Hungary says new CO2 plan to curb windfall profits
By Gergely Szakacs
BUDAPEST (Reuters) - Hungary's new greenhouse gas emissions plan for 2008-12 will clamp down on windfall profits generated at some firms in the previous allocation period due to oversupply of pollution permits, a ministry official said.
Hungary's government seeks to pass a decree on the revised carbon dioxide (CO2) limits under the EU's emissions trading scheme next month after the European Commission cut its proposal by 12.4 percent to 26.9 million tons a year for 2008-12.
Most other EU states faced a reduction in their original emissions plan for 2008-12 by Brussels last year.
While Hungary has challenged the cuts at a European court, the environment ministry said the revised plan for the 2008-12 emissions trading period will hit those firms hardest which earned undue profits due to an oversupply of permits in 2005-07.
"The new algorithm was set up with a view to (firms) that may have passed on costs of emissions cuts to clients and those that earned undue, or windfall profits from overallocation," Environment Ministry official Jozsef Feiler said on Thursday.
Figures published by the European Commission showed Hungary handed out about 16 percent more pollution permits in 2005-06 than the actual verified emissions in that period, undermining efforts to curb overall emissions in the bloc.
Feiler declined to name firms most affected by the revised plan but said growth and competition prospects were also taken into account when implementing the cuts.
"This is a transparent system, but naturally, firms are always asking for more (pollution permits)," he said.
The power sector alone accounts for about 45 percent of Hungary's emissions quotas, while district and industrial heating take up another 17 percent of the annual 26.9 million tons of carbon dioxide emissions allowed in 2008-12.
The European Union's emissions trading scheme is the bloc's key tool to fight climate change and meet commitments to cut emissions under the Kyoto Protocol by setting limits on the amount of climate warming greenhouse gases industries can emit.
(Reporting by Gergely Szakacs)