Czech Senate approves five-month extension to emissions allowance surrender deadline

Companies will be able to surrender emissions allowances for emissions released into the atmosphere in the previous year by 30 September, rather than by 30 April as at present. This is also the deadline by which companies must purchase the required number of allowances. Companies will thus be able to spread their purchases over a longer period. The price of allowances is one of the factors that feed into energy prices. The Senate approved these changes today. The amendment to the Act on the conditions for trading in greenhouse gas emission allowances will now be sent to the president for signing.

The proposal to delay the deadline by five months was submitted by a group of coalition MPs and two MPs from the opposition ANO movement in response to the same change to the European directive. The change was prepared by the Ministry of the Environment, but the government would not have been able to pass its proposal in time. Companies would therefore have had to purchase and surrender allowances by 30 April this year.

Emissions allowances are purchased by power plants and other industrial companies that release greenhouse gases, such as carbon dioxide, into the atmosphere. One allowance entitles a company to emit one tonne of carbon dioxide, or an equivalent amount of another gas. The law requires the companies concerned to surrender emissions allowances in quantities corresponding to their emissions.

The European emissions trading system is the EU’s main tool for reducing greenhouse gas emissions. It sets limits on the total amount of greenhouse gases that sectors covered by the system may emit, while also allowing companies to obtain or purchase emissions allowances, which can be traded as needed. When allowance prices rise, companies have a greater incentive to try to reduce emissions. This year’s proceeds from allowances are expected to exceed CZK 40 billion, according to estimates.

After the amendment was approved, the Senate sitting was adjourned and will resume on Thursday morning.