The Council was briefed on the state of play on this proposal for a Directive, which is intended to create a Community market for emission allowance trading as part of the overall reduction in greenhouse gas emissions required by the Kyoto Protocol.
Three important issues relating in particular to the first phase in 2005-2007 remain undecided at this stage, i.e. whether the emission allowance trading scheme should be compulsory or optional, what its scope of application should be and how rights to pollute should be allocated.
While seeking an overall reduction in greenhouse gas emissions, the proposal aims to ensure the proper functioning of the internal market and prevent any distortions of competition which might result from the establishment of separate national trading schemes. The first phase of the scheme proposed by the Commission, between the beginning of 2005 and the end of 2007, precedes the Kyoto Protocol's first commitment period.
It will be recalled that the Council discussed the proposal at its meeting on 12 December 2001 and that it was briefed on the stage reached in the initial proceedings at its meeting on 4 March 2002.�