TALLINN - Last week Estonia and Latvia, along with six other EU member states, took a step closer to trading carbon dioxide emission quotas as the European Commission approved national allocation plans for greenhouse emission allowances on Oct. 20.
However, Eesti Energia, the state-owned power-engineering giant that will receive over 80 percent of the quotas, stated immediately that it did not plan to start trading anytime soon.
Jaanus Arukaevu, head of the company's wholesale department, told the Baltic News Service last week that if the winter were warmer and the summer colder than expected, the company could sell surplus quotas sometime before 2007. "If the weather is cold in the winter and warm in summer, we will have to either cut exports or buy extra quotas. Naturally we are not going to publicize the details of our quota trading strategy and tactics," he said.
According to Eesti Energia, the price of quotas is quite low at the moment, with brokers reporting about 5 euros per ton. In addition to brokers, the quotas can be traded through bilateral agreements or on the stock exchange.
Experts also noted that quota trading would require a state-run registry - something that does not yet exist in Estonia.
Today there are 43 enterprises, including power-engineering companies and Estonian metal, mineral and pulp producers that will have the right to trade CO2 emission quotas beginning in January 2005 in accordance with the EU emission quota trading system. The country has received EU clearance to distribute CO2 emission quotas amounting to 56.8 million tons. Latvia lists 95 enterprises and its cleared allowance volume makes 13.7 million tons of CO2.
The EU, however, has cut the quotas initially planned for Estonia and Latvia by 8.1 million tons and 5.6 million tons respectively.
Estonia ratified the Kyoto Treaty in September 2002, thus taking upon itself the responsibility to reduce greenhouse gas emissions from 2008 to 2012 by 8 percent compared with the level registered in 1990. Certain progress has been achieved as a result of EU regulations, officials have said.
The European Commission approved the second set of eight national allocation plans for greenhouse gas emission allowances last week, with plans from Belgium, Estonia, Latvia, Luxembourg, Slovakia and Portugal being accepted unconditionally. France and Finland will have to adjust their plans.
The eight national allocation plans - or the countries' vision of how many emission allowances a member state wants to give to an energy-intensive enterprise from 2005 to 2007 - that were approved last week cover 2,100 industrial plants, or about 15 percent of the EU total.
The plans, related to some 40 percent of industrial enterprises in the EU, were approved in July of this year.
"The commission's role is to make sure that the emission trading works, and that there are no over-allocations. I am pleased that a number of member states have amended their plans to fulfill the criteria and will be ready to start trading in January 2005," Environment Commissioner Margot Wallstrom was quoted as saying.
The commission has so far approved the assessment of 16 plans, namely from Austria, Belgium, Denmark, Estonia, Finland, France, Germany, Ireland, Latvia, Luxembourg, the Netherlands, Portugal, Slovakia, Slovenia, Sweden and the U.K.
The analysis of plans form Cyprus, the Czech Republic, Hungary, Italy, Lithuania, Malta, Poland and Spain is ongoing, while Greece has not filed its plan yet.
The Kyoto climate control treaty received a major boost last week as Russia's Duma (lower house of parliament) ratified the international agreement, which means that the landmark international treaty forged several years ago will likely be realized. Participation of at least 55 percent of global CO2 gas producers was necessary for the protocol to work.