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

4. A Summary of Emissions Trading in Hungary
Chapter III has provided an overview of the institutional background of the Hungarian carbon
dioxide emissions market, regulatory authorities and the process of institutional learning. The
author has described how, from a scenario comparable to the “blind leading the deaf” (Feiler,
2008), the pilot phase has led to a greater understanding of necessary tasks and the appointment of
responsible officials. A lack of coordination during the allocation process between the Ministries of
Environment, Economy and Finance has been highlighted. The execution of auctions during the
pilot phase has called attention to the necessity of cooperation between ministries. The system could
work more efficiently and more quickly – and in an environmentally sounder way – if oversight
were practiced by one professional team within one department.
Decentralized allocations, the decision-making purview of national authorities and a drive to obtain
the support of industry groups characterized the EU ETS pilot phase in Hungary. From the
perspective of monitoring and verification, the pilot phase was lacking reliable reference values.
The majority of installations did not record and did not calculate their carbon dioxide emissions
prior to the introduction of the EU ETS. This was the most significant problem of the pilot phase,
and it was a problem encountered not just in Hungary but also in every country of the region. The
databases, which served as the basis for determining allocations, did not prove adequate and
reliable, as the majority of installations overestimated their future emissions.
The dissertation has examined the auctioning practices of the pilot phase, and has provided a
detailed overview of Hungarian processes. The author’s analysis confirmed that Hungarian
regulators recognized how companies not viewing emissions allowances as goods with inherent
opportunity costs must be made to understand as much by the authorities. The two auctions netted
the Government of Hungary revenues of over 2.5 billion HUF, which could have been greater still,
had the auctions taken place earlier.
The accounting of emissions allowances posed a significant problem for companies, even despite
their having had access to Hungarian and EU guidelines. Companies did not understand these
guidelines and the impact of allowances on company balance books. It would be vital to publish
international standards adopted both by Member State authorities and acknowledged – and then
committed to – by obligated companies, so that burdens on companies and uncertainty may be
reduced.
The dissertation has introduced and grouped the obligated parties of the Hungarian carbon dioxide
market according to sector and according to size. In Hungary some 250 installations participated in
the trial period of the emissions trading system; two-thirds were active in the field of energy
182