The UK government is considering appealing a Commission decision to reject its request for additional CO2 emission allowances to British industry for the first trading period of the EU emissions trading scheme (2005-2007).

The EU Commission on 22 February announced its decision to reject the UK's request for the second time, "on the grounds of late submission". The first rejection was decided almost a year ago but it had later been annulled by the European Court of First Instance (CFI) in November, on the grounds that the reasoning behind the decision was flawed.

The British employers' organisation, the CBI, attacked the Commission's second rejection, saying that the Court's November ruling had "been completely ignored". The Court, it argued, "ruled the UK's revised plan could not be rejected simply on the grounds it was submitted after the Commission's deadline." "Yet this was the reason given by the European Commission today," the CBI complained. "We are looking at the ruling and considering what to do next, including the case for any legal challenge," said a spokesman for the Department for Environment Food and Rural Affairs quoted by Reuters.

"The legal possibilities exist for a challenge." The decision comes as EU countries prepare to submit their CO2 allocation plan for the second trading period, which covers the years 2008-2012. The deadline for countries to submit their plan is set at 30 June 2006. The UK Department of Trade and Industry (DTI) launched a public consultation concerning the second phase of the EU-ETS on 16 February.