EC OKs Temporary Free Allowances for Power Plants in Bulgaria, Czech Republic, Romania

The European Commission approved Friday the requests of Bulgaria, the Czech Republic and Romania for a continued free allocation of EU Emissions Trading System (EU ETS) allowances to their power sectors beyond 2012.

According to a statement of the EC press office, the Commission has taken these decisions under provisions which allow certain Member States exemptions from the general rule that, from 2013 onwards, the power sector must buy all its allowances at auctions or in the market.

The EC has already approved applications from Cyprus, Estonia and Lithuania.

Under the revised EU ETS Directive1 adopted in 2009, 10 Member States were given the possibility to request temporary exemptions from the rule that full auctioning of EU ETS allowances will apply from 2013 in the power sector.

In September 2011 eight of these Member States submitted applications for temporary free allocations.

The Commission is obliged to assess these in accordance with the rules and conditions laid down in the Directive.

In total, more than 268 million allowances will be allocated for free to power plants in these six countries in the period 2013 to 2019.

The number will be reduced each year, reaching zero in 2020.

The Member States will put in place strict monitoring and enforcement rules to ensure that the economic value of free allowances is at least mirrored, if not exceeded, by a corresponding amount of investments in modernizing their electricity generation.

The decisions are without prejudice to a forthcoming state aid assessment by the Commission.

If the permission had not been granted, from 2013 onwards all Bulgarian power plants powered by coal, gas and other fossil fuels would have been under an obligation to buy all EU ETS allowances at auctions, which would have had a substantial impact on electricity prices.

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