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CO2 EMISSION QUOTAS ARE AT THE HEART OF A TUSSLE BETWEEN BUSINESS AND GOVERNMENT

Industry emits distress

BIG industry is seriously concerned about national carbon dioxide (CO2) emission quotas. The amount given to Slovakia by the European Commission is 14 percent lower than what Slovakia requested in its National Allocation Plan for 2005-2007.
Industrial manufacturers say reduced CO2 emission allowances will put an unbearable burden on Slovak industry, especially those in the metallurgy, concrete and energy production sectors. They say the situation will have a serious impact on employment.
The Environment Minister resolutely dismisses their claims.

BIG industry is seriously concerned about national carbon dioxide (CO2) emission quotas. The amount given to Slovakia by the European Commission is 14 percent lower than what Slovakia requested in its National Allocation Plan for 2005-2007.

Industrial manufacturers say reduced CO2 emission allowances will put an unbearable burden on Slovak industry, especially those in the metallurgy, concrete and energy production sectors. They say the situation will have a serious impact on employment.

The Environment Minister resolutely dismisses their claims.

The reduced emission volume is the result of negotiations between Environment Minister László Miklós and the European Commission. The European Commission rejected Slovakia's plan, which asked for CO2 emission quotas equalling 106.4 million tonnes for three years, or 35.5 tonnes of emissions annually.

Subsequent negotiations resulted in a compromise: the European Commission would grant 30.5 million tonnes to Slovakia - a 14 percent drop from the original request.

Miklós told The Slovak Spectator January 27 that if Slovakia had refused to accept the compromise, the European Commission would have enforced its own numbers, requiring Slovakia to manage with just 26.5 or 27.1 million tonnes.

According to the Environment Minister, the European Commission felt that Slovakia had based its national allocation plan on inflated emissions needs.

"The European Commission came up with a different method of calculation, which is based on the growth of the gross domestic product. Consequently, its numbers were considerably lower [than ours]," said the minister.

Miklós explained that based on the Kyoto protocol, the EU must push down its CO2 emissions by 8 percent. Quotas have been divvied up according to need and distributed to all EU member countries.

He speculated that certain Slovak companies were disappointed in the compromise because they were hoping to have left over emission allowances to sell to other companies. Even with the decrease, Miklós thinks Slovak companies will still have quotas left over to sell on the market.

Economy Minister Pavol Rusko listened sympathetically to the complaints of industry leaders. He said he was shocked that the Environment Ministry had been keeping the emission quota issue under wraps. Industry representatives are pressing the government to reopen CO2 quota discussions in Brussels.

Slovakia's biggest CO2 producer, US Steel, is challenging the European Commission's decision to reduce Slovakia's emissions in court (the European Human Rights Court). US Steel spokesman, Ján Bača, says that an emission allocation reduction by 14 percent would threaten the company's ability to compete. US Steel is among the five biggest employers in Slovakia.

"[Reduced emissions] could have a serious impact on the company's production plan. We might not be able to meet our business plan and this would certainly affect employment in our company," Bača told The Slovak Spectator.

The state intends to distribute the new reduced quotas to Slovak companies by the end of February at the latest. In the case of big emission producers, the ministry will seek reserves through individual negotiations.

"We have not yet received any concrete number from the ministry," Bača said January 27.

US Steel denies inflating its emission estimates and claims it provided scientific, accurate data based on the plant's planned production levels.

"These production levels are already limited by EC restrictions, including production caps agreed to by Slovakia," the company claims.

The Slovak Association of Employer Unions (AZZZ), an advocate for Slovakia's biggest employers, agrees that the Slovak government should reopen negotiations with the European Commission.

"The global impact [of the lower CO2 emission quotas] will be negative. But on Slovakia, the impacts could be grave, mainly in the spheres of metallurgy, concrete and energy production. Lowering the CO2 emission quotas from the original 8 percent agreed on to 14 percent proposed by the European Commission will be a serious threat to companies in these branches," AZZZ General Director František Bruckmayer told The Slovak Spectator.

According to Bruckmayer, lower quotas would inflate production costs, which in turn could harm the fragile profitability of the firms and weaken their competitiveness on the European market.

"Some, mainly foreign firms, see moving part of their production facilities to other EU countries. However, this is not a solution for firms with Slovak capital only," Bruckmayer told The Slovak Spectator.

Companies seriously concerned about the reduction of CO2 allowances met in Košice on January 11, calling on the government to create competitive conditions for Slovak companies.


Magdalena MacLeod
contributed to this report

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