A Critical Conversation on Climate Change ... - Green Choices

lessons unlearned 91While most assets given to companies under the EUETS do go towardcovering emissions, their sheer volume guarantees new profitmakingopportunities as well. Costs of buying extra pollution permitsare being passed on to consumers without any incentives for systemicchange being created, generating new profits for utilities andother corporations. Let’s look at the facts:• The big six UK electricity generators are getting around usd 1.2billion per year in windfall profits from the EU ETS – even morethan the GBP 500 million per year the UK Parliament’s EnvironmentalAudit Committee had earlier estimated. 82 None ofthis ‘valuable income on their balance sheets’ 83 need be spent ona structural transition away from fossil fuels. 84 ‘A combination offree allocation to power stations and full pass-through of marginalcosts to consumers has led to a massive increase in the electricityindustry’s profitability,’ consultants IPA Energy noted recently.• In the UK, oil companies BP, Esso and Shell have made millionsof pounds by selling off surplus free EU ETS allowances, whileNational Health Service hospitals have had to pay tens of thousandsof pounds to buy extra allowances. 85• In Germany, where power prices rose from €30 to €47 per megawatt-hourfrom 2005 to 2006, heavily-polluting power companiesare being accused of profiteering off carbon trading. Major utilityRWE is alone said to have made €1.8 billion in windfall profits inone year by adding the current market value of the EU allowancesit had received for free to its customers’ bills. 86• In Belgium, France and the Netherlands, some 40 to 70 per cent ofthe cost of freely-allocated EU ETS allowances is passed throughto large and small consumers. Contrary to the stated objective ofemissions trading, the system is stimulating investments in carbondioxide-intensive power plants, according to the Energy ResearchCentre of the Netherlands. 87• In the Czech Republic, the electricity giant CEZ received onethirdof the 97.6 million metric tonnes of carbon dioxide emissionallowances issued to the country. (Only around 90 million tonnesof carbon dioxide were produced yearly in the country before2005.) This will enable the company to make as much as usd 187million from trading in carbon credits between 2005 and 2007, accordingto an analyst at Atlantik Financní trhy. After having madeprofits off carbon allowance sales in 2005 when prices were high,the company is looking to buy them back now that prices havedropped. As a result, ‘we’ve also launched more coal production,’said Chief Executive Officer Martin Roman. 88