Emissions trading in the Czech Republic

The Czech Republic is completing preparations for trading to begin under the EU's emissions trading scheme on 1 January 2005.

In November, the Chamber of Deputies approved the Emission Allowance Trading Act and the Government approved the National Allocation Program. However, the Act must be passed by the Senate and signed by the President before it becomes law and the National Allocation Program has yet to be approved by the European Commission.

The EU's emissions trading scheme applies to operators of large facilities such as cement factories, combustion plants, oil refineries, coke ovens and steel plants. They receive an allowance limiting the amount of CO₂ (the main greenhouse gas responsible for climate change) to be released into the atmosphere from the facility. Any unused allowances can then be traded with operators of other facilities in the scheme.

Emission Allowance Trading Act

The Act sets out:

• the rights and duties of operators (some 350 companies) of facilities responsible for CO2 emissions

• the issue and allocation of emissions allowances

• the terms and conditions of emissions allowances trading

• penalties for breach of imposed obligations

National Allocation Program

The National Allocation Program establishes the CO₂ emissions allowance for the Czech Republic as a whole. The Government has proposed an annual allowance of 107.6 million tonnes for the period 2005-2007. This represents a compromise following a bruising battle throughout the summer and autumn between the Ministry of Industry and Trade (proposed 116.3 million tonnes) and the Ministry of Environment (proposed 91.6 million tonnes). The Czech Republic, like most other new EU member states, is still waiting for the European Commission to decide whether or not its proposal is acceptable.

The following weeks will determine the terms and conditions under which the emissions trading scheme will operate in the Czech Republic. We will keep you informed of further developments.

For more information, please contact Radim Kotlaba at [email protected] or on +420 221 098 830.