From the 28 Member States of the European Union, Hungary was the first to allocate free European CO2 quotas to 11 power producing establishments on 26 November, 2013. The free quotas play an extremely important role in the modernisation of Hungary’s power sector and restore Community legal security in the EU Emissions Trading System.
In the 2013-2020 trading period of the EU Emissions Trading System, carbon dioxide quotas can be freely used, after their allocation, for compensating for emissions or for trading, throughout the whole period. From EU states, Hungary was the first to finalise its free quota allocation plan (derogation), meant to help the modernisation of the power sector, with the European Commission and implement free allocation for the establishments.
Through the over 6 million units allocated, the derogation in the power sector may generate funds of almost HUF 8.8 billion for financing two system-level investments in Hungary. It may help the implementation of the smart network pilot project (smart meter network) of MAVIR Hungarian Independent Transmission Operator Company and the construction of the section of the Slovak-Hungarian Interconnector Gas Pipeline of Hungarian Gas Transit Ltd. between Vecsés and Balassagyarmat.
The smart meter network will make the time optimisation of energy consumption based on consumers’ own decision as well as on automatic interventions possible. It will improve information flow between the players of the power system and of other energy systems, create opportunity for interactivity and produce thereby improved competitiveness at the level of the national economy. The increased capacity of renewable energy producing units will decrease dependency on external energy resources.
Through the implementation of the interconnector investment, new sources are to appear at the Hungarian natural gas market, which will create a better position for customers. The development will have favourable effects on gas supply fees and contribute to reducing the price of natural gas. As part of the North-South Gas Corridor, the pipeline will serve Hungarian and international supply security and strategic goals.
By the above measure, Hungary has been the first to prove in Europe that the system-level development of the power sector through pilot projects is a priority goal. In this Hungary is ahead of several other Member States that, rather than spending above 50 percent of their quota revenues on the development of emission reduction pilot projects the way Hungary now does, channel all their quota revenues into their state budget.
The fast allocation of the emission allowances has been made possible by the transposition into Hungarian legislation of the related Directive of the European Parliament and of the Council and the outstanding interest representation and adequate expert attitude of the ministry.
The table issued by the European Commission on the allocation of transitional free allowances by Hungary:
http://ec.europa.eu/clima/policies/ets/cap/auctioning/docs/process_overview_10c_en.pdf
For further information on the issue, please visit:
http://klima.kormany.hu/tajekoztatas-a-2003-87-ek-europai-parlamenti-es-tanacsi-iranyelv-10c-cikke-szerinti-kerelem-europai-bizottsag-altali-elfogadasarol
(Ministry of National Development, Communications Department)
