EU and California to link emissions trading schemes

The californian scheme is set to be the second largest of its kind, after the EU's, and comes after attempts to create a national US trading scheme were rejected by the country's senate.

In December, EU member states mandated the commission to starts negotiations on linking the EU's ETS with a similar system in Switzerland, but the California hook-up would be considerably bigger.

Transactions on the EU ETS were valued at roughly €72 billion in 2010, with Energy analysts Point Carbon predicting the California cap and trade scheme could be worth €7 billion by 2016.

The EU is keen that the two schemes be sufficiently compatible however, along with others currently being developed around the world.

"We told Governor Brown that we would very much like to co-operate with them so that no matter how California constructs their scheme, it is linkable to the way we do things in Europe," Hedegaard said, reports the Guardian newspaper.

"It doesn't have to be identical, just compatible," she added.

A spokesperson for Hedegaard confirmed this message. "As you know, countries and regions around the world including South Korea, Switzerland and New Zealand have trading schemes or are in planning stages," Isaac Valero Ladron told this website.

"Each country might want some special ways of doing it, but of course it's also practical that ... each different region can be linked, so that in the end we have this vision of having a global price on carbon," he said.

EU and California experts are set to discuss the plans in greater details, amid reports that the world's largest polluter, China, is also set to develop a regional emissions trading scheme under its latest five-year plan.

By forcing companies to buy 'pollution' permits, the EU scheme is designed to shift production onto a more environmental-friendly track, although under the current phase (2008-2012) the permits are handed out to energy-intensive sectors free-of-charge.

Critics also argue that the permitted threshold of emissions under the EU's ETS has been set to0 high, with a roughly 3.5 percent rise in emissions last year still failing to meet the maximum permitted level.

Supporters say the rise would have been even greater without the emissions trading scheme.

Reports of mulit-million euro windfall profits for large steel companies who failed to use up their free permits last year, and a series of recent cyber-attacks have also weakened confidence in the EU scheme.