Britain to hand out free 2013 carbon permits by early January

LONDON Wed Dec 18, 2013 1:28pm GMT

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LONDON (Reuters) - Britain will distribute this year's quota of free carbon permits to industry by early January after the European Commission approved the country's allocation plan, the UK government said on Wednesday.

The Department of Energy and Climate Change (DECC) said the European Union executive endorsed Britain's allocation plan on Wednesday, making it one of the first in the 28-nation bloc to receive the final approval.

"There are around 750 allocations, so they will each be checked (by regulators) and submitted individually over the next few weeks," a DECC spokeswoman said.

Britain is one of the larger emitters in the EU, and its industry is due to receive almost 69 million free permits this year, worth some 338 million euros ($464.8 million) at current market prices.

Industrial manufacturers regulated by the EU's Emissions Trading Scheme (ETS), such as steel and cement producers, get free carbon allowances to help them compete with rivals in other countries that have looser environmental regulations.

But this year's EU-wide allocation has been delayed since February largely due to late submissions by governments.

That has prevented companies from being able to estimate the cost of complying with the EU ETS, to sell surplus permits to raise cash or to use them as collateral for finance.

The Commission on September 5 estimated the entire allocation process would take up to three months.

But on Monday, it said just 13 countries including Britain, representing 32 percent of the total permits to be handed out for free in 2013, had completed the second stage in what has turned out to be a more lengthy and bureaucratic process.

The Commission added that 11 nations including major emitters Germany and Poland, representing 49 percent of allowances, were well behind in the four-step process, meaning it could be months before industry in those nations receive their allocations.

(Reporting by Michael Szabo, editing by William Hardy and David Evans)

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