EC Accepts Lower Free Carbon Credit Level
The five-year-long dispute with the European Commission regarding allowable greenhouse gas credits has come to an end.
Despite Estonia's bid for much higher annual allowance of carbon credits, the figure will stay at 13.3 million tons, most of which will be used by the power giant Eesti Energia.
Estonia pared back its request by several million tons most recently in August.
In 2008, when the five-year period began, 47 Estonian companies were aware that the European Commission's allowance would be only slightly over half of the desired amount that Estonia could hand out free to the companies.
"We submitted a distribution plan that was put together based on transparent and objective methods that would be implemented in the same way for all companies," said Environment Minister Keit Pentus. "It is possible that some of the 47 companies had bigger ideas, but we cannot go before the European Commission with mere big ideas."
The biggest carbon credit user - Eesti Energia - no longer needs to figure out how large the free quantity allocated to the company will be. But it will need to buy the rest.
"Considering the current situation and the length of the process, I think the result is optimum," said Eesti Energia environmental director Tõnis Meriste, saying that the amount that they would have to buy on the market is now smaller than it was.
Prices on the market fluctuate widely, from 0.07 to 30 euros. Emission of a ton of CO₂ currently costs 8 euros.
Meriste said the fine for each ton of carbon not yielded is 100 euros per year which he noted is more than the market price even in the best case.
In 2013, a new system will come into effect for electricity producers, where pollution allowances will have to be acquired on the open market. Estonia has put in its application for free allowances and the EC's repines should arrive in January 2012. The price of electricity in 2013 depends on it. The free allowances can only be used to cover investments for modernization of the production.
Kristopher Rikken