BRUSSELS, Belgium (AP) - The EU's executive arm cut back emissions credits for the next stage of its trading plan on Wednesday by 7 percent below last year's allowed levels, saying it needed to send a strong signal to make the program work.
It demanded 10 nations make changes to their plans to give industry allowances to release carbon dioxide - which they can then trade with others from 2008 to 2012 - giving them a financial incentive to cut back on the gases that cause climate change.
Emissions trading is the cornerstone of an EU push to reduce greenhouse gas releases by 8 percent below 1990 levels by 2012 as it promised under the 1997 Kyoto Protocol on climate change.
But the program needs fewer credits, the European Commission said, as it criticized Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia and Sweden for setting allowed limits too high.
Only Britain - which asked for a cap of 246.2 million metric tons of carbon - saw its recommendation win EU backing.
''The Commission reduced the allowances by almost 7 percent below the emissions proposed by the national allocation plans and 7 percent below the 2005 emissions,'' the EU executive said.
It told Germany - by far the largest carbon polluter - to reduce its cap from 482 million metric tons to 453.1 million.
The EU program is the world's largest so far, worth euro7.2 billion ($9.44 billion) last year when it traded 362 million tons of carbon. It has already exceeded both those values and volumes during the first six months of 2006.
Starting last year, companies that produce large amounts of carbon dioxide can trade allocations for how much they can release.
But putting a price on carbon has not been an easy ride so far as it became clear in May that governments had granted too many credits for the current stage, which runs until 2007, threatening the success of emissions trading - which needs a scarcity of allocations to create market conditions to cut real carbon releases.
The EU also demanded each of the 10 nations make changes to make the program work better next time around.