The Senate was to vote on Wednesday on an amendment to the law on excise duties, to which ČEZ (with the help of MPs Říman, Urban and Vojíř) added a clause dealing with transposition, approached in a very unhappy way for the Czech economy, of the directive on trading in carbon dioxide allowances. Let us leave aside the formal aspect of the move – that it is an unconstitutional clause and that Martin Roman circumvented both the Environment Ministry and the government. What is more important is the ill-conceived content of the proposal: it would not benefit Czech industry and environment, but would harm them.
The problem is that the clause sets a tight deadline for power companies and industrial businesses to implement investment in modernisation of their energy facilities. In line with the clause, only those companies will be entitled to a free-of-charge allocation of carbon dioxide allowances that manage to spend at least 50% of their planned investment in infrastructure modernisation and in clean technologies by the end of 2011! This clearly discriminatory provision is aimed at giving preferential treatment to ČEZ, which would like to report already implemented or prepared investments in reconstruction of coal-fired power stations (Tušimice, Prunéřov, Ledvice) as so-called additionalities, that means, extra investments induced by emission trading. But its competitors would not be able to even prepare project documentation and get the necessary permissions by the end of 2011, much less document the resources actually invested.
If the Senate approved the clause, then the commission will most probably not acknowledge the Czech national plan for investment in infrastructure modernisation and in clean technologies. Article 10 c), paragraph 3 of the directive orders the commission to adopt instructions according to which member states will introduce a gradual beginning of auctions so that the method of carbon credits distribution does not interfere with economic competition. What manager will decide on an investment worth dozens of billions of crowns without a guarantee of a return on the investment in the form of free carbon credits?
ČEZ knows already that it has gone too far. To calm down its rebelling industrial partners and competitors among power companies, it promised to secure another amendment to the clause by means of a Senate initiative that would be presented as early as August. The amendment should correct the unrealistic and discriminatory deadlines. Sounds absurd? It is just for the CEO to save face. At the expense of the Senate’s face.
If the Senate behaved as a guarantee of democracy and rejected the clause, then there would be no threat. The Environment Ministry is working on an amendment to the law on trading in carbon dioxide allowances; it will modify the proposal according to the EC’s instructions and present to the government. The deadline is the end of September 2011. Companies will be able to count investments materialised after 25 June 2009. At play is CZK 68 billion and this is something that a government formed after proper elections should have its say on. The objective is for everyone to be able to take advantage of the auctions in a fair way – and for the state to have a guarantee that the investments will really improve the condition of the environment.
The author served as environment minister from 2007 to 2009.
