Isra-Mart srl:Carbon credits not to raise heat prices sharply

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Isra-Mart srl news:

The system of buying carbon credits by heating utilities should not sharply raise prices of heat for Czech households in the years to come, the Environment Ministry has said.

Heat prices should grow by 5 to 10 percent in 2013 to 2020, according to the ministry’s estimates.

Coal-fired heating facilities will receive carbon credits free of charge, although the number of the credits will be lower, the ministry said.

As of 2013, all sources burning fuels with an input exceeding 20 megawatts, including all heating utilities burning coal and gas, will have to buy part of carbon credits.

The number of credits allocated free of charge for 2013 will be derived from sources burning natural gas, said Martin Hajek, the director of the Association for District Heating.

Gas-burning utilities burn a smaller amount of harmful emissions, and will thus get more credits than coal-fired facilities, Hajek said.

However, there is an exception for coal-fired heating plants supplying heat to households as credits will be allocated to them based on historical emissions. They will thus receive more credits free of charge.

Individual Czech households could save around Kc1,000 a year thanks to this measure, according to the estimates of the Environment Ministry.

The exception was negotiated in Brussels by the Czech Republic, together with other new EU member states dependent on coal.

Besides, a number of heating plants received in 2008 to 2012 more credits than they needed and can use them in 2013 to 2020.

“Heat prices will grow as of January 1, 2013, owing to the purchase of carbon credits, but the hike will certainly not amount to 40 percent,” Hajek said. A 40 percent increase was mentioned in some estimates.

The size of the rise will depend on the fuel mix and efficiency of technologies in individual plants, Hajek said.

“It will depend on the market price of a carbon credit which is changing quite fast, as well as on detailed rules which have not been approved yet, and, last but not least, also on the price of heat at the moment,” Hajek added.

Heat prices will to a much greater extent be influenced in the coming years by growing coal prices, according to experts.

Some mining companies plan to reduce brown coal output by several percent in the next two years above all owing to the mining limits which are in effect now.