Business Czech industry emits mixed message on emissions

23-01-2014 15:44 | Chris Johnstone

Czech industry has given a mixed reaction to the latest European Commission climate change proposal, a swansong package which leave several key questions up in the air.

Photo: Tomáš AdamecPhoto: Tomáš Adamec The Czech Republic makes heavy use of fossil fuels, partly local brown coal and partly imported oil and gas; has one of the highest EU proportions of manufacturing industry, and has seen relatively low development of renewable power.

Renewables are almost a swear word in most industrial and political company. The local solar power boom, fueled by poorly drawn up local legislation that robbed the poor to pay the rich, has left a deep and widespread Czech animosity to new European initiatives on climate change.

So, the European Commission’s unveiling Wednesday of plans for the next round of moves to cut the continent’s carbon footprint and boost renewables without, in theory, doing too much damage to heavy industry or collapsing electricity grids, was very closely watched indeed.

The eventual batch of follow on targets and goals for 2030 has met with a mixed local reaction. Generally speaking, large chunks of industry, who don’t believe that Brussels should be poking its nose in here anyway, have denounced the package. State owned power utility ČEZ seems pretty happy and, almost inevitably given the former, most Green groups are disappointed with what they see as modest ambitions to tackle climate change and concessions made to big companies.

The flagship goal coming from the Commission is to cut greenhouse gas limits to 40% of 1990 levels within 17 years. The existing target for 2020 is a 20% reduction. The new Europe-wide target for use of renewables is 27% of total energy needs by 2030, up from 20%, but specific national goals have not been included this time round.

How the overall European target for renewables can be met without the sort of constraints on national governments that now apply appears a mystery. The Czech Ministry of Industry and Trade should be happy, at least temporarily. It took the lead in saying there should be no new national targets, arguing that the country’s renewable power potential will be reaching its limits by 2020. Nonetheless, Some Green groups say they still expect some sort of framework setting national goals or targets to be sketched out later.

Czech heavy industry blames the existing renewables targets for sharp rises in electricity prices which, if continued, will drive them to the wall. Local electricity prices have surged in the last five years from below the EU average to above it with the renewables surcharge a major factor.

ČEZ has one main reason to be cheerful: the fact that the Commission proposes to continue its carbon emissions trading market on reformed lines that should renew the lucrative cash flow to the company. Those earnings have been depressed because of low emissions prices.

Actually, the Commission’s proposals to reform the EU’s emissions trading system after 2020 bear a startling similarity to those that ČEZ itself has been pushing over recent weeks. Basically, it would allow the Commission to hold back allowances if there appears to be a glut of them on the market, for example, because of economic slowdown affecting industrial companies that need to buy these pollution permits.

This is, probably, the current Commission’s last big swansong proposal before it bows out later this year. Bolstered up or not, the proposal still has to win approval from heads of government and a newly elected European Parliament. That means it’s far from clear whether the Commission will be going out with a bang or a whimper.

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