the new scheme.

I will be pleased to see all six major greenhouse gases included. I will not be happy to see, however, limits on the allocation of allowances, on the introduction of an untried system of benchmarking, or on limiting access to international trading systems as foreseen by the Kyoto Protocol. They are measures that still need to be addressed.

Every journey begins with a first step. We should not underestimate the length of the journey that we are beginning today by starting on this legislation. We should not underestimate just how steep, stony and difficult the path is going to be, but I do hope, for all our sakes, and for the world, that we can set off on the right foot and in the right direction.

Davies (ELDR). – Mr President, Parliament can point to some real gains from the deal negotiated with the Council to fast-track this legislation and avoid the conciliation procedure. We can claim to enclose a number of possible loopholes. Member States will not be allowed to issue allowances that exceed their previously agreed targets, and they must not use the Kyoto mechanisms to avoid taking action to reduce emissions domestically.

We look forward to the Commission coming back with plans to bring other greenhouse gases into the scheme and to extend its scope to include other industries. We await with keen anticipation the Commission's proposals to reduce emissions from the transport sector. Of course, we might have secured more, but speed is of the essence. We want this scheme to succeed, and if Member States are to start meeting their targets they must publish national allocation plans by March 2004.

When the Commissioner reflects on her term in office, she can take particular pride in the role she personally, and her team, played in securing support for the Kyoto Protocol. But with emissions of greenhouse gases continuing to increase in most developed countries, we hope that this scheme can make a very significant difference. I hope that it will enable the European Union to retain its credibility as the world's leading force in pressing for action to curb global warming.

I hope also that it will send out a very clear signal about our determination, both to the United States and to Russia – particularly to Russia – whose ratification of the Protocol is so important.

Bowe (PES). – Madam President, I welcome this agreement. It is absolutely essential to ensure the workability of the emissions trading system when it starts in January 2005. I want to congratulate the rapporteur on the work he has done. I have seen a lot of rapporteurs and he really has done a very good job. He has secured an agreement with the Council which is a practical compromise and which will reap considerable environmental rewards whilst providing for industry a great deal more certainty than the original proposal.

I am happy that we have been able to retain the cap on the number of credits issued. It is a sensible solution allowing Member States to monitor and control the market and make sure it is not flooded. On specific issues, I believe we have been able to persuade the Council of the need for greater reflection on whether to include domestic projects. The guidelines we have laid down there are useful.

As regards 'sinks' I feel we have the best possible deal: a prohibition on companies using credits from land-use projects and carbon forest sinks until at least 2008. We will find this is a very difficult thing to calculate and we need time to look at it more closely.

Concerning big hydro and nuclear projects, it seems disappointing if we wanted the allowances for such projects excluded permanently from the scheme, but in reality Parliament has been able to ensure that the projects and the take-up within the European scheme are at least in line with Kyoto and the World Commission on Dams and the Marrakech Accords. It is not really a bad result.

Our message to EU governments is clear: real, environmental improvement through emissions reductions must be brought about by long-term, sustainable effort at home and not by cheap, ill-advised and potentially detrimental projects in the poorer countries. Member States: we will be watching you!

Davies (ELDR). – Madam President, no sooner had agreement been reached with the Council, than Greenpeace, the WWF and the RSPB were denouncing it as inadequate and calling on Members to throw it out. Some Members may vote against it when the time comes, but they will probably come from amongst those who tend to put the interests of industry before those of the environment. I am not really sure whether WWF counts them amongst its friends.

I took a certain malevolent delight, especially with the election approaching, in our Green rapporteur having been denounced by Greenpeace for his work, but personally I congratulate him. He has done a great job in keeping all sides of this House together. Of course the agreement is weak, but we have to start somewhere. The reality is that we know there was resistance, even amongst some Member States, towards the implementation of these measures.

I am glad that the EU is still trying to lead the world on the whole issue of climate change. However, the real issue is, firstly, that we have to get some sort of agreement up and running and, secondly, that we have to move forward. I am concerned about what will happen if the Kyoto Protocol does not come into force. That is the key question that the Commissioner is seeking to address this week with colleagues. Can we persuade Russia – the crucial element in the equation – to sign up to the Kyoto Protocol and bring it into force? I do not like having to give in to ransom demands. However, for once, it might be a price worth paying.