Lignite unit exit ‘must not be influenced’ by EU directives

The implementation of new EU directives concerning state support amid the EU’s Emissions Trading System framework must not affect the rate of progress of the lignite unit withdrawal schedule decided on by the government and power utility PPC, market authorities have noted.

According to latest EU directives, CO2 emission cost recovery levels for eligible energy-intensive industrial producers will not depend on their energy supply sources, be they polluting or green, but, instead, on an independently determined constituent resulting from the national electricity production mix of the previous year.

This effectively means industrial producers will be eligible for CO2 emission cost recovery even if supplied green energy.

The new EU directives are intended to counter industrial facility relocations to territories beyond the EU as a result of increased European electricity production costs, driven higher by costlier CO2 emission rights.

Though EU state members are theoretically free to shape their own CO2 cost offsetting mechanisms as support for energy-intensive producers, these mechanisms must be approved by Brussels ahead of implementation. Ultimately, the European Commission would not endorse any mechanism that does not comply with its EU directives.

The new EU directives concerning state support within the ETS framework were forwarded for public consultation on January 14. They will be applied in 2021 and are expected to remain valid until 2030. The current system expires at the end of this year.


CO2 cost coverage up to 100% for 8 industrial categories

New EU directives concerning CO2 emission cost coverage for industrial enterprises could lead to significantly increased support that may fully offset this cost.

The directives, planned for the period between 2021 to 2030, have just been forwarded for public consultation.

This greater carbon emission cost offsetting support is expected to enable power utility PPC to extend the operating period of at least one of its lignite-fired power stations for continued electricity supply to energy-intensive industries eligible for the offsetting measure.

The European Commission proposal aims to increase the offsetting percentage of CO2 emission costs for aluminum and steel industries until 2030 to a level of as much as 100 percent.

The number of eligible industrial categories is expected to be reduced from 14 at present to eight, according to the Brussels proposal.

Aluminum, iron, steel and ferroalloy production are among the categories proposed for carbon emission cost offsetting eligibility.