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Amendment to Act on Greenhouse Gas Emission Allowance Trading

The amendment (effective since 1 September 2008) responds primarily to the objections raised by the European Commission and abolishes the allowance guarantees for new facility operators or other operators whose facilities changed in terms of use, manner of operation or capacity as a result of major investment.

According to the European Commission, the provisions of Section 8(6) and (7) of the Act – guaranteeing the full right to receive allowances for two subsequent trading terms to preselected groups of operators – could be deemed to constitute state aid incompatible with the public market.

The amendment also deals with the current application troubles. The Act provides the Ministry of the Environment with permanent authorization to allocate the allowances or, if applicable, regulate the allocated amount if several facilities merge or a single facility demerges. So far, such authorization was contemplated to apply only to the first trading term, but not permanently.

The amendment further introduced provisions on termination of the allowances since the provisions resulted hitherto in practical problems with dismissing operators who failed to comply with the criteria for being enrolled in the scheme and closing their deposit accounts with the register.

The amendment newly introduced assigned amount units (AAUs) that represent the difference between the Czech Republic’s obligation under the Kyoto Protocol and the actual emission reduction as compared to 1990. The Ministry of the Environment may sell these credits both to other countries participating in the scheme of international emission trading and to private corporations in auctions. The funds raised may only be used to support projects for reduction of greenhouse gas emissions.

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