Czech minister Červený: Emissions allowances enrich speculators, not the economy

Emissions allowances have become a tradable commodity from which speculators profit, according to Environment Minister Igor Červený (Motorists). He cited Chinese companies that buy up emissions allowances through European firms as an example. He also criticised the planned introduction of the expanded emissions trading system for buildings and transport (ETS2), which he said was approved by the previous government. Červený told the Czech News Agency (ČTK) in an interview.

"It is important to remember that ETS2 was approved by the previous government. We are dealing with the consequences of that decision today," Červený said.

According to him, introducing ETS2 would significantly increase the cost of energy, fuel and the economy as a whole. "Every civilisation needs relatively cheap access to energy in order to prosper," he added.

He said the problem also lies in emissions allowances having become a tradable commodity. "Although the EU and member states each receive part of the proceeds from the initial sale, prices subsequently rise on the exchange, and speculators profit," he said. He said his movement wants to change the system so that it does not have a negative impact on households and the economy.

"We cannot support the introduction of ETS2, enriching securities resellers in the form of emissions allowances and damaging our economy and households, just so we can feel good about doing something about carbon," Červený said.

Červený also said he was discussing possible reform of the existing ETS1 emissions trading system with some EU member states. He does not want to disclose specific proposals yet, until agreement has been reached with partners. He said debate in Europe about the sustainability of the current pace of the green transition is also intensifying.

Renewable energy sources should be approached "rationally, not ideologically", he said. They should be developed where they make economic sense, for example hydropower. He also wants to push for nuclear power to be considered a clean energy source. "Nuclear energy is emissions-free and, in my view, should play an important role in the Czech Republic's energy mix," he said.

Next Tuesday, government envoy for climate policy and the Green Deal Filip Turek (for Motorists) will attend a meeting of EU environment ministers in Brussels in place of the minister. Červený said Turek would also attend because the meeting will discuss reform of emissions allowances as envisioned by the current government. The main agenda items are expected to include a political discussion on revising the regulation on CO2 emission standards for passenger cars and light commercial vehicles, as well as an exchange of views on strengthening strategic cooperation in global environmental diplomacy.

ETS2 covers carbon dioxide emissions from the combustion of fuels in buildings and road transport. The previous Czech government of Prime Minister Petr Fiala had already sought changes. The current government of Prime Minister Andrej Babiš (ANO) has categorically rejected the ETS2 emissions trading system and said it will seek support in the EU for scrapping it. According to Babiš, the main priority is to lower energy prices, and changes to emissions allowances are also intended to help achieve this. The prime minister recalled that, according to a 2020 European Commission forecast, the price of an emissions allowance was expected to be 26.50 euros per tonne of carbon dioxide (CO2) in 2025. "The average was 87 euros," Babiš said at the end of February.

EU member states formally approved a climate target last week to cut emissions by 90 percent by 2040 compared with 1990 levels. Up to five percentage points of net emissions may come from high-quality international carbon credits from partner countries. The agreement also includes a one-year delay to the introduction of ETS2 emissions allowances, until 2028.