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

During the pilot period, Hungarian companies were not striving to maximize their profits. They
were in no hurry to balance out their abatement marginal costs with the market price. Examining the
pilot phase, it may be concluded that companies’ reactions to the introduction of the scheme were
rather weak, which raises questions about the efficiency of the system. Clearly, the number of
Hungarian companies interviewed by the author is negligible when compared to the number of all
participating companies, making results not representative. Nonetheless, this suggestion may be
worth considering.
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Based on the interviews conducted, it is the author’s conclusion that the introduction of the EU ETS
had no significant impact on the operation or behavior of Hungarian companies during the pilot
phase. The companies viewed the scheme as an additional regulatory burden, and paid more
attention to the administrative duties it required than to the positive effects it could have had on
participants (through the possibility of realizing profits from the sale of surplus allowances). The
fact that CO2 costs failed to become integrated into company price calculations is most likely due to
the abundance of allowances available during the pilot phase.
The Impact of the EU ETS on Expenditures
No examination of the effects of the EU ETS would be complete without a discussion of the cost
implications of the scheme. Based on the author’s interviews with representatives of the
installations, it may be concluded that the carbon dioxide trading system posed no significant
financial burdens for operators during the pilot phase. There are three kinds of transaction costs of
the EU ETS (Convery et al, 2008). In Hungary, (1) expenditures prior to 2005 were negligible. (2)
Administrative costs and (3) trading costs did not entail significant expenses for the companies.
This section will offer an examination of two major kinds of administrative costs: fees and fines,
and trading costs.
Operators are obligated by the relevant regulations to pay fees for the operation of the emissions
trading system. Most Member States work to recover at least a part of their administrative costs
related to the trading scheme by levying different kinds of dues on operators and person holding
accounts. These fees imposed on operators, however, are generally insignificant compared to the
value of the emissions allowances.
(1) Each operator pays a supervisory fee to the authorities. The revenues from these fees are put
by the environmental authorities toward covering expenses related to the operation of the
system, supervisory activities related to the regulations in place, maintaining required records
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