The emissions trading plan is to be submitted to the European Commission at the end of March. It’ll be part and parcel of the European Union’s future trading in carbon dioxide (CO2) emission certificates with the aim of achieving greenhouse gas output reductions as agreed under the 1997 Kyoto Protocol.

In line with Kyoto, the European Union remains committed to reducing greenhouse gas emissions by 8 percent between 1990 and 2012. As the largest single economy within the bloc, Germany is shouldering the heaviest burden. As part of a voluntary deal struck between industry leaders and the government, it’ll have to reduce emissions by 21 percent.

Pollution ration cards

As of Jan. 1, 2005, EU member states will start dealing with emission certificates. Companies in the industrial and energy sectors will be granted a certain number of certificates for CO2 emissions. If they produce more, they can buy certificates from other companies that have not exceeded their limits. If they emit less, they can sell certificates to companies that would otherwise exceed the legal limits.

But German Environment Minister Jürgen Trittin (photo), of the Green Party, and Economics Minister Wolfgang Clement, of the Social Democrats, don't see eye to eye on a number of issues. It remains unclear just how many certificates can be issued, and to whom, according to Reinhard Loske, the environmental spokesman for the Greens.

"Environment Minister Trittin is in favor of doling out more certificates to gas power stations and less to the coal industry," Loske said. "This has economics minister Wolfgang Clement up in arms because he fears that the domestic coal industry will suffer another blow as a result."

But Clement said there is still plenty of room for talks and a possible compromise. "An agreement has not yet been reached, but there's some time left for further negotiations," he said. "But I insist on a solution which does not represent a setback for German companies' competitiveness."

Trittin has been trying hard to play down his ongoing row with Clement (photo). He said industry leaders have insisted they get an amount of certificates so generous they would have no chance of getting approved by Brussels.

"I think it would not be in the interest of German industry to try and drag its feet on the matter," the environment minister said. "We should really aim to reach agreement by the end of this month, and I will make this abundantly clear in the next round of negotiations."

Environment minister: business benefits

Trittin reckons that German companies as a whole would be among the biggest beneficiaries of certificate trading. According to estimates by the Environment Ministry, many of the 2,600 German enterprises which fall under the EU program will be able to sell certificates abroad, generating a market in certificates worth as much as €500 million ($617.4 million) a year.