US embassy cable - 04MADRID3273

UNCLAS SECTION 01 OF 02 MADRID 003273 
 
SIPDIS 
 
SENSITIVE 
 
DEPARTMENT FOR OES/EGC (ED FENDLEY) AND EUR/WE 
 
E.O. 12958: N/A 
TAGS: SENV, ECON, ETRD, ENRG, PGOV, SP 
SUBJECT: SPANISH CABINET APPROVES C02 EMISSIONS PLAN TO 
MEET KYOTO TARGETS 
 
REF: MADRID 1743 
 
1.  (U)  SUMMARY:  The GOS August 27 issued a Royal 
Decree-Law that launched a National CO2 Emissions Allocation 
Plan designed to both:  (1) set Spain on course for meeting 
its CO2 emissions commitments under the Kyoto Protocol; and, 
(2) comply with the EU Directive intended to launch the EU's 
CO2 trading regime come January 1, 2005.  This law suggests 
that Zapatero's Government takes Spain's Kyoto commitments 
more seriously than it predecessor and sets the stage for 
Spain to feel, for the first time, the economic costs of the 
Kyoto approach to reducing greenhouse gas emissions.  END 
SUMMARY. 
 
2.  (U)  During its first official session after the summer 
holiday, the Spanish Cabinet ("Consejo de Ministros") on 
August 27 approved a 2005-2007 National CO2 Emissions 
Allocation Plan designed to meet Spain's commitments under 
the terms of the Kyoto Protocol.  The plan authorizes an 
annual average of 172.31 million emission "rights" (each 
right equaling one ton of CO2 emissions) divided among 
covered industry sectors.  It specifies the methodology 
through which these rights are divided among sectors and how 
compliance is measured.  Affected sectors are given until 
September 30 of this year to apply for individual CO2 
emission rights authorized for their sector.  On October 1, 
these rights will be codified into a National Emission Rights 
Register ("Registro Nacional de Derechos de Emision") which 
will be controlled by the Environment Ministry and open to 
public scrutiny.  This codification will form the legal basis 
for later trading in emission rights. 
 
3.  (U)  According to the plan, the covered sectors encompass 
40 percent of traditional Spanish CO2 emissions (including, 
inter alia, electricity generation, the mining and refining 
of ferrous metals, and the cement, glass, ceramics, and paper 
products sectors).  The non-covered sectors, representing 60 
percent of traditional Spanish C02 emissions, are expected to 
emit 225.79 million tons of CO2 per year during this period 
for a total average annual emission of 398.1 million tons. 
This would represent a 0.2 percent drop compared to total 
2002 CO2 emissions of 401.34 million tons.  The stated goal 
of the 2005-7 plan, which is formally titled Regulating the 
Commercial Regime of Greenhouse Gas Emission Rights" 
("Regulado el Regimen del Comercio de Derechos de Emision de 
Gases de Efecto Invernadero") is to stabilize current 
emissions at the rate measured from 2000-2. 
 
4.  (U)  For serious violations of emission authorizations, 
the plan includes provisions for closing facilities as well 
as for fines of up to two million Euros.  Less serious 
infractions will be punished by fines of 40 Euros for each 
CO2 ton over the limit during the period of 2005-7, climbing 
to 100 Euros per excess ton in the 2008-12 period. 
 
5.  (U)  Through this plan, Spain hopes that total CO2 
emissions in the 2008-12 period do not exceed 1990 emission 
levels (the Kyoto base line) by more than 24 percent. 
Spain's Kyoto target is 15 percent over the 1990 CO2 
emissions baseline.  Under the plan, Madrid hopes to find the 
missing nine percent through a mixture of carbon sink credits 
(two percent) and emission credits obtained on the 
international market (seven percent). 
 
6.  (U)  Finally, the decree creates an inter-ministerial 
commission to supervise all GOS efforts to meet its Kyoto 
commitments.  Members will include representatives from the 
Foreign, Economy/Finance, Environment, and 
Industry/Tourism/Commerce ministries, as well as a 
representative from the President's Office of Economic 
Affairs.  The formal head of this Commission will be Arturo 
Gonzalo Aizpiri, Secretary General of the Environment 
Ministry's Office of Pollution Prevention and Climate Change. 
 
 
7.  (U)  Approval of this plan, which had originally been 
drawn up by the Aznar Government but was not approved by the 
cabinet prior to that government's defeat in the March 
national elections, will allow Spain to submit to Brussels 
its national CO2 emissions plan required under an EU 
directive 87/2003.  This, in turn, should allow Spain to 
participate in the new EU CO2 emissions market that is 
expected to debut on January 1, 2005.  This submission has 
been overdue in Brussels since March 31. 
 
8.  (SBU)  COMMENT:  With this announcement, Spain takes a 
step toward, at least on paper, meeting its Kyoto targets. 
It also addresses the need to formally implement the EU 
emissions trading directive via national regulation.  One 
should not be surprised that Zapatero's center-left coalition 
would be more attracted to Kyoto than its center-right 
predecessor.  And it is of course easier to impose such 
regulations immediately after an election.  However, once the 
economic costs of attempting to meet these targets become 
more readily apparent, it will be interesting to see exactly 
how green is Zapatero's valley. 
MANZANARES