Romanian Utilities May Get 75 Million Free 2013-2020 CO2 Permits

Romania may give about 75 million free carbon permits to energy producers in the seven years starting in 2013, with oil company OMV Petrom SA (SNP) and two state- owned power plants poised to get almost half of the allowances.

The country’s Economy Ministry will apply to the European Union regulators for the free permits before the Sept. 30 deadline, according to an e-mailed response to questions from Bloomberg. It has already started public consultations on the proposal to allocate the allowances valued at 894 million euros ($1.2 billion) at today’s prices, it said.

“Romania’s energy sector is benefiting from this waiver as power generators will be able to invest in upgrading the sector infrastructure instead of paying for the permits,” the ministry said in the statement.

Eastern and central European nations, including the Czech Republic, Poland and Romania, won an exemption in 2008 from an EU requirement that power plants purchase all their CO2 permits in the next phase of the bloc’s cap-and-trade program, the world’s largest.

The EU opt-out allows utilities to get for free in 2013 allowances corresponding to 70 percent of their average annual emissions for the period 2005 to 2007 with relation to national electricity production and consumption data. The number will decrease gradually each year and in 2020 power plants will have to buy all their permits at auction or in the market.

Romania’s largest oil company OMV Petrom, a unit of Austria’s OMV AG, will get 10.3 million free permits for its new Brazi gas-fired power plant from 2013 through 2019, according to the ministry. State-run coal-fed power plants Turceni and Rovinari will get 11.8 million and 11.6 million permits, respectively, for the seven years through 2019.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net; Stephen Voss at sev@bloomberg.net