EU clears rules on free carbon allowances for utilities
The European Commission on Tuesday adopted the rules that will govern how many EU allowances (EUAs) central and east European governments could give out for free to their power sectors - even after 2012, when most other utilities will face 100% auctioning of EUAs.
Governments can calculate the amount of EUAs a specific power generator might receive for free either using efficiency benchmarks or historical emissions data from 2005-2007.
Countries now have until the end of September to apply to the Commission if they want to continue free EUA allocation to the power sector. The Commission is set to give its first rulings on these applications half a year later, in March 2012.
The country applications have to outline the allocations to individual plants, as well as planned investments into the green sector.
EU law requires countries that have opted out of full power sector auctioning to spend the estimated market worth of the free EUAs on energy efficiency programmes.
Opting out also means that these countries will also lose out on auctioning revenues.
Some of the states that are eligible for the auctioning derogation have recently indicated they will abandon earlier plans to apply, possibly because it would hit them with the double expense of lost auction revenues and mandated clean investment (see EDCM 22 December 2010).
Countries can also chose to apply for a smaller free allocation than the maximum allowed (70% of EUAs needed to cover domestic power consumption), or for a shorter time period than the whole of phase III (2013-2020).
Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland and Romania are eligible to apply for the derogation. TMM
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