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Italy approves a further €160m in new entrants refunds for carbon allowances

29 Jul 2013 17:52:34 | edcm


The amount Italy must refund phase II new entrants for EU allowances (EUAs) bought in 2008-2012 grew by €160m, the latest calculations by energy regulator AEEG show

The compensation is owed to installations in the EU Emissions Trading System (ETS) that were entitled to receive allowances for free but had to buy them on the market as Italy's new entrant reserve (NER) was short.

The money owed will be funded with part of the proceeds Italy gains from phase III auctions on the EEX common platform.

The regulator gets the amount of EUAs that the EU ETS and Kyoto managing committee said must be refunded.

AEEG sets its carbon price on the basis of the annual average EUA spot price and volumes from the main European exchanges.

The final value owed to every installation is obtained by multiplying its carbon price by the number of EUAs.

According to a recent study by the Italian Institute for Environmental Protection and Research (ISPRA), all sectors covered by the EU ETS had a surplus of permits compared with their real emissions when taking into account the EUAs admitted for refunds, save for the refinery sector in each year and fossil fuel-fired electricity plants in 2008.

The figures agreed by AEEG means the total Italy owes grows to €660m (see EDCM 3 January 2013). The bulk of the €160m or €118m will be paid to companies for credits bought in 2012.

Those companies had to buy 15.9m EUAs overall, which AEEG valued at €7.44/tonne of CO2 equivalent (tCO2e) each. OTC spot EUAs averaged €7.37/tCO2e in 2012, ICIS data show.

The companies owed include cement maker Italcementi, which will be paid €4m for 550,000m EUAs covering three production plants, and power incumbent Enel, which will receive €51.1m for 6.8m EUAs bought to cover emissions from its 2GW coal-fired Torrevaldaliga electricity plant.

A further €41.3m overall will go to new entrants for credits bought in 2008-2012, valued at different prices depending on the year.

Companies that are entitled to receive these reimbursements include steel major ILVA, for emissions at its Taranto plant, one of the most carbon-emitting installations in the country.

The company is entitled to receive €3.6m, AEEG documents show.

Italy is one of the countries that has earned the most by phase III auctioning in Q1, according to a European Commission report (see EDCM 17 May 2013).

Separately, Italy is also reimbursing EUAs buying costs to power plants covered by an incentive scheme dating back to the 1990s (see EDCM 22 July 2013). Silvia Molteni

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