The European Commission today approved Hungary's request for a continued free allocation of EU Emissions Trading System (EU ETS) allowances to its power sector in 2013. The Commission has taken this decision under provisions which allow certain Member States exemptions from the general rule that, from 2013 onwards, the power sector must buy all its emission allowances at auctions or in the market. Unlike other Member States, Hungary intends to use this option only in 2013.
More than seven million free allowances will be allocated to power plants in Hungary in 2013. The Commission has already authorised requests for temporary free allowances from Bulgaria, Cyprus, the Czech Republic, Estonia, Lithuania, Poland and Romania. In its decisions, the Commission does not raise objections to the applications, but in the case of Poland certain modifications are required.
In total close to 680 million allowances will be allocated for free to power plants in these eight countries in the period 2013 to 2019. The number will be reduced each year, reaching zero in 2020. The Member States will put in place strict monitoring and enforcement rules to ensure that the economic value of free allowances is at least mirrored, if not exceeded, by a corresponding amount of investment in modernising their electricity generation.