The European Union has been a pioneer in the fight against Climate Change. After ratifying the Kyoto protocol, EU has embarged on the European Trading Scheme where individual countries provide carbon allowances which can be traded by the major pollutors including power generation companies.

The BBC reports that the Phase-II of the program for 2008-12 is tougher on the countries.

To make the scheme effective in tackling climate change, the EU has cut member states’ carbon permits by 7% on average from 2008-2012. Germany, a major polluter, said the stricter limits were unacceptable and would push electricity prices up.The European Trading Scheme (ETS) aims to cut emissions by 8% from 1990 levels.

Critics argue that, even with the new lower limits, the plans are unlikely to help reduce pollution and the emissions of greenhouse gases. According to Tony Ward, Energy Director at Ernst & Young,…”The move is small and is unlikely to encourage the necessary substantive behavioural change,” he said.

Some major criticism of the scheme is that in the first phase, member countries provided a high level of allowances which increased the supply of carbon credits and decreased the price of carbon.