Potential impacts of CFI ruling range from -45 Mt/yr to +164 Mt/yr

Oslo (2 October 2009) 

Following confusion in the market after the ruling by the Court of First Instance last week on the Polish and Estonian National Allocation Plans (NAPs), Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets, wants to stress the following:

• The European Commission will only re-assess the NAPs of the countries that brought the NAP decision to court before the two month and 10 days deadline. Countries that have not filed a lawsuit have by definition already accepted their allocation.
• The following eight countries have filed a lawsuit against the Commission over their NAPs: Poland, Estonia, Bulgaria, Czech Republic, Hungary, Latvia, Lithuania and Romania.
• The European Commission reduced the phase 2 allocation in these countries by 164 Mt/year. This is thus the maximum increase we can see in the overall phase 2 cap as a result.
• Five Member States, Bulgaria, the Czech Republic, Latvia, Lithuania and Poland, pleaded in their cases that the Commission failed to take a decision on their NAPs within the three-month deadline specified in the directive. If the EC fails to make a decision within this deadline, the NAP would automatically be accepted as it was submitted by the Member State. However, the CFI did not support Poland’s plea because the initial NAP did not contain all the information required by the EC to make an assessment. Point Carbon expects this to be the case for the other countries. Still, the risk that the CFI could find that the Commission has failed to respect the three-month deadline cannot be completely ruled out in all the cases.
• The European Commission has stressed that the new NAP assessments will be based on the best available and most recent data. What could this mean in practical terms? As a theoretical exercise, Point Carbon has taken the method used by the EC in their initial assessment of phase 2 caps and applied observed GDP figures for 2006-2008 as well as the current forecasts for GDP growth in the 2009-2010 period. Point Carbon finds that this would actually decrease the phase 2 cap for these 8 countries by 45 Mt/year (10%). (See the table below for details). Point Carbon stresses that this is only a theoretical exercise as a reassessment of the allocation plans would not be done using the original methodology. Nevertheless, it clearly illustrates the potential implications of using the most recent data available.
• Point Carbon finds that this provides a total range for the potential impact on the phase 2 cap following the CFI ruling, from a decrease of 45 Mt/yr to an increase of 164 Mt/yr. Point Carbon maintains the view that the final outcome will be relatively close to the initial assessment done by the EC and a major increase in the supply of European Union Allowances (EUAs) is not expected.

	Approved phase 2 cap (Mt/yr)	Cap with updated GDP growth rates (Mt/yr)	Difference (Mt/yr)
Bulgaria	42	38	-5
Czech Republic	87	79	-8
Estonia	13	9	-4
Hungary	27	23	-4
Latvia	3	2	-1
Lithuania	8	7	-1
Poland	209	197	-12
Romania	75	65	-10
Total	464	419	-45

For comments or further information, please contact:

Candida Jones
PR Manager, Point Carbon
Mob: +44 (0) 777 5754 763
E-mail: cjo@pointcarbon.com

Henrik Hasselknippe
Global Head of Carbon Analysis at Point Carbon Trading Analytics & Research, Point Carbon
Mob: +47 92 82 77 64
E-mail: hha@pointcarbon.com

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