Brussels: The European Union’s executive on Friday set the bloc the target of reducing its annual greenhouse-gas emissions from heavy industry below 2 billion tons for the first time, as the first step towards making the deep cuts it has pledged for 2020.

The EU’s legally-binding target is to reduce overall emissions to 20 per cent below 1990 levels by 2020. A key part of that strategy is to make industrial plants pay for permits to emit greenhouse gases as a way of making it relatively cheaper for them when they cut emissions.

The European Commission has decided that the bloc will issue a total of 1.93 billion emissions permits in 2013, officials in Brussels said. Each permit allows the buyer to emit 1 ton of carbon dioxide (CO2) or equivalent greenhouse gases.

It is the first time that the cap on the Emissions Trading Scheme (ETS) has fallen below 2 billion tons. The average annual cap for the first stage of its existence, 2005-07, was 2.2 billion tons; the cap for the second stage (2008-13) was 2.03 billion tons.

The commission’s goal is to reduce the cap by 1.74 per cent every year until 2020 to force industries to cut their emissions. That equates to a reduction of 35 million tons of industrial emissions per year — the total output of a country such as Croatia.

In principle, the ETS works by making industries bid at auction for a limited number of emissions permits. That puts a price on emitting greenhouse gases, and therefore encourages them to reduce their emissions so that they can cut their costs.

The proposed cap for 2013 is still a provisional figure, as new industries and types of gas are also set to be brought under the ETS in that year. The commission is expected to propose a revised cap in September.