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Czech green scheme puts high price on household emissions cuts

Date: 08-Nov-13
Country: CZECH REPUBLIC
Author: Marton Kruppa

A billion-dollar scheme to reduce household emissions in the Czech Republic costs five times as much per ton of carbon dioxide (CO2) as some European industries need to spend to achieve the same cuts, government data showed.

The scheme's expense, $105 per ton of greenhouse gas emissions cut, highlights the burden that European governments face in meeting a mid-century decarbonisation goal.

The Czech government has ploughed 20.5 billion crowns ($1.1 billion) over the past five years into the green investment scheme it says will cut output of around 800,000 tons of heat-trapping gases per year over the next two decades, the country's environment ministry said by email.

The project, by far the biggest of its kind in Europe, includes installing wall insulation and biomass-fired boilers in homes and was partly funded through the government's sales of surplus carbon permits allocated under the U.N. Kyoto Protocol.

Despite the relatively high cost compared with emissions reductions in certain European industrial sectors, some consultants believe the measures will pay for themselves via other benefits, such as cutting household electricity bills.

"If lower energy bills of households in greener buildings are factored in, some countries may as well end up with negative costs," said Jozsef Feiler of Hungary-based consultancy Klimapolitika.

The European Union has agreed to aim to cut its output of heat-trapping gases by 80-95 percent below 1990 levels by mid-century to help prevent the worst effects of climate change.

In a 2011 study on how to meet the goal, the European Commission suggested emissions from buildings, already down 12 percent by 2005, should be cut 37-53 percent by 2030 and around 90 percent by 2050.

Debate on the 2030 emission target is likely to be fraught as member states aim to balance short-term costs with longer-term gains that also include lower fuel import bills and increased security of energy supplies.

The buildings sector - including schools, offices and other non-residential sites as well as homes - is now responsible for more than 10 percent of the EU's total CO2 output. But it is not directly regulated by the Emissions Trading Scheme (ETS), Europe's main weapon for curbing greenhouse gases blamed for global warming.

Member states must instead set their own policies for cutting non-ETS emissions to meet annual emission goals.

The cost of cutting buildings emissions is far higher than the 20 euros per ton it would cost some European heavy industrial plants to install energy efficient technologies, the cheapest form of CO2 abatement now available in the ETS, according to Thomson Reuters Point Carbon analyst Emil Dimantchev.

The carbon-cutting cost of the Czech building program is lower than similar, smaller scale programs in Hungary and Slovakia, which cut CO2 at a rate of $110 and $170 per ton respectively, according to Reuters estimates based on 2011 government data.

All three countries partly funded their programs from revenue raised through selling emission rights called Assigned Amount Units (AAUs), which can be used by governments to help meet their legally binding emission targets under the U.N. Kyoto Protocol.

(Reporting by Marton Kruppa; Editing by Ben Garside and Anthony Barker)

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