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EC denies emissions request

Industry and Trade Minister Říman vows lawsuit over decision

By František Bouc
Staff Writer, The Prague Post
March 28th, 2007 issue

Czech industry advocates, faced with tough new standards for greenhouse gas emissions, are pushing for a lawsuit against regulators over a March 26 ruling by the European Commission.

The agency denied the Czech Republic’s request for carbon dioxide credits that would allow it to release 102 million metric tons (110 million short tons) per year over the period 2008­–12 and instead ordered that emissions be cut to 86.8 million metric tons.
Although that amount is still 5 metric tons more than Czech industries released last year, leading corporations and Industry and Trade Minister Martin Říman insist that the EC’s plan will restrict economic growth.
“The expected launch of Hyundai’s production in north Moravia alone should increase the use of energy in this country next year up to 3 percent,” Říman said.
As a result, he argued, the Czech Republic may challenge the allocation before the European Court of Justice in Luxembourg.
“The EC ruling is very unfair, and I’ll lobby in the Cabinet to file a lawsuit against the EC,” Říman said.
Prime Minister Mirek Topolánek’s Cabinet is expected to deal with the question in early April.
If the administration agrees to sue, the Czech Republic would become only the second country in the European Union to sue over its carbon credits allocation.
Although the EC reduced credits in 15 of the 17 national allocation plans it has considered so far, only Slovakia has sued up to now, filing in February in the Luxembourg court after seeing its limits of 41.3 million metric tons per year reduced to 30.9 million.
HVB Bank analyst Pavel Sobíšek said he doubts the lawsuits will succeed, adding that most EU members have seen their carbon allowances reduced, which undermines the argument that unfair conditions are being imposed on Czech industry.
EU Environment Commissioner Stavros Dimas said the cuts are being made in order to ensure that the market for carbon credits does not collapse.
Under the current system, companies that have surplus credits can sell them to other companies Europe-wide and make additional profits.
The surplus of credits on the market caused their price to drop from 30 euros ($39/835.50 Kč) in late 2005 to about 1 euro early this year.
Czech Environment Minister Martin Bursík of the Green Party welcomes the EC cuts.
“The system can only work if the price of emissions credits significantly rises,” Bursík said.
But industry representatives warn that a more dramatic rise in the price of credits caused by scarcity would increase inflation in many countries and could pose a threat to smaller companies that find it hard to afford them.

František Bouc can be reached at fbouc@praguepost.com


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