For allocation of allowances for greenhouse gas emissions trading for participation of bulgaria in the european greenhouse gas emission

Ensuring Compliance with the Criteria under Annex III of the Directive

1.6. What will be done to ensure that the total quantity of allowances does not exceed the necessary quantity for the strict application of the criteria under Annex III of the Directive? How is the correspondence ensured with current or projected emissions pursuant to Decision 93/398/EEC? ?

The total quantity of allowances, allocated by the Commission Decision of 26 October 2007 for Bulgarian NAP for 2008-2012 and Corrigendum to the Commission Decision of 26 October 2007, corresponds to the present alocation in the plan for the period 2008-2012 and has been decreased with 37 % in comparison to the quatity of allowances reqired by the country in the draft of the plan presented in 2007. That guarantees that the total quantity of allowances does not exceed the necessary quantity for the strict application of the criteria under Annex III of the Directive. With Commission Decision of 26 October 2007 EC refused to recognize the increase of emissions in the trading sector, resulting from the closure of two units in NPP Kozlodui on the 31.12.2006 before the term set and the introduction of measures to decrease the emissions of harmful substances – actions undertaken for the implementation of the requirements of the Treaty of accession of Bulgaria to EU. Defining the total quantity of allowances for Bulgaria, the Comission refuses also to normalize the hidrologiacal conditions in the country regarding the electricity production in hydro power plants.

In this condition, the operating installations in the country will be vastly restricted in thеir exploiatation, and the possibilities for construction of new, modern installations are also limited. The business, despite the fact, that Bulgaria has a considerable reserve of AAUs from the Kyoto protocol, will be forced to to buy allowances or to limit its activities after 2009 (with up to 20 % toward 2007 and 2008 , what will decrease it’s competitive power.

The projected emissions of the new installations, whose construction has been declared, exeed 60 Mln t. Rendering an account of this quantity, as well as of the shortage of about 8 Mln allowances in order to maintain the level of production from the period 2007 – 2008, a limitation to the extent of about 14 Mln t annually appears. It follows from this that the total amount of allowances is about 25 % less then the necessary one in order to comply with the criteria. This estimation does not render an account of the fact that during the period 2007 – 2008  the installations operated with about 70 % of their capacity and presupposes retention of this low load level.

This substantial shortage of allowances for the installations in operation, as well as for the new entrants, can lead to cessation of operation and bankruptcy of a part of the installations and to stop the process of construction of new installations.

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