UPDATE 1-Czechs propose 101.9 mln tonnes per year CO2 cap

(Adds background)

PRAGUE, Oct 31 (Reuters) - The Czech Republic is proposing an annual carbon dioxide (CO2) emissions cap of 101.9 million tonnes per year under the European Union's carbon trading scheme for 2008-2012, a government official said on Tuesday.

The proposal for the EU scheme -- which sets overall limits for carbon emissions but then allows businesses to trade their quotas -- calls for a 23.5 percent increase over the actual 2005 emmissions levels.

"The joint proposal by the Ministry of Environment and the Ministry of Industry and Trade is for (a cap) of 101.9 million tonnes, including all reserves," Jaroslav Suchy from the Ministry of Environment said in a statement sent to Reuters.

The bloc's 25 member states were due to send their plans to the European Commission by the end of June, but most countries -- including the Czech Republic -- were late.

That led the Commission earlier this month to start legal action against the Czechs and seven other countries for not submitting plans on how much carbon dioxide their industries may emit in 2008-2012.

The country had said earlier it would like to defend at least the current 2005-2007 annual emissions cap of 97.6 million tonnes, despite emissions reaching only 82.5 million last year.

But the Commission, which can approve or reject the plans, is under pressure from environmentalists to insist on strict cuts after 2005 data showed that most companies had more credits than they needed, leading to a carbon credits price crash.

The EU's trading scheme is the bloc's key instrument to fight global warming and meet targets under the Kyoto Protocol.

((Reporting by Marek Petrus; editing by James Jukwey; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477))

Keywords: ENERGY CZECH CO2