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East Europe May Deny Utilities Free Carbon Permits as of 2013
2010-10-19 13:17:59.537 GMT
By Ewa Krukowska and Mathew Carr
Oct. 19 (Bloomberg) -- Some East European governments may
waive their option to allocate free emission permits to power
producers in 2013, opting instead for auctions that would
generate public money, a senior European Union official said.
Eastern and central European nations led by Poland won an
exemption in 2008 from an EU requirement that utilities purchase
all their carbon dioxide permits in the next phase of the bloc's
emissions-trading program, the world's largest. The opt-out
limits the share of allowances that must be auctioned to power
plants to 30 percent in 2013, with the portion gradually rising
to 100 percent in 2020.
The Czech government agreed last week that electricity
producers including CEZ AS should buy a greater portion of CO2
permits than mandated. Prime Minister Petr Necas said proceeds
from auctions would be used to offset higher power prices.
"There will be some countries that will go for full
auctioning," Jos Delbeke, director general for climate at the
European Commission, said in an interview today in Brussels at a
Platts seminar on emissions. "The debate is still on. I expect
the debate to heat up."
An eastern European decision to auction more permits than
required would bolster government revenue while raising the
threat of an unlevel playing field in the region. At issue is
whether nations want to steer more revenue to finance ministries
rather than increase the supply of free permits for utilities.
In the next phase of the European emissions-trading system,
running from 2013 through 2020, western utilities will have to
buy their full allocation of permits at auctions.
Cap and Trade
The EU carbon-trading program, started in 2005, covers
about 12,000 facilities that produce energy or goods ranging
from paper to cement. Polluters must have an allowance for each
ton of CO2 they let off. Those emitting more than their cap must
buy more; those that emit less can sell their surplus. Unused
allowances may also be carried over to the next trading period.
The Czech government said it has yet to decide what share
of the allowances for utilities it will sell. EU permits for
December 2010 fell 1.6 percent to 15.14 euros ($30) a metric ton
at 2 p.m. in London.
CEZ could incur additional costs of 39.4 billion koruna
between 2013 and 2020 if the state-run utility were to buy all
carbon credits, according to a report published last week by
Prague-based brokerage Atlantik FT.
For Related News and Information:
Emission market news: NI ENVMARKET <GO>
Today's top energy stories: ETOP <GO>
European power-markets home page: EPWR <GO>
--With assistance from Jonathan Stearns in Strasbourg. Editors:
Mike Anderson, John Buckley.
To contact the reporter on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or
ekrukowska@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net
