The national carbon allocation plan, now approved by the Spanish cabinet, will attempt to reduce greenhouse gas emissions in line with European Union rules and comply with the Kyoto Protocol. The plan allocates CO2 emission rights to 957 facilities, of which more than 200 are associated with the electricity sector.

The final version allowed an increase of more than 4.5 million tonnes of CO2 for coal-fired plants, but offset this with cuts in emissions rights for future plants. The new plan will affect companies such as Endesa and Unión Fenosa more than Iberdrola and Gas Natural, which use comparatively less coal. Under the final draft, Endesa will get an additional 2.74 million tonnes on top of its 38 million tonnes annual allocation for 2005 – 2007, Union Fenosa will get an extra 1.27 million tonnes on top of the 13 million tonnes already allocated for the same period. Iberdrola will get just under 13 million tonnes a year in the same period, slightly less than the original allocation.

With drastic emissions cuts coming from the energy sector, in total, the sector will be allowed to emit a maximum of 88 million tonnes of CO2 per year with a countrywide annual emission limit of 168.2 million tonnes for 2005 – 2007. Power producers will produce an estimated 55.4 million tonnes of CO2 this year.