CEZ: Decision about allocation of CO2 credits in the Czech Republic for NAP II. may be today

Decision about allocation of CO2 credits for individaual sectors in the Czech Republic for the period of 2008–2012 may happen today, even though this issue has not been on today’s agenda so far. Government has been waiting for the agreement between involved offices. Both Ministry of Trade and Industry and Ministry of Environment said that they agreed on the principle of allocating the quotas and that government can decide on this issue.

Our view:
Czech Republic received 86.8m of CO2 credits for NAP II. which is 14.8% lower than requested. As we mentioned earlier, system of allocation among industries, i.e. proportional or disproportional, will be critical for CEZ. Should CEZ receive less than what it received in NAP I., i.e. 35.4m what was then 36.5% and currently represents 40.8%, CEZ could be short of CO2 credits for 2008-2012 period according to our assumptions. Note however that in the expectation of higher prices of CO2 credits CEZ already started to buy them on the market in past weeks.