The Republic of Cyprus is set to experience a substantial boost in revenue, estimated at €150 million annually for the period 2024–2030, through the auctioning of greenhouse gas emission rights.
This was announced yesterday by Theodoulos Mesimeris, the head of the Department of Environment, during a session with the parliamentary Control Committee discussing the special report by the Audit Office titled “Have the actions promoted by the Republic of Cyprus yielded the desired results in reducing greenhouse gas emissions?”
According to official data, Cyprus first auctioned pollution rights in 2012. From 2012 to 2020, a total of 6,201,500 rights were auctioned, with 5,621,500 and 580,000 pertaining to fixed installations and air transport, respectively.
The total revenue generated during this period amounted to €103,160,956. In the first two years of the 2021–2030 period, 1,478,000 and 1,293,500 rights were auctioned, resulting in revenues of €78,415,320 and €102,888,405, respectively. Notably, the revenues for 2022 nearly match the total for the entire 2012–2020 period.
Simultaneously, Mesimeris highlighted that significant economic costs are anticipated from January 1, 2024, with the inclusion of maritime transport in the Greenhouse Gas Emission Trading System (GHG ETS) and the full integration of the aviation sector.
He stated, “Realities dictate that there will be a significant economic cost; everyone will pay, impacting the overall competitiveness of the economy.”
Furthermore, Mesimeris revealed that from 2027, road transport, buildings, heating fuels, and motion fuels will also be included, constituting additional costs for conventional fuels, vehicles, and heating.
The total annual pollution rights generated in Cyprus, as indicated by Mesimeris, reach 8 million tons. Within the GHG ETS, industries contribute 4 million tons, with 3 million from the Electricity Authority of Cyprus (EAC) and 1 million from the Cement Factory and brickworks.
Explaining further, Mesimeris stated that, based on the national plan for energy and climate, Cyprus initially aimed for a 24% reduction in greenhouse gas emissions by 2030 compared to 2005.
However, this target was recently revised to a 32% reduction, posing a significant challenge for the Republic of Cyprus. Achieving this, he emphasized, requires a substantial number of electric vehicles in Cyprus by 2030, in addition to the necessary building upgrades, which present challenges due to a shortage of required workforce.
Costas Hatzipanayiotou, the Director-General of the Department of Environment, noted that several recommendations and changes proposed in the Audit Office report have already begun implementation.
He stated that comments from the European Commission on the national plan “Climate and Energy” are expected before the end of the year, with the final plan to be submitted to the EU in June 2024.
Hatzipanayiotou emphasized that the implementation of the national plan goes beyond the responsibilities of the Department of Environment, involving the entire state mechanism and society at large.
Adonis Yiasemides, the CEO of the Electricity Authority of Cyprus (EAC), projected that the EAC’s anticipated payment for pollution in 2024 would be around €270 million.
He added that pollution levels in 2024 are expected to be at 2023 levels, approximately 3.1 million tons of carbon dioxide emissions, with an average projected value of €88.4. Yiasemides indicated that during the period 2017–2022, €570 million was paid for the purchase of rights, which was passed on to consumers.
Environment Commissioner Maria Panayiotou stated that the national plan for energy and climate is undergoing revision, with the primary goal of incorporating recommendations and changes to achieve the ambitious EU targets.
She emphasized that reducing pollution requires environmentally friendly actions, policies, decisions, and actions, making it a top priority. Panayiotou added that actions like promoting photovoltaics for all and sustainable mobility are aligned with this direction.
Auditor General Odysseas Michaelides has emphasized the need for all relevant state authorities involved in implementing the National Plan for Energy and Climate to seamlessly proceed with the adoption of appropriate policies and measures to achieve the greenhouse gas emission reduction targets, as per Cyprus’s commitments to the EU.
Michaelides proposed the establishment of a reliable monitoring mechanism for the implementation of policies and measures. He also suggested finding ways to effectively allocate auction revenues, with investments funded by these proceeds evaluated for energy efficiency and the modernization of the energy system.