Tardy CO2 Plans by Italy, Greece, Spain Delay EU Permit Decision

Delayed submissions from Italy, Greece and Spain are holding up the European Union decision on the number of carbon allowances that companies in the bloc’s emissions market will get for free as of 2013, according to an EU official.

The EU in April warned six countries that it may take them to court for failing to present on time their national plans on allocating free carbon permits, giving the governments two months to react. Three of the nations -- Germany, Belgium and Bulgaria -- have submitted the overdue measures, said the official, who declined to be named, citing policy.

The European Commission, the EU regulatory arm, needs to assess the so-called national implementation measures from all 27 member states to calculate the final number of free allowances to be given to more than 12,000 facilities in the next period of the bloc’s carbon cap-and-trade program that runs from 2013 to 2020. The original deadline for submitting national plans expired on Sept. 30, 2011.

The EU, which has given away the majority of emissions allowances since it started the program in 2005, will sell the majority of them in the next stage of its emissions trading system, or the ETS. The bloc will auction around 60 percent of the total number of permits in 2013, according to the commission estimates, and the proportion will increase in coming years.

The allocation of a dwindling supply of free permits will be done through carbon-efficiency benchmarks approved last year, based on the average performance of the top 10 percent of installations in 2007 and 2008.

National Bids

To ensure that the total number of free allowances to be handed out to companies in the ETS doesn’t exceed the maximum amount allowed under the EU law, the commission may apply a reduction factor across industries in the program after assessing national bids.

In the third phase of the ETS, western European utilities will no longer get free allocations, while eastern European power plants will have to buy 30 percent of their permits at auctions. That figure rises to 100 percent by 2020.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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