EU proposes tapping carbon credit cash for adaptation and forestry

The row between the EU and the UK government over what to do with the revenue raised from the auctioning of carbon credits through Europe's emissions trading scheme (ETS) looks set to intensify after an influential committee of MEPs proposed that a quarter of the money raised should be used to fund climate change adaptation projects in the developing world.

The recommendation again puts the parliament on a collision course with the UK, which has repeatedly resisted attempts to ring-fence or hypothecate revenue raised from the ETS for environmental projects and which earlier this year signalled its opposition to proposals that would see revenue raised from auctioning credits to airlines earmarked for climate change mitigation projects and research into cleaner aircraft.

Under the latest proposals, at least 25 per cent of the revenue raised through the ETS would go to the Global Climate Change Alliance that is currently being proposed by the European Commission, and which is intended to fund climate change mitigation and forest protection projects in developing countries.

In the report drafted by Anders Wijkman (EPP-ED, SE), the Development Committee argues that the budget of €60 million proposed by the Commission for 2008/2010 is insufficient. It recommends that funding of at least €2bn per year will be required by 2010, and that between €5bn and €10bn will be needed by 2020, adding that the funding could be easily covered by using the revenue raised from the auctioning of carbon credits.

A spokesman for the committee said that the report would now go before the full parliament where it is expected to be endorsed. It will then be presented to the Commission, which will make the final decision on whether to proceed with the proposals.