Slovenia's plan to cap carbon dioxide emissions at 8.3 million tons per year got a green light from the European Commission on Monday.
EU Environment Commissioner Stavros Dimas said Slovenia's program was accepted under the European Union's carbon emissions trading plan for 2008-2012, which is meant to combat climate change, reducing Europe's greenhouse gas emissions.
The EU is currently evaluating all 27 national plans to cut emissions for the second trading period, which starts in 2008. It has provisionally approved 13 such plans, including those from big emitters like Britain and Germany.
Slovenia's plan however, needs some small changes before it is ready to be implemented the commission said. It called for Slovenia to limit access to its national credits for foreign-based industries seeking to purchase them.
The EU has taken a tough stand cutting permits for emissions available to industry. Last month the commission cut allowances for amounts of carbon dioxide industry can release in Belgium and the Netherlands to ensure scarcity needed to boost the prices of the so-called carbon credits.
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, reports AP.
Starting last year, companies that produce large amounts of carbon dioxide mainly power plants burning oil, natural gas and coal can trade allocations for how much they can release, giving them a financial incentive to release less pollution.
But the scheme risked losing credibility when it emerged that some governments had set targets above actual emissions during the first stage of the EU trading scheme from 2005 to 2007.
Carbon trading needs allowances pegged below actual levels to trigger the market conditions that encourage companies to cut real carbon releases.