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

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2007, three installations joined the system. The interviews conducted for this dissertation revealed that – in several instances at least – the requested allowances appeared on the new entrant installation’s accounts only after April 30, 2008, by which time the installation had surrendered the allowances according to its emissions, and by which time, too, its allowances had become worthless anyway. Analysis of the Allocation Plan revealed that there were twenty installations, which were not allocated allowances initially. It was hypothesized by the author, in connection with these installations, that they were new entrants to the scheme, beginning carbon-dioxide-emitting activities only after January 2005. As this dissertation was being prepared, officials of the Ministry of Environment and Water provided the list of new entrants for the years 2006 and 2007: thirteen of these twenty installations were on the list, but only five of them received allocations for free (italicized in the table below), all of them representing the energy sector. As far as the year 2007 is concerned, when all pilot phase new entrants had already begun their operations, only 16.5% had received allocations for free. It is interesting to note that of the five installations, two received allocations that were more than enough to cover their emissions, while three ended up facing a shortage. 2005 2006 2007 Installation Alloc. Emiss. Alloc. Emiss. Alloc. Emiss. Miskolc Hold utcai Kombinált Ciklusú Er"m! 0 0 0 0 23,04 21,968 DCCE gázmotoros kiser"m! 0 0 22,131 24,757 22,131 26,17 Hankook Tire Magyarország Kft. Gumiabroncs gyár 0 0 0 0 4,133 5,789 Almex96 Kft 0 0 3,934 3,891 3,934 3,404 Inotal Kft. 0 0 0 0 2,512 7,514 NYKCE Nyíregyházi Kombinált Ciklusú Er"m! Kft. 0 0 0 0 0 85,807 Újpalotai Gázmotoros Er"m! 0 30,235 0 59,386 0 61,578 Füredi úti Gázmotoros Blokkf!t"er"m! 0 29,806 0 53,806 0 52,459 Bakony úti F!t"er"m! Er"m! Fejleszt" Kft 0 0 0 0 0 27,159 Wienerberger, Tiszavasvári Téglagyár 0 6,128 0 15,021 0 21,833 MOL Nyrt. 0 0 0 0 0 10,485 Creaton Hungary Kft. 0 3,877 0 5,636 0 5,48 Gázmotoros F!t"er"m! 0 0 0 0 0 3,247 Dunakeszi Aszfaltkever" üzem 0 3,253 0 3,969 0 2,838 Verebély úti Gázmotoros F!t"er"m! Energott Kft 0 0 0 0 0 2,202 MVM Észak-Buda Gázturbinás Kogenerációs F!t"er"m! 0 0 0 0 0 0 94
2005 2006 2007 Installation Alloc. Emiss. Alloc. Emiss. Alloc. Emiss. STRABAG Zrt. Királyegyházi Cementgyár 0 0 0 0 0 0 Regionális Gumihasznosító Er"m! Techkon Kft 0 0 0 0 0 0 Paksi Téglagyár 0 1,356 0 1,354 0 0 Columbian Tiszai Koromgyártó Kft. 0 0 0 0 0 0 Table 16. New entrant Hungarian installations Source: Author’s compilation, CITL, information provided by Ministry of Environment and Water International practices vary over what steps countries take when their NER is exhausted, or if emissions allowances are left over at the end of the pilot phase. In most countries, “latecomer” entrants cover their needs from the market. This was not done in Hungary; after meeting all demands, any remaining allowances were auctioned by the GOH – ultimately, this meant that the allowances sold at auction exceeded the quantity originally set aside for that purpose; this will be discussed in greater detail below. Closures Regulations pertaining to closure cover installations, which had received emissions allowances, but had terminated their operations during the compliance period, without either using the allocations or surrendering them. The so-called transfer rule (governed by Law XV of 2005 and Government Decree no. 213/2006) makes it possible for the owner of an installation that will be shutting down to transfer unused allocations to a new installation; the recipient installation will then not be entitled to allocations from the New Entrant Reserve. Hungarian regulations stipulate that allowances intended for installations that are closing are added to the reserve for new entrants in the following years. According to the Ministry of Environment and Water, during the pilot phase, fifteen installations were shut down – four in 2006, and eleven in 2007. It is worth noting that in the Allocation Plan, five installations were listed with zero emissions in 2007 and three with zero emissions in 2006; it was, once again, hypothesized that all of these were facing closure, but the list revealed that only one, in fact, terminated its operations. Grandfathering or Auctioning? The most controversial and debated – and therefore, in many ways, the most interesting – issue in connection with the EU ETS has been the politics of allocation. Much of the economics literature focusing on the allocation of tradable allowances maintains that auctioning is a more efficient tool than allocating allowances at no cost (Hahn, 1988; Cramton and Kerr, 1999; Burtraw, 2001; Burtraw et al., 2002; Fischer, 2002; Brandt and Svendsen, 2003; Woerdmann, 2003). Nonetheless, and in spite of the apparent benefits discussed in the literature, 95
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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
Page 43 and 44: Figure 10. Distance to burden-shari
Page 45 and 46: Early attitude of companies towards
Page 47 and 48: high quality, differentiated produc
Page 49 and 50: investments needed in the industry.
Page 51 and 52: 3.2. Emission Trading in the new EU
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Page 57 and 58: lawsuits against the Commission for
Page 59 and 60: The most active countries to host J
Page 61 and 62: Figure 14. Hot air as supply for AA
Page 63 and 64: There have been three proposals on
Page 65 and 66: transparency of AAU transfers; redu
Page 67 and 68: Figure 18. Tradeable Hungarian AAU
Page 69 and 70: “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
Page 85 and 86: emissions each calendar year Non-tr
Page 87 and 88: is found to be in order, they may s
Page 89 and 90: economy to a market economy, as is
Page 91 and 92: the EU ETS. Many observers believe
Page 93: Emissions allowances to be allocate
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 and 122: Figure 27. The Concentration of the
Page 123 and 124: Figure 30. The Hungarian EU ETS mar
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
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Page 135 and 136: was considered, since they all obta
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Page 139 and 140: During the pilot period, Hungarian
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ensuring great enough profit, it sw
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combined with an internal price tha
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Were Emissions Actually Reduced? Co
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column) and the verified emissions
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Figure 38. Hungarian reference peri
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* * * The effects of the EU ETS on
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(2) Transfer account of allowances,
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In an EU-context, Hungary held its
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installations the author spoke to w
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Companies, which were certain of th
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Figure 42. Hungarian transactions d
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phase. CITL Data The transaction da
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International Transfers The author
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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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Author’s Publications related to
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