Germany, which will sell more European Union carbon allowances starting next year, intends to increase grants of free permits to 15 percent of its emitters in the bloc’s greenhouse-gas market.
About 311 of 2,012 installations will get more free allowances next year than in 2012, according to data from the federal environment agency Umweltbundesamt compiled by Bloomberg New Energy Finance. A total of 527 emitters lost more than 90 percent of their free allowances. Seven hundred and forty-five emitters lost more than half their free allowances, while 426 lost from 50 percent to 90 percent.
Germany will hand out about 1.4 billion metric tons of the permits to plants, including some operated by Volkswagen AG (VOW) and BASF SE (BAS), in the eight years through 2020, according to the data published May 11. That’s 175 million tons a year on average and compares with 390 million tons of free allowances granted this year, according to data compiled by Bloomberg.
“Of the manufacturing sectors, the pulp and paper installations will lose out the most,” relative to their free allowances in the five years through this year, Konrad Hanschmidt, an analyst in London for New Energy Finance, said by e-mail. “Cement installations have the smallest reduction in the amount of free allowances,” with a 5 percent drop, he said.
Cement makers may continue to receive surplus carbon allowances, which they will be able to sell over the next few years, boosting cash flow and profits, Hanschmidt said.
Carbon Permits Decline
Carbon permits for December dropped as much as 4.2 percent to 6.55 euros ($8.41) a metric ton on the ICE Futures Europe exchange in London, the lowest since May 7. They were at 6.60 euros a ton as of 2:57 p.m.
Installations to be handed additional free-of-charge permits include the Thermooelerhitzer fuer Glaettwerk facility in Schongau, in the pulp and paper category, and the Kraftwerk Hallendorf unit in Salzgitter in the steel-making list, the data show.
The decision on allowances to the individual plants is “preliminary,” as they have to be verified by the European Commission in Brussels, regulator of the carbon market, the agency said last week.
EU nations have granted about 97 percent of carbon allowances for free in the five years through this year, easing emitters into the program, according to data from the U.K. Department of Energy and Climate Change. Western European power stations must buy all allowances starting in 2013.
Factories in industries that have successfully argued they may be hurt by carbon trading because of price competition in international markets for products will continue to get at least a portion of allowances at no charge after this year, according to the system’s rules.
The bloc’s carbon market is the world’s biggest greenhouse gas cap-and-trade program by traded volume.
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