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Energy package feeling the heat

Industry critical of EU proposal to auction carbon allowances

By Paul Voosen
Staff Writer, The Prague Post
January 30th, 2008 issue

Business leaders and the Industry and Trade Ministry decry a proposal made by the European Union that seeks to clarify and strengthen Europe’s commitments to fighting climate change.
The proposal, announced Jan. 23, addresses a laundry list of topics related to carbon emissions, widely accepted as one of the principle causes of global warming. It sets specific goals for member states’ use of renewable energy and revises the EU’s “cap-and-trade” system of carbon emission credits.
More than any other portion of the plan, it is the changes proposed for the 2013–20 period of the EU’s Emissions Trading System (ETS) that have drawn protest from industrial leaders like the energy giant ČEZ and the chemical company Unipetrol.
“The European Commission’s proposal destabilizes the market and forces companies into making expensive, long-term investments,” said Unipetrol spokeswoman Markéta Köhlerová. The plan would increase Unipetrol’s expenses up to 10 percent of its revenue, she added.
Beginning in 2013, the ETS would discard its current system of allowing individual member states to draw up national allocation plans for carbon emissions that, once approved by EU regulators, are then distributed among major emitters. By putting these allowances up for auction, the EU hopes to give the ETS teeth, encouraging companies to reduce their emissions under the threat of ever-higher prices for the right to emit greenhouse gases.
The Industry and Trade Ministry said increased costs arising from the auctions could hinder Europe’s competitiveness.
“The introduction of auctioning in the ETS could cause a rise in the price of carbon-intensive commodities and subsequently a rise in energy prices,” said Tomáš Bartovský, the ministry’s spokesman. “This might motivate some companies to move their production to areas with lower environmental standards.”
The elimination of national allocation plans for one slowly tightening EU-wide cap on emissions, beginning in 2013, is also contested by the ministry, which is suing the European Commission over its carbon allowances for 2008–12.
The EU also set a goal for the Czech Republic to draw 13 percent of its energy from renewable sources by 2020, up from the current 4.7 percent. The government suggested this goal, hoping to meet the criteria by subsidizing the development of additional hydroelectric and biomass power plants.
The energy package, which also includes portions on mandatory biofuel use and carbon capture and storage, seeks to cut the EU’s emissions 20 percent by 2020.
The plan must be approved by member states and the European Parliament and could come under discussion during the Czech Republic’s EU presidency next year.

Paul Voosen can be reached at pvoosen@praguepost.com


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