EU limits Spanish firms' use of Kyoto CO2 credits

Companies in Spain will be allowed to use foreign credits under the Kyoto Protocol only to meet 20 percent of their emissions obligations in 2008-2012, the European Commission said on Monday.

That decision came as the European Union executive trimmed Spain's plan allocating carbon dioxide (CO2) emissions rights in 2008-2012 to 152.3 million tonnes annually, just under the country's proposal of 152.7 million tonnes annually.

"The proposed extent of companies' use of credits from emission-reduction projects carried out in third countries under the Kyoto Protocol's flexible mechanisms is not consistent with the rule that these mechanisms should be used to supplement domestic action on emissions," the Commission said. "Consequently Spain is required to limit the use of these credits to some 20 percent of the allowed allocation."

Spain had proposed a figure of 39 percent, a Commission spokeswoman said. The Commission said its approval of the Spanish plan was conditional on two other factors in addition to the Kyoto foreign credits limit.

Spain needs to provide more information on how it would treat new industrial entrants to the emissions trading scheme. It must also provide a complete list of the installations that will be allocated CO2 rights along with a breakdown of how many permits each factory will get.