Dóra FAZEKAS1
HUNGARIAN EXPERIENCES WITH THE EU ETS
Carbon Market Implications
for the new EU Member States
Abstract
This paper assesses the trial phase of the European Union Emissions Trading Scheme (EU ETS)
from the point of view of the new Member States. Countries of Central and Eastern Europe are
thought to lack the market-based economy necessary for the successful operation of such a
system. Although the study provides an evidence-based description in the context of allowance
trading in Hungary, the conclusion is general enough to inform the further development of the
EU ETS.
The findings of this study are based on interviews at installations responsible for two thirds of the
Hungarian ETS emissions. This paper finds that no reductions were achieved clearly attributable
to the introduction of the EU ETS due to the loose target and the overall long position of the
market. Hungarian operators acted as regulatory cost-minimizers, focusing on compliance, rather
than benefit maximizers seeking to profit from the scheme. Nonetheless the export share of the
Hungarian allowance surplus was quite high in the pilot phase. On one hand some long
installations kept their allowances until the end of the pilot phase when it was already worthless,
hence not worth selling. On the other hand some operators made fortunes by selling early. The
EU ETS in Hungary has been effective in inducing firms to build their capability to respond to a
carbon price signal, but has not led to significant emissions abatement during the first phase.
Key terms: emissions trading, Hungary, market functioning
Acknowledgement
I am indebted to the APREC2 team for the opportunity to engage in their research activities –
special thanks to Raphael Trotignon for providing the CITL data necessary for my findings. I am
grateful to Mariann Csikesz without whom the interviews, which give the basis for the findings
of this study, would not have been possible. I also wish to thank Denny Ellerman for his careful
reading and constructive criticism.
1
PhD Candidate at the Department of Environmental Management and Technology, Corvinus University of
Budapest, Hungary
2
APREC has been implemented by an international research team composed of experts at the Center for Energy and
Environmental Policy Research (CEEPR) at the Massachusetts Institute of Technology (MIT), the University
College Dublin (UCD), and the Mission Climat of Caîsse des Dépôts, in collaboration with the Université ParisDauphine, the International Energy Agency (IEA), the Öko-Institut in Berlin and the Centre International de
Recherche sur l'Environnement et le Développement (CIRED) in Paris.
Table of contents
Introduction and Methodology........................................................................................................... 3
History and development of the EU ETS in Hungary........................................................................ 4
Legal and regulatory environment ..................................................................................................... 6
Allocation of allowances and effects.................................................................................................. 7
Auctioning .......................................................................................................................................... 8
Development of the EUA market..................................................................................................... 10
Emissions and abatement ................................................................................................................. 13
Impacts on Hungarian EU ETS sectors............................................................................................ 14
Joint Implementation projects .......................................................................................................... 16
Green Investment Scheme and trading with hot air ......................................................................... 16
Conclusions and outlook .................................................................................................................. 17
Annex I. – Hungarian NAP I............................................................................................................ 18
Annex II. - Firms interviewed receive the bulk of allowances ........................................................ 20
Annex III. – Auctions in the pilot phase .......................................................................................... 21
Annex IV. – Accounting Aspects of Emissions Allowances ........................................................... 22
Annex V. – Transactions based on data of the Hungarian Registry................................................. 23
Annex VI. – Hungarian JI projects................................................................................................... 24
Annex VII. – GIS framework and the potential hot air in Hungaryó............................................... 26
References ........................................................................................................................................ 27
List of figures
Figure 1. Hungary has very low per capita emissions level ................................................................ 5
Figure 2. Prices on the day of the first auction .................................................................................... 9
Figure 3. Long and short positions of Hungarian ETS sectors .......................................................... 13
List of tables
Table 1. Comparing clearing and market prices .................................................................................. 9
Table 2. Net flows from/to Hungary.................................................................................................. 11
Table 3. EUA transfers within Hungary between April 11, 2006 and April 30, 2008. ..................... 12
Table 4. Sectoral distribution of NAPI .............................................................................................. 14
2
Introduction and Methodology
This paper aims at providing a theoretically sound and empirically validated understanding of
carbon trading in the new Member States3 of the European Union (EU), with a special focus on
Hungary. The European Union Emissions Trading Scheme (EU ETS) is one of the obligations
which came with the accession to the EU, although Hungary, and all the other accession countries
signed the Kyoto Protocol, they are not part of the EU’s burden sharing agreement. The EU12
received the carbon reduction obligation with the EU membership. The new EU countries differ
significantly with regard to size, state of reforms, economy and environmental challenges.
However, they share several similarities due to their common post-socialist history (Ürge-Vorsatz et
al, 2006). The rather limited experiences of Bulgaria and Romania that only joined the EU ETS in
2007 has proved that one year for preparation for the Kyoto phase was insufficient while the three
years for the other countries was more or less enough to implement the scheme, set up the
institutional background and set the carbon price as a new factor in corporate decision-making.
As part of the international research program, the Association for Promoting Research on Carbon
Economy (APREC), this paper provides an ex-post evaluation of the Eastern European CO2 market,
with a focus on Hungary. The findings are based on Community Independent Transaction Log
(CITL) and Hungarian Registry data and interviews conducted by the author together with Mariann
Csikesz, the Communication Manager of Hungarian based Vertis Environmental Finance Zrt. We
interviewed the operators of installations responsible for two thirds of the Hungarian ETS emissions
(see Annex II.), two industry associations: cement, and iron and steel and two international auditor
firms.
During the trial phase the system’s legal basis has been laid down, the institutional framework has
been set up, the trading has been introduced, and non-compliance has not occurred. On the other
hand the system was introduced in a rush, all Eastern Member States, except Slovenia, were
overallocated, and free allocation led to windfall profits for almost all sectors.
Based on the interviews this paper finds that in the short run, the impact of EU ETS on operations
was minimal, the effect if any has been non significant at best, and positive for the sectors in some
cases. Despite the theory (Montgomery, 1972) stating that the efficiency of the scheme is
independent of the initial permit allocation this study finds that most of the operators agreed that
lobbying for more generous allocation was the optimal solution for the Hungarian ETS sectors.
Although in theory the choice between free allocation and auctioning is not supposed to modify the
conditions of competition at the margin (Reinaud and Philibert, 2007), we have found that it had
important implications on corporate balance sheets and market behavior. Volumes and frequency of
national and international transfers prove that Hungary was actively involved in the allowance
market. This reflects that Hungary at the country level as well as at the corporate level effectively
exercised the opportunity to access the European carbon market.
The paper first presents the history and development of the EU ETS in Hungary, its legal and
regulatory environment, then describes the allocation process with a focus on auctioning. The
development of the carbon market in Hungary is then presented, followed by a discussion on
whether decreasing emissions are due to abatement activity. Based on the interviews the paper
reveals the impacts of the EU ETS on the main Hungarian sectors: combustion, iron and steel, oil
refinery and cement production. Finally an overview on Joint Implementation projects and Green
Investment Scheme in the context of hot air trading is given.
3
The new Member States of the EU referred to as EU12 are: Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Poland, Slovakia, and Slovenia, which joined in 2004 and Bulgaria and Romania which joined in 2007. Cyprus and
Malta also joined in 2004 but are not addressed because they do not have a target under the Kyoto Protocol.
History and development of the EU ETS in Hungary
As all new Member States of the EU Hungary is a „country that is
undergoing the process of transition to a market economy”
according to the UNFCCC and shares most of their characteristics
with respect to climate policy. (Bart, 2007) Hungary signed the
UNFCCC on June 13, 1992, the Parliament passed a resolution
and the ratification was announced to the public by Law LXXXII
of 1995. Hungary ratified the Kyoto Protocol on August 21. 2002,
joined the European Union on May 1. 2004 and reached Kyoto
eligibility at the end of 2007.
Hungary barely has twenty years of experience with market-based
economy, hence it was rather challenging to introduce and
nevertheless successfully introduce the market-based environmental policy tool of the EU ETS into
the policy space in Hungary. Hungary traditionally devotes only scanty resources to environmental
issues plus environmental problems and their solution were not in focus prior to EU accession.
Hungary is a small country in every aspect, regarding population, area, and economic performance,
influenced by its neighbors. According to Szlávik et al. (2000) Hungary does not develop a
significantly different environmental policy from the policy of the neighboring countries and
especially the EU, Hungary follows the Western European trends. Ürge-Vorsatz warns (ÜrgeVorsatz et al. 2005, 2006) that this “copy and paste” policy may not work for every Member State
with different circumstances and conditions.
Hungarian opinion about EU ETS was rather ambiguous prior to its introduction. On one hand
Eastern Europeans felt that new Member States’ interest were not taken into account. On the other
hand due to the loose reduction target the trading sector was expected to be in gain and the scheme
was seen as a potential foreign direct investment into the country. In 2003 Hungary and other
candidate countries, have expressed their concerns over the EU ETS. "The scheme was designed
without keeping in mind the needs of new member states", officials voiced their worry (ENDS
Europe DAILY, 2003). It is true that while the scheme was vital for the EU15 to reach its Kyoto
commitments, the situation was different for accession countries. Another article from 2003
(Figyelő) states that accession countries will be the losers of the European climate regulation due to
the fact that Western countries will buy up their hot air allowances below their value, hence Eastern
Member States will waste their allowances, which will set back their economic growth and
development. I agree with Lesi and Pál (2004) who argue that this attitude is mistaken and for
Hungary not to participate in the first phase of the EU ETS, especially for the firms in sectors
covered by the scheme, would be disadvantageous. The majority of Hungarian installations have a
high abatement potential and with receiving allowances for free, they will benefit from the system.
(Lesi and Pál, 2004)
By ratifying the Kyoto Protocol, Hungary committed to cut its greenhouse gas (GHG) emissions by
6% under 1990 levels from 2008 through 2012. The latest data, which exclude sinks such as
forestry, shows the country is 32% under 1990 levels. With forests, agricultural lands, and meadows
removing carbon dioxide from the atmosphere taken into account, Hungary's emissions are around
36% under the target. (EEA, 2008) Hungary, like all new Member States, has seen a decline in its
plan-based carbon-intensive economy during the 1990s, and despite of the increasing economic
activity, emissions are still well below their base year4 level. None of the Eastern Member States
need any further measures to meet their Kyoto targets, nevertheless a stronger than expected growth
in emissions could bring current Hungarian emissions close to the target. (IEA, 2005)
Per capita CO2 emissions level is very low in Hungary (see figure 1. below), only Latvia and
Lithuania have lower levels in the European Union. The low per capita emissions level is due to
three factors. First, the state owned Paks nuclear power station covers 40% of national electricity
demand. Second, the share of natural gas in primary energy supply is very high: 40%. Third, the
number of cars per capita in Hungary is growing but still very low.5
Figure 1. Hungary has very low per capita emissions level
Source: Author’s graphs based on OECD data, 2005
In Hungary, 254 installations received CO2 allowances. These are responsible for almost 40% of the
Hungarian CO2 emissions. Hungary’s trading sectors CO2 emissions are relatively small compared
to its size. Total quantity of allowances issued is about half of the trading sector emissions of
Belgium, a country with almost equal number of habitants. Though only half as populous as
Hungary, Slovakia’s trading sector emissions are almost equal to Hungary’s. (Bart, 2007) The
relatively small emissions are attributable to the relatively small heavy industry and an
exceptionally high share of gas in the country’s total primary energy supply. Significantly, unlike in
most other new Member States, electricity generation and distribution has been almost fully
privatized, and is now owned mostly by multinationals E.ON, RWE and EDF. The state owns and
operates the national electricity grid and the Paks nuclear power station.
4
For most countries 1990 is their base year but because of their special situation, the EU12 was granted a degree of
flexibility for choosing the target. Bulgaria (1988), Hungary (average of 1985-87), Poland (1988), and Romania (1989)
have chosen a base year other than 1990.
5
Based on personal communication with dr. Prof. Sándor Kerekes, vice rector of Corvinus University
5
Legal and regulatory environment
In Hungary emissions trading issues are not only regulated and managed by the Ministry for
Environment and Water but also by the Ministry of Economy and Transport, moreover auctions
were implemented by the Ministry of Finance. The cooperation of the three Ministries, each having
a different goal and a different conception was not the ideal situation for the EU ETS in Hungary this contradiction was present during the whole pilot phase.
Hungary lacked the infrastructure, the institutions to back the scheme, also the staff working with
climate issues was hardly a team of two people before the introduction of the scheme. After the
pilot phase a Climate Change and Energy Unit is operating in the Ministry for Environment and
Water with a team of five people. Besides the three ministries the National Inspectorate for
Environment, Nature and Water appears on the regulatory scene, with five people, operating the
Registry with the software licensed from DEFRA.
EU accession has changed the environmental outlook in Hungary. The transposition of the Acquis
Communautaire and the unification of Hungarian markets with EU markets, including conformity
with the relevant EU directives, were the main drivers for environmental policy. (IEA, 2005) The
Hungarian EU accession has led to the adoption of the EU directives. Hungary has liberalised
partially both the electricity (January 1, 2003) and natural gas markets (January 1, 2004). From July
1, 2008 100% market opening is achieved, the electricity generation and distribution has been
almost fully privatized, is now owned mostly by multinationals E.ON, RWE and EDF. The issue of
climate change and the term cap-and-trade is becoming common knowledge. Environmental
awareness in Hungary has grown considerably.
A small Member State, like Hungary, cannot afford to spend too many resources on climate change
issues, and it faces a greater pressure to introduce rules tailored for large installations with large
bargaining power (Bart, 2007). The treatment of industries with only one or two operators is rather
challenging – for instance oil refinery and the steel industry both have only one participant in
Hungary, also the large power generation sector is responsible for two-thirds of all ETS emissions.
Based on the interviews it may be concluded that Hungarian operators lack confidence in regulators
due to serious delays, confusions, lack of their technical knowledge6 and postponing decisions.
Operators feel authorities are not consequent, some minor mistakes received excessive attention
while some major drawbacks go through the system. Lobbying power of some companies and
sectors were the main drivers in the public consultation processes, as it will be discussed in the next
chapter.
6
For instance one interviewee mentioned that Regulators could not define the difference between the CHP: combined
heat and power and CCGT: combined cycle gas turbine technologies. Hence rules were confusing and contradictory.
6
Allocation of allowances and effects
The lack of harmonized rules and the absence of restrictive Kyoto Protocol targets describe the
allocation process in most new Member States. Three countries, Lithuania, Hungary and the Czech
Republic used top-down macroeconomic analysis to forecast total expected emissions of the ETS
trading sectors which was the input for the total amount of allowances to be created. The primary
allocation method was that each installation's share of total emissions of its sector during the base
period was the percentage used to distribute.
On the other hand, Poland, Slovakia, Estonia and Latvia used microeconomic forecasting, a bottomup approach based on installations’ production forecasts. The latter countries have received more
allowances than they were expected to emit. According to Bart (2007) Hungarians were
disappointed when their National Allocation Plan (NAP) was approved after the approval of the
more generous NAPs of Slovakia and the three Baltic Member States. Bart (2007) compares the
proposed and approved NAPs and their relationship with the Kyoto targets and finds that almost all
new Member States tried to allow for a significant growth in the trading sector’s emissions.
Although similar attempts of old Member States were restricted by the Commission, new Member
States justified the difference by their strong economic growth and by their need to benefit from the
EU ETS.
In the allocation process Hungary proposed a total amount that was 3.8% more than its emissions in
2002. The proposal was accepted in December 2004 by the Commission. Slovenia and Hungary
were the only Member States that did not have to reduce their proposed allocation before the
Commission’s approval. During the public consultation process of the NAP the powerful industry
representatives were arguing for increased amounts. As mentioned earlier in smaller countries
operators have a significant level of access to authorities responsible for allowance allocation, in
consequence of lobbying the NAP already submitted was withdrawn, and a new version with higher
quantity was submitted, 1.7% increase in allowances was exclusively allocated to large power
generators. This was not only due to the government’s weakness in face of industry pressure but
also the Directive was unclear about the rules for setting the total quantities.
Allocation was a rather complex process, on one hand, the Ministry for Environment was
responsible for setting the cap, and their goal was to keep the total amount of allowances low. On
the other hand, the Ministry of Economy and Transport, which was responsible for distributing
allowances among sectors, supported industry representatives claiming for more allowances. They
supported the power generation industry and the miners' labor union that threatened mass lay-offs
of miners if power plants had to close down due to lack of allowances. Finally the Ministry of
Economy and Transport aimed at reaching the fairest solution by minimizing the number of
disadvantaged and prevent participants from receiving windfall allowances.
The first Hungarian NAP had a cap of 94.98 Mt for the pilot period with 2% new entrants reserve
(NER), and 2.5% auction reserve (see Annex I). In the Hungarian NAP 55.6% of the total quantity
allocated for free was delivered to the electricity sector represented by 18 installations. So a few
dozen installations account for the bulk of emissions. During the process data collection was more
difficult than previously thought. “Soft data”, i.e data not gathered for the purpose of emissions
trading, was used due on one hand to the lack of time, pressing regulation and on the other hand to
the fact that data gathered on the basis of previous legislation turned out to be less useful.
7
Three interesting features of the Hungarian NAP are worth mentioning:
(1) „Free-riding technique“: the Hungarian NAP was among the last ones to be published and
approved, so the drafters built on the structure and contents of other NAPs previously
submitted.
(2) Early action reserve: operators who can prove that there was a reduction in their emissions per
unit of production may apply to the reserve for allowances. The early action allowances are
distributed on the basis of applications, in proportion to the size of reductions achieved and
above all to power plants which have switched to biomass. However during our interviews we
were told that receiving the allowances from the reserve took so long that some operators
received the allowance after 2008 when those were already worthless.
(3) New entrants’ reserve: divided into progressively decreasing tranches across the three years of
the trial period. Requests were collected during the year in order to prevent operators rushing
for allowances and to distribute the risk of NER being too small. The NER for the whole period
was 1.875.960 tCO2 (2005: 937.980 tCO2, 2006: 625.320 tCO2, 2007: 312.660 tCO2). It was not
totally used in any of the three years. Nonetheless every installation received the requested
amount, for some operators the amount was transferred only in April 2008 when they had
already surrendered their allowances.
Auctioning
Only four countries chose to auction allowances among the twenty-five Member States. Three,
Hungary, Ireland and Lithuania used sealed-bid uniform-price auctions. The auctions were open to
anyone with an interest in the market, from installations needing to cover shortfalls in allowances to
financial players. Denmark had a different experience, after assessing their possibilities they chose
not to have an auction after all, their EPA organized direct sales through an agent instead.
In the Hungarian National Allocation Plan, the Hungarian government set aside 2.5% of the total
allocation, 790,000 tonnes for auctioning. On November 27, 2006 the Hungarian government
announced the sale of European Union Allowances (EUA) in accordance with the Government
decree 109/2006 (V.5.). Hungary sold a total of 2.4 million emission allowances at two auctions;
the first one in December 2006 and the second in March 2007. The sources for the additional
allowances were unclaimed NER allowances and those from closures. Auctions were implemented
by the Ministry of Finance, revenue generated flew into the central budget. The situation was
stressful due to the conflict of interests between Ministries, while the Environmental Department
urged the Finance Department to have the auctions as soon as possible, the Finance Department was
not in a rush, they could have generated more profit if selling early.
The first auction took place on December 11, 2006 and sold a total of 1,197,000 EUAs for a price
of € 7.42 per tonne. (see figure 2.) Bids for 3.42 million allowances were received. On 26 March
2007 a total of 1,177,500 emission allowances were on offer. Buyers have been bidding a volume of
2.4 million EUAs and the total volume offered for sale was sold, for a price of € 0.88 per tonne. The
auction was a uniform-price auction where the single price was set by the lowest bid accepted by
the auctioneer. The clearing price could not be lower than the minimum price determined by the
auctioneer. The minimum price for the first auction was set at the Point Carbon 2007 EUA closing
price index of the day before the auction minus 90 cents. Taking time value into account, this was
around 60 cents less than the spot market price. (vertisfinance.com) In the second auction the
8
minimum price for the allowances for each round was 85% of the closing December 2007 forward
price for the day before the particular auction round, rounded off to 2 decimals.
Figure 2. Prices on the day of the first auction
Source: Kaderjak (2007)
The electronic auction was implemented on the euets.com CO2 trading platform. All entities or
individuals holding an account at an emissions trading registry of any of the EU member states
were able to participate in the auction through one of the Climex Alliance partners. Participants
submitted bids for any quantity of emissions allowances up to the limit of the total number of
allowances offered for sale. The electronic auction would have comprised a maximum of two
sessions; if the whole amount of allowances were not sold during the first session; but at both
auctions one was sufficient to sell all offered EUAs.
Bidders had to place their bids in the given time period and could not withdraw them after the
termination of the bidding phase. The bids were not visible to other bidders, which is known as a
blind auction. The bidders needed to deposit their collateral with the clearing house of euets.com,
APX B.V. or that of the Climex Alliance two working days before the date of the auction. The
clearing and settlement of the transaction entered into during the auction was completed in two
business days following the auction. Successful bidders could request the transfer of the purchased
allowances by the clearing house to their holding accounts one business day after clearing. Bidders
could request the refund of any unused collateral one business day after clearing.
(€ per tonne)
Clearing price
Daily market price
December 11, 2006
7.42
7.10
March 27, 2007
0.88
0.98
Table 1. Comparing clearing and market prices
Source: Fazekas (2008), Daily prices from Vertis Environmental Finance.
It is interesting to compare clearing prices to daily market prices. Table 2. and also figure 2. show
that on the day of the first action the auction clearing price was higher than the daily market price.
Based on economic theory this contradicts the rational market behavior. Explaining this
particularity is however out of the focus of this paper.
9
Development of the EUA market
Overall, the Hungarian carbon market is maturing, the system works with some issues left to
resolve. Almost all support mechanisms are working, also the ITL-CITL connection has been set up
by the time of writing this paper, it started in July, 2008. Nonetheless legal, tax, and accounting
issues are not fully developed at companies. Financial services relating to CO2 emissions
allowances were available through investment service providers - banks and brokers - as in the case
of securities and commodities transactions. Hungarian operators could not sell their surpluses when
the EUA price was still around 30 € s due to the long approval process of the NAP and delays of the
Registry. The Hungarian Registry started operation on April 11, 2006 slightly before the publication
of 2005 emissions data, when the carbon price collapsed. At that time the Dec 2006 EUA price was
29.43 € s. The Hungarian trading platform operated by Vertis Environmental Finance started spot
trading on the euets.com CO2 stock exchange7 on April 20, 2006, until then only forward
transactions were available. The euets.com is the first internet-based CO2 stock exchange in Central
and Eastern Europe, a company may join the trading platform in case it has an operator’s account in
the Transaction Log of any EU Member State or has a permit from the financial supervisory body
of any EU Member State.
Hungarian companies mostly traded via brokers, few companies joined exchanges and some did not
appear on the market, while subsidiaries of multinational firms used the central trading desk, and
Hungarian departments received extra allowances in case needed and had to surrender their
surpluses, mostly independently from the carbon price on the market. Players on the Hungarian
carbon market are Vertis Environmental Finance Zrt, Carbon Capital Markets (CCM), Evomarket,
STX Services and multinational’s trading desks (EDF, EON). Based on our interviews those
operators traded early who were confident, completely sure about their surplus. For example a
Hungarian operator sold its surpluses for more than €8 millions in 16 transactions, with an average
price of €15. Another operator tested the system by pilot sales; a good price was achieved then.
Nonetheless later trying to sell the entire surplus, at a lower price, the income hardly covered
administrative expenses. Most Hungarian players appeared on the market just after their yearly
compliance became clear, moreover some installations waited to sell even until April 30, 2008.
Based on data from CITL and the Hungarian Registry it may be concluded that Hungary both
imported and exported allowances from and to other EU Member States, parallel to domestic
transfers. This reflects that Hungary at the country level as well as at the corporate level effectively
exercised the opportunity to access the European carbon market. Based on the CITL data, which
builds upon surrender information, the net quantity of allowances transferred by Hungary equaled
to 9.75Mt, the equivalent of 10.75% of distributed allowances. The gross Hungarian export was
more than 10Mt CO2 allowances, representing a value transfer of €35 millions into the country.
Table 4. reveals net flows, exported minus imported allowances. Positive numbers indicate transfers
from Hungary, EUAs originating in Hungary, then surrendered in other countries. Negative
numbers indicate transfers to Hungary, foreign EUAs surrendered in Hungary. Interestingly, despite
the abundance of allowances in Hungary 323 thousand allowances were imported, mostly in 2007,
hence the price paid by Hungarians did not reach €400 thousands. Values are calculated in
accordance with the methodology of the APREC team, we used average prices for each compliance
year: €20,6, €16,6 and €0,6 respectively. International transfers represented an income of
€52,164,937 during the pilot phase, equivalent to 0.05% of the Hungarian GDP.
7
Source: www.vertisfinance.com and www.euets.com internet portals.
10
Net Flows (Export - Import) t CO2e
2005
2006
Austria
Belgium
2007
Value associated to transfers to Hungary (€)
2005-2007
34 703
34 703
20 000 1 458 070
1 478 070
332 505
332 505
2005
2006
332 000
2007
2005-2007
20 822
20 822
874 842
1 206 842
199 503
199 503
Cyprus
Czech Republic
Denmark
58 827
Estonia
58 827 1 211 836
-5 908
-32 784
-38 692
19 460
19 460
-108 057
-114 160
457 172 2 042 476
2 499 648
Finland
France
-6 103
Germany
Greece
1 211 836
-98 073
-19 670
-117 743
11 676
11 676
-64 834
-166 144
7 589 055 1 225 486
8 814 541
-101 310
2 500
10 000
12 500
41 500
741 742
338 931
1 080 673
12 312 917
224
224
11 317
23 183
34 500
5 524
357 503
363 027
-159 261
1 111
Romania
245 873
Slovakia
-11 494
6 000
47 500
Ireland
Italy
Latvia
Lithuania
203 359 12 516 276
134
134
187 862
13 910
201 772
91 698
214 502
306 200
-159 261
14 807
-95 557
-80 749
-163
-21 148
667
-20 481
245 873
147 524
147 524
-11 494
-6 896
-6 896
Luxembourg
Malta
Netherlands
Poland
Portugal
-1 274
Slovenia
Spain
Sweden
15 358
521 590
4 100
4 100
570 962
1 107 910
14
14
United Kingdom
1 054 610 1 743 307
Total
74 185 2 801 170 6 870 826
316 375
8 658 394
2 460
2 460
342 577
9 317 346
8
8
2 797 917
17 506 526 1 045 984 18 552 510
9 746 181 1 528 211 46 514 228 4 122 497 52 164 937
Table 2. Net flows from/to Hungary
Source: Author’s calculations based on CITL data from APREC
Besides external trading, based on data from the Hungarian Registry (see also Annex V.), internal
trading in Hungary amounted to almost 5 million EUAs during the first phase, starting from the
opening of the Registry on April 11, 2006 until April 30, 2008 (see table 5. below). Hungarian
operators traded more than 4.5 million EUAs among themselves and more than 400 thousands
allowances were transferred to personal accounts. Calculating with the average prices above
domestic transfers represent a value transfer of €73.5 millions during the pilot phase, equivalent to
0.07% of the Hungarian GDP.
Comparing the extent of domestic transfers to foreign transfers, our finding that most of the
transfers took place with parties in other Member States is not surprising since short installations in
Hungary were uncommon. The cumulative short position of Hungarian installations was in the
order of 4 million EUAs (see also figure 3.), this deficit could easily be covered by domestic
transactions of 4.5 million plus imports of 323 thousand EUAs.
11
2006
EUA
Transfers between
Hungarian operators
Transfers from
Hungarian operators to
Hungarian personal
accounts
Transfers between
Hungarian accounts
(Total)
2007
No. of
transaction
2008
No. of
transaction
EUA
EUA
2006-2008
No. of
transaction
EUA
No. of
transaction
1 846 804
38
1 737 049
30
922 407
57
4 506 260
125
131 035
6
200 000
1
81 461
6
412 496
13
1 977 839
44
1 937 049
31
1 003 868
63
4 918 756
138
Table 3. EUA transfers within Hungary between April 11, 2006 and April 30, 2008.
Source: Hungarian Registry, personal e-mail communication (2008)
As presented on the tables above there was a considerable amount of movement among market
players, both internationally and within Hungary. Comparing the extent of exports to the overall
long position of the Hungarian EUA market we must state that less allowances left the country than
the potential supply. The allocation for the entire pilot phase was 90,708,498 EUAs, verified
emissions were 78,843,048, thus the Hungarian carbon market was long by 11,865,450 EUAs.
Based on the CITL data the net flow of Hungarian exported EUAs was more than 9.5 million
EUAs, based on the Hungarian Registry it was around 9 million EUAs8. Both are more than 2
million EUAs less than the potential supply of Hungarian operators, which were neither transferred
to another Member State, nor surrendered in Hungary. Thus the first period surplus was on the
order of 12 million EUAs and Hungarian operators managed to transfer or sell more than 9 million
to accounts in other Member States. Despite that Hungary did not appear on the market with all its
over-allocation, we may conclude that 75% to 80% is a rather high degree to which the surplus was
in fact sold.9
Comparing CITL data to that of the Hungarian Registry reveals an interesting feature, the timing of
the transfers. On one hand, the Hungarian Registry registered two-thirds of transfers from Hungary
abroad in 2006 (see Annex V.) On the other hand, more than 70% of the surrenders of Hungarian
EUAs in other MS's occurred in 2007 (see table 2). This timing suggests that Hungarian operators
realized the revenue generating potential of selling their surpluses on the European carbon market.
Unfortunately due to limited data availability we may only conclude that Hungarian operators sold
at a higher price than suggested by the surrender data.
8
The cause of the inconsistency is not yet revealed, but it is most probably due to the different datasets of the systems.
Information on international transfers was constructed based on surrender information from the CITL. On the contrary
the Registry builds on actual transactions from and to the country.
9
Based on personal communication with Denny Ellerman.
12
Emissions and abatement
CO2 abatement as an indicator to measure the level of investment in technologies or capacities can
only be measured in longer term than the three years of the Phase I of the EU ETS. Short term
emissions abatement measures, such as switching to less carbon-intensive fuels or increasing energy
efficiency, occurred without doubt in Hungary as well, albeit Hungarian sectors were overall long,
meaning that more allowances were allocated in Hungary than were needed by installations.
Significant net long positions occurred in Hungary (14%) accounting for 12 Mt CO2 during the
three years. While the overall Hungarian market was long (see figure 3. below), some installations,
mainly in the combustion sector, were short on allowances.
Figure 3. Long and short positions of Hungarian ETS sectors
Source: Author’s calculations based on CITL data from APREC
An important issue for the new Member States regarding the EU ETS was the lack of reliable
baseline data for CO2 emissions. For most installations, no historical data had ever been collected at
all, it was very important to assess the mass balance measurement process and thoroughly examine
all possible sources of emissions. Our interviews confirmed the widespread belief that baseline
emissions were often inflated (Ellerman and Buchner, 2006).
Hungary's greenhouse gas emissions in 2006 totaled 78.6 million tonnes of carbon dioxide
equivalent (CO2e), 2 per cent down on the previous year, according to data released by the National
Meteorological Service. The setback is mainly due to the milder winter that curbed energy demand
for heating, the authority said, although long-term emission trends show a stagnation of Hungarian
emissions since 1992 due to the collapse of heavy industry. At 40% of Hungarian installations
emissions increased, and decreased at 60% during the pilot phase.
Based on our interviews nothing tangible can be measured in aggregate data so as to the impact of
EU ETS on Hungary during the first phase of the scheme. The effect if any has been non significant
at best, and positive for the sectors in some cases. No reductions were achieved clearly attributable
to the introduction of the EU ETS due to the loose target and the overall long position of the
market. According to interviewees the system was not motivating, operators perceived the scheme
as an administrative burden to comply with. This study’s main conclusion is that EU ETS has been
effective in inducing firms to build their capability to respond to a carbon price signal, but has not
led to significant emissions abatement in the pilot phase.
13
Impacts on Hungarian EU ETS sectors
The pilot phase was a learning phase for the Hungarian economy, for decision-makers and also for
operators, it raised awareness, and most importantly, carbon price appeared in their decisionmaking processes. Hungarian installations did not have to struggle for EUAs during the pilot phase
as most installations in most sectors were overallocated. Operators did not have to worry about
compliance, although they voiced their concerns over the stricter allocation for the Kyoto
compliance period. For every Hungarian company the first phase of the EU ETS was rather neutral
due to the over-allocation. According to operators, lobbying for loose and generous allocation was
the optimal attitude in order to comply. The second phase allocation was expected to be based on
the first one, so receiving more allowances in the pilot phase seemed to secure compliance for the
Kyoto phase as well. Interestingly, the economic rationale of selling the surplus and thus generating
profit was not mentioned by any of the interviewees as a reason to lobby for more allocation.
In theory, free allocation amounts to compensating companies for the introduction of a cost on
carbon (Grubb and Neuhoff, 2006). Allowances given free represent a rent transfer, in the form of a
financial asset that can be sold on the carbon market. Free allowances thus have an opportunity
cost, it is the cost of emitting an additional tonne of CO2, which means that one less freely allocated
allowance can be sold on the market (Ellerman, 2005, p.130). Since most Hungarian installations
were in a long position, the ETS was not a real constraint, they could emit as they would without a
CO2 price and simply surrender the equivalent number of allowances. This however does not mean
operators were not recognizing the opportunity cost of carbon allowances. This study presents two
specific cases where the opportunity cost of freely allocated allowances were clearly recognized but
we must state that most operators were apparently not doing so. Some long installations did not
realize the potential for revenue generation and kept their allowances until the end of the pilot phase
when it was already worthless. Nonetheless some operators made fortunes by selling early.
This study presents ETS implications of four
sectors receiving the bulk of Hungarian
allocation.
Table 4. Sectoral distribution of NAPI
Combustion
Cement
Iron and steel
Refineries
Ceramics
Metal ore
Glass
Coke ovens
Paper and board
Total
Allocation
65,522,637
72.23%
8,564,688
9.44%
6,583,995
7.26%
4,149,510
4.57%
2,596,341
2.86%
1,003,191
1.11%
886,260
0.98%
792,699
0.87%
609,177
0.67%
90,708,498
100.00%
Power generation
Although the EU ETS was overall neutral to the power generation sector due to over-allocation,
effects differ for coal, gas, lignite, and biomass fired power plants. Fuel-switch from coal to
biomass represents the most common abatement possibility revealed by interviewees. One power
plant manager revealed that after the price collapse of carbon allowances they switched back to
coal, which clearly indicates the appreciation of the value of allowances relative to the cost of
abatement. It may be concluded that the system could have had an impact, were the prices
reasonable on the market. Two features worth mentioning are (1) the debate about BAT references
14
for cogeneration between industrials and the authorities, and (2) the growing interest for carbon
capture and storage (CCS) by multinationals and their Hungarian subsidiaries.
Cement production
According to the head of the association of cement industry the entire Hungarian cement sector was
long in the first period. That is the rationale behind the fact that industrials were not concerned with
the allocation but rather with rising energy prices, strong competition on the market and the
substantial delays of public investments. The bulk of allowance sales from the cement industry were
done through the central trading desk of HOLCIM Heidelberg company.
Iron and steel
The strategic-technical director of the most significant Hungarian steel maker pointed out that
carbon emissions in the iron and steel sector are due to technology hence cutting CO2 emissions is
only achievable by reducing production. In his opinion, the only abatement possibility is relocating
production e.g. to Ukraine, where EU ETS has not been introduced. This is the so called leakage.
Oil refinery
Interviews revealed that a Hungarian owned company had successfully internalized carbon price by
managing the firm's allowances centrally and introducing carbon pricing into the profit and
management evaluation criteria. Their linear programming models used to maximize plant
profitability were modified by adding new constraints representing the cost of every tonne of CO2
emitted as a result of operational decisions. The carbon constraint amounts to €25/t presently and
will increase to €40/t from 2012. It is built into each business unit’s performance assessment by
focusing on EBITDA corrected with CO2 emissions indicators. The opinion expressed by the chief
economist in the refinery sector we met overlaps with the findings of Lacombe (2008) that risks of
leakage are of concern to them in the long run through capacity relocation. He concluded a very
limited pass-through potential.
Although cost of carbon in the pilot phase was too low to create strong incentives for actors to
change their operations, it has compounded with the recent increase in energy prices and led
companies to become much more serious about energy efficiency investments. Operators need time
to learn that carbon allowances are assets that are subject to trading and also that banking and/or
borrowing, and later selling them on the market represent an option to generate profit instead of
normal production where carbon allowances are used.
A question for the interviewees was to know whether they cut production down because of the
carbon price. Such an outcome was irrelevant for the entire Hungarian ETS sector, it had at best a
marginal impact on production choices and emission outcomes. In the short run, the impact of EU
ETS on operations was minimal.
All interviewees in all sectors agreed that the system is unreliable and unpredictable due to
tremendous delays. Even half a year after the start of the second period Hungarian installations do
not know their Phase II allocations. Interviewees only guess that their position is going to be short,
which renders business planning even more difficult. We must conclude that such a system will
undoubtedly have negative effects on all players if the rules of the game are set late and the
circumstances are uncertain.
15
Joint Implementation projects
Since Hungary meets the eligibility requirements, track one JI procedure is pursued, meaning that
Hungary as the host party of JI projects wishes to apply its own national rules and procedures to the
selection of JI projects and the estimation of emission reductions from them. In order to facilitate
the implementation of JI projects, the Ministry for Environment and Water has developed the
procedure for evaluating and approving JI projects. It created and maintains a web site with the
relevant, updated information on the application procedure and general information on JI projects. It
developed a manual that defines the additionality criteria for Hungarian JI projects and it regularly
publishes the list of already submitted project initiatives and their status.
In early 2002, US energy group AES`s power plant in Kazincbarcika was considering a pioneering
fuel switch from coal-firing to biomass-firing. This was the first ever JI project in Hungary, the
Ministry for Environment had never before issued approvals for Kyoto Protocol transactions. AES
sold the Emission Reduction Units (ERU) to the Dutch government raising over €3 million of
funding, 25% of the project cost. In 2004, Hungarian fertilizer manufacturer Nitrogénművek began
planning a new nitric acid plant to replace its old plant in Pétfürdő in Western Hungary. A private
bank acquired the ERUs from the project which reduced N2O emissions by over 2 million tonnes of
CO2 equivalent. The project will ultimately raise between €12 and €20 million for the client,
covering a substantial portion of the funding for the new nitric acid plant. There has already been a
significant amount of JI projects in Hungary, regarding the number of projects approved most of
them focus on wind energy and biomass utilization.
Green Investment Scheme and trading with hot air
Along with Joint Implementation Hungary intends to use International Emission Trading (art. 17 of
the Kyoto Protocol) with guaranteed “hard greening” of the revenues from these activities. The
Hungarian Ministry for Environment and Water has set up a Green Investment Scheme (GIS) for
which the Hungarian cabinet adopted the last legal provisions on December 5, 2007. The
framework aiming to lend environmental integrity to governmental carbon credits under the Kyoto
Protocol demands that all activities supported by the scheme result in reductions of GHG emissions,
so that buyers of the credits can be sure that the money they pay will be invested in climate friendly
activities. Activities will focus on energy efficiency, energy saving and renewable energy (FeilerRabai, 2007).
Availability of Assigned Amount Units (AAU) for the use of flexible mechanisms is determined by
the total quantity of AAUs available for the country, the size of the commitment period reserve,
likely emission trends till the end of Kyoto commitment period and the amount of AAUs necessary
to be set aside for the generation of ERUs for Joint Implementation projects. (Feiler-Rabai, 2007)
For Hungary the approved assigned amount is 542,366,600, and the commitment period reserve is
394,987,486 AAUs. According to emission trends for the commitment period by the Fourth
National Communication of Hungary 432-443 million AAUs are needed to be set aside to cover
domestic emissions. For the already approved JI projects a reserve of 10 million AAU is likely to be
sufficient and no major new JI projects are foreseen. Considering these factors Hungary owns some
89 million AAUs, which can be used for sale in international emission trading or for banking for the
post-Kyoto period. Hungary’s strategy is to sell 10 million AAUs in an initial phase, to test its GIS.
If successful, the country plans to sell another 30-40 million AAUs over the Kyoto commitment
period. No sales were organized during the pilot phase, but it is worth mentioning that on December
18, 2007 Hungary signed its first basic agreement with Japan to sell AAUs.
16
Conclusions and outlook
During the pilot phase of the EU ETS Hungary has learned considerably about using emissions
trading, using the market in order to reduce GHGs. The infrastructure, the institutional background
has been set up, although with considerable delays but we might say it was due to the time pressure,
which was the same even for the EU15. The Registry is up and running, the spot market has
developed. The major part of Central and Eastern Europe uses the Hungarian trading platform. By
January 1, 2008 only three countries had received UN approval to trade within the flexible
mechanisms, Hungary among them, with Japan and New Zealand. In February 2008, Hungary
adopted its National Climate Change Strategy in order to meet its obligations. The strategy will be
financed from the government's environment and energy operational program and from sales of
Kyoto carbon credits through the Green Investment Scheme, first to be up and running in the
region.
Hungary is one of only a handful of states to have used provisions in the ETS Directive allowing
governments to auction allowances. The Hungarian experience serves as evidence that a new
market economy has the institutional capacity and technical expertise to carry out auctioning. This
confirms that Hungary at the state level realized the revenue generating opportunity behind
emissions trading.
There was a considerable amount of movement among market players, both internationally and
within Hungary. Volumes and frequency of domestic and foreign transfers prove that Hungary was
actively involved in the allowance market. The timing of transfers and surrenders suggests that
Hungary, also on the corporate level, realized the revenue generating potential of selling surpluses
on the European carbon market.
Hungarian installations did not have to struggle for allowances, operators did not have to worry
about compliance during the pilot phase. Based on the interviews the impact of the EU ETS on
operations was minimal, the effect if any has been non significant at best, and positive for the
sectors in some cases.
This study finds evidence that some operators are recognizing the opportunity cost of freely
allocated allowances, although some long installations kept their allowances and their surplus did
not appear on the market. Our interviews revealed two examples of economically rationale
behavior: one power plant switched back to coal from biomass when the allowance price dropped,
and one firm introduced carbon pricing into their profit and management evaluation criteria. We
must conclude that these two instances are both attributable to those two persons in their positions.
The main conclusion of this study is that Hungary both at the country level and at the corporate
level effectively exercised the opportunity to access the European carbon market. It will be
interesting to look at the Kyoto phase for which a short position is foreseen even in Eastern EU.
Whether operators have learned their lesson and whether they will forfeit the Kyoto period remains
the subject of a possible next paper.
17
Annex I. – Hungarian NAP I
Emissions allowances to be allocated to existing installations
free of charge
I/a-I/b.
I/b.
I/c.
Quantity of emissions
allowances
(CO2 tonnes/year)
16,927,857
2,267,091
2,100,160
Electricity generation*
District heating
Combustion for internal purposes (except for sugar
industry)
I/d.
Sugar industry
431,479
II.
Mineral oil processing
1,383,170
III.
Coking
264,233
IV-V. Roasting and concentration of metal ores; iron and steel
2,643,354
production*
VI/a.
Cement production
2,390,321
VI/b.
Lime production
464,575
VII.
Glass production
295,420
VIII.
The production of roof tiles, bricks, fire-resistant bricks,
865,447
wall tiles, stone products and china
IX-X. The production of cellulose, paper and cardboard
203,059
1. Total for existing installations
30,236,166
2. New entrants’ reserve
633,218
TOTAL FREE OF CHARGE (1+2)
30,869,384
3. Quantity to be allocated for compensation
791,523
TOTAL FOR SECTORS (1+2+3)
31,660,907
* Including the quantity to be transferred by the sector later under point 15 of the
Allocation Plan.
Source: Hungarian Ministry for Environment and Water
18
Breakdown of the number of installations by Annex I activity
Mineral
Iron
Pulp
Combustion oil
Coke Metal and
Cement
Ceramic and
Optinstallations refineries ovens ore
steel clinker Glass products paper in
Total
151
1
1
2
8
7
9
50
6
0
235
Combustion installations with a rated thermal input between 20 and 50 MW
Installations
Emissions
Share of
national
Share of total
installations
national
%
Number
t CO2 eq
emissions %
71
30
1,103,424
4.2
Breakdown of installations by emission categories — number of installations
Emissions
in kt
CO2/year < 500
500 to 50,000 50,000 to 500,000 > 500,000
Total
Number
5
177
40
12
234
Breakdown of installations by emission categories — emissions
< 500
500 to 50,000 50,000 to 500,000 > 500,000
kt CO2
per year
0.3
2,843
5,859
17,325
%
0.0%
10.9%
22.5%
66.6%
19
Total
26,028
100%
Annex II. - Firms interviewed receive the bulk of allowances
Installation
Percentage of Cumulative
Allowances allowances
percentage
Sector
Mátrai Ltd. Visontai Power Plant 1-Combustion
20 382 318 22,47%
22,47%
Dunamenti Power Plant
1-Combustion
7930539
8,74%
31,21%
Dunaferr Company Group
5-Iron and steel
5 769 828
6,36%
37,57%
Oroszlányi Power Plant
1-Combustion
5 185 509
5,72%
43,29%
AES Tisza Power Plant
1-Combustion
4 307 580
4,75%
48,04%
MOL Duna Oil Refinery
2-Refineries
4 149 510
4,57%
52,61%
Csepel II. Power Plant
1-Combustion
2 432 598
2,68%
55,30%
Vértesi Ltd.
20
Annex III. – Auctions in the pilot phase
Allowances set aside for auctioning
EUAs
EU25
Denmark Ireland
Hungary Lithuania
Phase 1 7,499,201 5,025,000
502,201 1,420,000
552,000
%
5%
0.75%
2.5%
1.5%
Allowances actually auctioned
EUAs
2005
EU25
Denmark Ireland
0
0
250,000
2006
2,410,000 2,762,500 + 963,000
2007
5,029,500 1,618,500
0
Phase 1 7,439,500 4,381,000 1,213,000
%
4.35%
1.81%
0
Hungary Lithuania
0
0
1,197,000
1,177,500
2,374,500
4.18%
Source: Fazekas (2008)
21
0
552,000
552,000
1.5%
Annex IV. – Accounting Aspects of Emissions Allowances
Entered as intangible assets
Reducing profits
Increasing profits
Recognition
Free allocation
Entered as goods
Reducing profits
Increasing profits
As extraordinary
revenue
Accrual of
extraordinary
revenues (as a
delayed revenue)
Other typical
recognition
Assessment
Market price Unplanned
below the book depreciation as
value other expense
Market price
above the book
value
As extraordinary
revenue
Accrual of
extraordinary
revenues (as a
delayed revenue)
The proportionate
resolution of the
accrual upon the
accounting of the
allowance as a cost or
expense
No effect on profits nor losses
Depreciation as
other expense
The reversal of
unplanned
depreciation as other
revenue
(Value correction against the assessment
reserve – effect on the capital)
Provision
The creation of a As other expense
provision on the
balance sheet day
The resolution of
the provision by
April, 30
Derecognition
Usage As other expense
Sale Book value as
other expense
The proportionate
resolution of the
accrual upon the
accounting of the
allowance as a cost or
expense
The reversal of
depreciation as other
revenue
As other expense
As other revenue
Sale price as other
revenue
Fees, penalties
Supervisory fee As expense for
Administrative fee other service
Account holding
fee
Penalties As other expense
Interest on
arrears
As other revenue
As other expense
Book value as
purchase value of
sold goods
As expense for
other service
As other expense
Source: Fazekas – Andor (2008)
22
Sale price as net price
revenue
Annex V. – Transactions based on data of the Hungarian Registry
2006
No. of
transaction
EUA
Transfers from
other MS to
Hungarian
operators
Transfers from
other MS
personal
accounts to
Hungary
Transfers from
other MS to
Hungary (Total)
2008
No. of
transaction
EUA
Phase I
No. of
transaction
EUA
No. of
transaction
EUA
18 688
1
96 200
4
451
1
115 339
6
611 322
20
452 832
18
343 554
13
1 407 708
51
630 010
21
549 032
22
344 005
14
1 523 047
57
192
2 605 788
62
1 311 356
25 10 260 616
279
6
200 000
1
67 344
198 2 805 788
63
1 378 700
Transfers from
Hungarian
operators to
other MS
6 343 472
Transfers from
Hungarian
personal
accounts to other
MS
131 035
Transfers from
Hungary to other
MS (Total)
6 474 507
Transfers
between
Hungarian
operators
Transfers from
Hungarian
operators to
Hungarian
personal
accounts
Transfers from
Hungarian
personal
accounts to
Hungarian
operators
Transfers
between
Hungarian
accounts (Total)
2007
2
27
398 379
9
10 658 995
288
1 846 804
38
1 737 049
30
922 407
57
4 506 260
125
131 035
6
200 000
1
81 461
6
412 496
13
0
0
0
0
0
0
0
0
1 977 839
44
1 937 049
31
1 003 868
63
4 918 756
138
Source: personal e-mail communication with the Hungarian Registry (2008)
23
Annex VI. – Hungarian JI projects
This table presents an overview of the Hungarian JI projects under approval. LoE stands for Letters
of Endorsement, LoA means Letters of Approval. The first five projects have already been
implemented as of April 2008.
Project supplier
AES Borsodi Power Plant
Bakonyi Power Plant
PANNONPOWER Co.
Project owner
ERUPT
(Netherlands)
Senter Novem
(Netherlands)
PCF (World Bank)
IBRD
Status
Type of project
Location
LoA
biomass conversion
Kazincbarcika
LoA
biomass conversion
Ajka
LoA
methane utilization
from landfill
methane utilization
from abandoned
landfill
methane, biogas
utilization
geothermal methane
utilization
energy efficiency
improvement
Nyíregyháza
Exim-Invest Biogas Ltd.
CCCCT Sarl
(Luxemburg)
LoA
Pálhalmai Agrospeciál
Ltd.
JI/CDM tender
(Austria)
LoE
BÁTORTRADE Ltd.
CDC IXIS Bank
LoA
ENVIROINVEST Ltd.
Mitsubishi C. (Japan)
LoA
Mitsubishi C. (Japan)
LoA
biomass conversion
Pécs
LoA
conversion coal-to-gas
Tatabánya
LoA
biogas utilization
Pálhalma
General Electrics
LoA
CHP from biomass
Balatonfüzfő
ERUPT
(Netherlands)
LoA
PCF (World Bank)
LoA
ERUPT
(Netherlands)
LoA
wind energy
generation
Osttffyasszonyfa
LoA
biomass
Dél-Nyírség
LoA
acid prod. - N2O
emission reduction
Pétfürdő
LoA suspended
methane utilization
Nagykanizsa,
Orosháza, Baja
LoE
biogas utilization
Sajóbábony
LoE
co-generation (gas)
Salgótarján
LoE
co-generation
Szeged
LoE
methane from landfill
Gyöngyös, Göd,
Salgótarján
MÁV Hungarian
Railways Co.
GREEN PARTNERS,
BGP Engineers BV
Framex Bioenergia Ltd.
Independent Energy
Production Ltd.
SZEGEDI Hőszolg. Ltd. –
Démász/BKZ
Szombathely District
Heating Ltd.
Vértesi Power Plant Co.
ERUPT
(Netherlands)
ERUPT
(Netherlands)
Euroinvest Co. – Füzitő
GM Ltd.
EETEK Ltd.
Alberirsai Wind Power
Park Ltd.
Eurowind Hungary Ltd.
Hungarowind Wind
Power Plant
Füzfői Power Plant Ltd.
Debreceni Hydropower
Co.
ERUPT
(Netherlands)
ERUPT
(Netherlands)
ERUPT
(Netherlands)
JI/CDM tender
(Austria)
ERUPT
(Netherlands)
ERUPT (Hollandia)
24
wind energy
generation
wind energy
generation
Debrecen
Nyírbátor
34 locations
81 locations
Rácalmás
Kimle
Project supplier
Callis CRt.
Kaptár "B" Energetika
Ltd.
Project owner
JI/CDM tender
(Austria)
JI/CDM tender
(Austria)
E.ON Hungária Co.
Pannon Wind Ltd.
Liget Bioenergy Works
Ltd.
Callis Co.
Nitrogénművek Co.
Status
LoE
LoE
LoE
JI/CDM tender
(Austria)
Tohoku Electric
Power Co. Inc.
(Japan)
JI/CDM tender
(Austria)
many project owners
(Austria...)
LoE
Type of project
wind energy
generation
wind energy park
wind energy
generation
wind energy
generation
wind energy
generation
Location
Albertirsa - Ceglédberc
Pusztaszabolcs
Sopronkövesd
Tét
Kimle
Károlyháza
Kisigmánd
LoE
gases recovered from
spas
26 locations
LoE
acid prod. - N2O
emission reduction
Pétfürdő
LoE
forest colonization
10 locations
Source: Hungarian Ministry for Environment and Water, personal e-mail communication (2008)
Source: Hungarian Ministry for Environment and Water (2007)
25
Annex VII. – GIS framework and the potential hot air in Hungary
Source: Feiler-Rabai (2007)
Source: Fogarassy, Cs. - Lukács, A. - Nagy, H. (2008)
26
References
Bart, I. (2007): Hungary. In. Ellerman, A. D. - Buchner, B. K. - Carraro, C. (ed.) Allocation in the
European Emissions Trading Scheme: Rights, Rents and Fairness. Cambridge University Press
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