European Commission will decide on free CO2 permits for utilities in July

The European Commission said it will decide on free carbon-dioxide permits for power generation utilities in eight member states in July.

The European executive asked all eight countries that applied by the end of September for free allowances for their power producers from 2013 to 2019 to provide additional information until Jan. 16, Isaac Valero-Ladron, EU climate spokesman, told Bloomberg.

“All the member states got back to us,” he said. “We are now analyzing the information provided. We expect to adopt or (partially) reject the member-states’ proposals by mid-July.”

The 27-nation EU is moving to a wider sale of permits, now largely granted for free, to meet its climate-protection goals.

Ten eastern and central European nations, including the Czech Republic, Poland and Romania, qualify for an exemption won in 2008 from the bloc’s requirement that power plants purchase all their CO2 permits from 2013.

The commission has six months to assess the applications. The opt-out from auctioning gives electricity producers the possibility to invest in modernizing power generation in poorer EU countries. The value of these investments must at least equal the value of the free allowances.

The EU opt-out allows utilities to get for free in 2013 allowances corresponding to 70 per cent of their average annual emissions for the period 2005 to 2007, with relation to national electricity production and consumption data.

That number will decrease gradually each year and in 2020 power plants will have to buy all their permits at auction or in the market.

Poland said last year it was planning to allocate 405.5 million free CO2 permits to power plants, while Romania was eyeing about 75 million free allowances in the seven years starting in 2013 and the Czech Republic wanted to give its electricity producers 108.2 million permits.

The European emissions trading system, known as the EU ETS, is the cornerstone of the bloc’s policy to cut greenhouse gases blamed for climate change. It imposes pollution limits on more than 11 000 utilities and manufacturers, including Electricite de France SA, Europe’s biggest power generator, and Royal Dutch Shell Plc, the continent’s largest oil company, leading to a cap in 2020 that will be 21 percent below 2005 discharges.

Emitters that produce less carbon than their quota can sell surplus permits, and those exceeding their limits must buy additional allowances.

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