Commission's response on ETS2 is an absolute victory, says Czech minister Hladík

The European Commission's (EC) response to demands from Czechia and 18 other countries for changes to the new ETS2 emissions trading system is an absolute victory, Environment Minister Petr Hladík (KDU-ČSL) told reporters today as he arrived for a government meeting. The Commission fully took the countries' demands into account, he said. In his view, this guarantees that allowance prices will remain at an acceptable level and that the new system will not negatively affect individuals, consumers, small businesses or self-employed people.

Andrej Babiš, leader of the ANO movement, which is negotiating the formation of a new government with SPD and the Motorists, today called the changes proposed by the EC ahead of the upcoming EU leaders' summit nonsensical and an exercise in evading responsibility. He urged outgoing Prime Minister Petr Fiala (ODS) to reject in Brussels what he called the Commission's "green madness".

According to Hladík, the key measure is to increase the number of allowances to 80 million from 20 million. "They will be released onto the market when the price exceeds 45 euros," he said. Another measure will keep allowance prices fixed for a five-year period. "Another measure concerns market stability and predictability. That means the exchange will open next year, because so far what has been appearing in the public domain is essentially bank derivatives. The Commission also wants to prevent that, so it is clear that the price is not some 80 euros, as has been suggested in the public domain," Hladík said.

In his view, the plan strengthens the mechanisms that will ensure the price stays around 45 euros. "It could never be a fixed cap, because that would be a tax, and taxes in the European Union require unanimity. We would not have achieved that," Hladík said.

Responding to Babiš's criticism, Hladík pointed out that the ANO leader is currently on holiday. "I think it would be good if he came back to Czechia from the seaside and started doing a bit of work. The election is over. I think there has been enough populism in Czechia," he said. According to Hladík, Babiš's populist rhetoric is simply taking the Czech Republic away from the European Union, which could bring negative economic consequences for everyone.

ANO's first deputy chairman, Karel Havlíček, called the changes to the allowance system a debacle on Tuesday. The EC's positions are becoming increasingly tough and categorical, he believes. Hladík said Havlíček had commented before the Commission presented its proposal. "Put simply, he just blurted something out without knowing the proposal itself. This is absolute amateurism that a future minister cannot afford," he said. Hladík added that this is the most Czechia could have achieved, and that it was the result of a year of effort.

Havlíček told reporters today, by contrast, that Hladík had taken the bait and failed to understand how emissions allowance trading works. According to Havlíček, it is an uncompromising instrument of a speculative nature. "Downplaying the impacts of emissions allowances or pretending they can be capped is unbelievably disingenuous on Minister Hladík's part," he said. Havlíček is convinced that the new Chamber of Deputies will not transpose ETS 2 into Czech law.

The new ETS 2 system is intended to extend allowance trading to areas such as road transport and building heating. Under current plans, it is due to take effect in 2027. Czechia is among a group of nearly two dozen countries that have called for changes to the system and guarantees that emissions allowance trading will be predictable, allowance prices will not rise sharply, and citizens will not be negatively affected.