Dóra Fazekas Carbon Market Implications for new EU - UniCredit ...

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In Hungary 55% of the allowances grandfathered during the pilot phase were received by seven installations; interviews with representatives of all seven were conducted to analyze the system. The Mátra Er"m! obtained nearly one-fourth of all allowances allocated in Hungary. The Dunamenti Er"m! received 9%, two other power plants obtained 6% and 5%, Dunaferr got 6% and MOL received 4% of the grandfathered allowances. These seven installations received over 60% of the allowances dedicated to the energy sector, 88% of the allowances that went to iron and steel producers, and 100% of the allowances which ended up in the hands of oil refiners. The pie chart on the right, below, shows that these seven installations were the recipients of a significant portion of the allowances that went to the three largest sectors. Figure 29. The breakdown of allocations in the Hungarian EU ETS market Source: author’s calculation based on CITL data It is important to examine the allocation process also with respect to companies and corporate groups. By linking the individual installations with companies and corporate groups, it becomes clear, once again, that the Hungarian market is concentrated also from this perspective. The Mátra Er"m! is the biggest market player, both in terms of the Hungarian market and in terms of the biggest sector (energy production), with 22%. By linking allocation data with corporations, multinational companies also enter the scene: the French Electrabel (9%), EDF (3%), E-ON (2%), the American AES (8%), and the Swiss ATEL (3%) are all present. The share of two cement-industry multinational companies is also significant in the Hungarian ETS market: Heidelberg (5%) and Holcim (3%) have a strong presence. Dunaferr (8%) is the most significant Hungarian steel and iron producing company, while the MOL group (7%) is the only ETS participant of the Hungarian oil refinery industry. 122
Figure 30. The Hungarian EU ETS market, broken down by companies and corporations Source: author’s calculation based on CITL data * * * Thus, the carbon dioxide emissions allowance market is a rather concentrated one, as far as sectors, companies and installations are concerned. In Hungary, over 70% of allocated allowances are accounted for by barely 4% (Hungarian Meteorological Service, 2008) of the installations, which are predominantly power plants. The Positions of Hungarian EU ETS Sectors The positions of the various sectors are examined by researchers in the literature by comparing verified emissions and allocated allowances; Ellerman and Buchner (2008) subtract the quantity of verified emissions from allocations. Anger and Oberndorfer (2007) consider the ratio of the two quantities to be the best indicator, and refer to this figure as an allocation factor. In the literature, installations facing a shortage are said to be in a short position, whereas installations with a surplus are said to be long. 27 Position = allocation – verified emissions The difference obtained when allocations and verified emissions are subtracted from each other serves to show whether the particular installation was facing a surplus or a shortage during the 27 The data examined pertain to the initial allocation, and do not contain new entrants or the allowances grandfathered to them. Thus, it may actually happen that certain installations only appear to be short because they were not considered in the first place. The quantity of allowances allocated in Hungary to new entrants during the pilot phase, however, is not significant (0.18%), and does not distort the other findings of this dissertation. 123
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PhD Program in Management and Busin
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List of figures Figure 1. Optimal l
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„If you want to understand today,
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Neither the theory nor the empirica
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Table 1. Installations receiving th
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oth on national and corporate level
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1. Climate Change Regulation The fi
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approaches, activities that are not
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In Europe the United Kingdom and De
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(2) Allocating emission rights is d
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Figure 2. The cap determines the ma
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Table 5. Tradeable certificates (ba
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value, sectoral and spatial coverag
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with their quantified reduction tar
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* * * Several authors (Hahn and Sta
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EU ETS Within the context of the UN
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establishing an international marke
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(c) Allowances can also be distribu
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• ETS in New Zealand; • Volunta
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emissions trading schemes, making i
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end of the pilot phase. Since Augus
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Figure 10. Distance to burden-shari
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Early attitude of companies towards
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high quality, differentiated produc
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investments needed in the industry.
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3.2. Emission Trading in the new EU
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environmental benefits at a relativ
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well below their Kyoto target (EEA,
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lawsuits against the Commission for
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The most active countries to host J
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Figure 14. Hot air as supply for AA
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There have been three proposals on
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transparency of AAU transfers; redu
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Figure 18. Tradeable Hungarian AAU
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“Think Globally, Act Locally” I
Page 71 and 72: At the same time, this relatively f
Page 73 and 74: processes on the whole act a sink,
Page 75 and 76: directly from CO2 emissions are ess
Page 77 and 78: 1.2. A Review of the Hungarian Lite
Page 79 and 80: 2. Introducing the EU ETS in Hungar
Page 81 and 82: databases containing common data el
Page 83 and 84: instances where inconsistent decisi
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Page 89 and 90: economy to a market economy, as is
Page 91 and 92: the EU ETS. Many observers believe
Page 93 and 94: Emissions allowances to be allocate
Page 95 and 96: 2005 2006 2007 Installation Alloc.
Page 97 and 98: Finance is putting much of the reve
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Page 101 and 102: allowance surplus, and then increas
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Page 107 and 108: What was the reason for this anomal
Page 109 and 110: considered a “transfer.” Apart
Page 111 and 112: When allowances are recognized as g
Page 113 and 114: provision is to be formed against t
Page 115 and 116: the model shall be supplemented wit
Page 117 and 118: Participants of the Hungarian EU ET
Page 119 and 120: program, full sets of emissions dat
Page 121: Figure 27. The Concentration of the
Page 125 and 126: Figure 32. Positions of Hungarian E
Page 127 and 128: Figure 40 below shows the allocatio
Page 129 and 130: 3.2. The Impact of the EU ETS on Hu
Page 131 and 132: interviews, that companies looked u
Page 133 and 134: neither emissions-reduction targets
Page 135 and 136: was considered, since they all obta
Page 137 and 138: spillover effect; this, however, co
Page 139 and 140: During the pilot period, Hungarian
Page 141 and 142: to comply shall have their names pu
Page 143 and 144: eact efficiently to regulations. Th
Page 145 and 146: ensuring great enough profit, it sw
Page 147 and 148: combined with an internal price tha
Page 149 and 150: Were Emissions Actually Reduced? Co
Page 151 and 152: column) and the verified emissions
Page 153 and 154: Figure 38. Hungarian reference peri
Page 155 and 156: * * * The effects of the EU ETS on
Page 157 and 158: (2) Transfer account of allowances,
Page 159 and 160: In an EU-context, Hungary held its
Page 161 and 162: installations the author spoke to w
Page 163 and 164: Companies, which were certain of th
Page 165 and 166: Figure 42. Hungarian transactions d
Page 167 and 168: phase. CITL Data The transaction da
Page 169 and 170: International Transfers The author
Page 171 and 172: Based on these numbers, it may be c
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The two right-hand side columns in
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sales, and how much was accounted f
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the CITL only contains data on wher
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approximately two-fifths of the vol
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(3) Installations that had shut dow
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production, one-fifth represented t
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IV. EXPERIENCES OF THE EU ETS PILOT
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starting in 2012, the European Unio
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originally allocated. Based on thes
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economic development rather than as
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Hungary has still to learn to opera
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Appendix I. - Questionnaire 3.c. Cl
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Had surplus but did not sell EUAs ,
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Appendix III. - Accounting Aspects
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Appendix V. - Overview and main fea
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Appendix VII. - Foreign emission al
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Hungária Cementipari Rt. 2006 HU 5
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Reductions Clean Development Mechan
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Linking Directive from project acti
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VII. REFERENCES Ahman, M. - Burtraw
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Burtraw, D. - Palmer, K. - Bharvirk
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EEA (2006): Greenhouse gas emission
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Hahn, R. - Stavins, R. (1999): What
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Kaderják, P. (1997): Economics for
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Montero, J. P. (1997): Marketable P
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Philibert, C. (2006): Certainty ver
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Tietenberg, T. (1992): Relevant Exp
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Woerdmann, E. (2003): Developing ca
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Hungarian law - Hungarian governmen
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Oxford University Press, USA http:/
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