Coalition against expensive allowances gains strength: Hungary and Italy join Czechia

Brussels, May 28 (ČTK correspondent) - Czechia has gained further allies in its efforts to protect heavy industry from costs associated with carbon emissions. According to Industry and Trade Minister Karel Havlíček, Czech efforts have now also been backed by Hungary and Italy. Havlíček told reporters this today ahead of talks in Brussels. The two countries have thus joined five other states which, together with Czechia, called in a so-called non-paper, for example, for the current level of free allocation of allowances enabling industrial companies to emit under the EU ETS to be maintained.

According to Minister Havlíček, the non-paper, an informal document intended for discussion, clearly points out that far greater support is needed for energy-intensive sectors such as glassmaking, steelmaking, the chemical industry, cement production and foundries.

"Essentially, we can say that France and, surprisingly, Spain can also be included in the broader coalition today, because they themselves are putting forward a non-paper that goes in a slightly different direction, but essentially it is a position that partly suits us," the Czech minister said.

"We are gradually gaining supporters, and a coalition of ten countries is taking shape that are very well aware that the situation is serious," he added.

The ETS emissions allowance system is intended to motivate companies to reduce emissions. Businesses must buy allowances for every tonne of CO2 they emit. The more emissions they produce, the higher their costs, so it pays for them to invest in cleaner technologies. European Commission (EC) President Ursula von der Leyen has previously said that the ETS system remains a "proven tool for supporting the transformation of industry", but that it needs to be modernised and made more flexible.

Czechia is one of the EU countries loudly calling for changes to the EU ETS emissions allowance system. After the March EU summit, Prime Minister Andrej Babiš said that Czechia would continue seeking allies for its proposals, which include exempting energy-intensive industry from the allowance system until 2034. The European Commission is expected to present its review of the EU ETS1 emissions allowance system on 15 July.

According to ČTK sources, in its planned review the Commission wants the emissions trading system to provide greater incentives for investment and innovation, and for those who pay for allowances to get their money back. The EC apparently plans to make more allowances available free of charge, but wants to make this conditional on decarbonisation plans by businesses. According to Minister Havlíček, this approach would also be acceptable to Czechia.

"We realise that a certain degree of decarbonisation and greening is necessary, but it must not be done in a directive manner, as it was in the past. I believe Europe is sobering up," the Czech minister told reporters.