Filenews 4 November 2021 - by Angelos Nikolaou
Nor will the use of natural gas avoid the environmental costs of more expensive energy and electricity tariffs will remain soaring. With the use of natural gas in electricity generation, it is expected that greenhouse gas emissions will be 25% to 30% lower than other fossil fuels, such as fuel oil. However, the price of the right is forecast to be higher than current levels, which will result in us still having high energy costs even in the case of the use of natural gas.
Therefore, from the huge delay in the advent of natural gas, households that would previously have had the potential for cheaper electricity, will not have it in the coming years, not even after the withdrawal of fuel oil, and will lose out. Cheaper electricity is now expected to happen only with power plants from renewable energy sources.
Today, EAC is charged up to €200 million for the purchase price of carbon dioxide emission allowances, with the result that the final price of electricity in households is greatly higher. Specifically, the price is approximately €60 per right. For each megawatt hour, EAC has 0.7 tons of carbon dioxide, which corresponds to €42. Therefore, if the cost of generating electricity of a megawatt hour today is €125, of that €42 is a penalty. That is, 35% of the cost of electricity generation concerns the purchase of greenhouse gas allowances.
According to estimates, the purchase price of pollutants is expected to approach even €100 and as a result there is no benefit for the consumer, since EAC will pay more for the use of polluting fuels, whether it is fuel oil or natural gas.
It is noted that Cyprus must comply with the most ambitious climate targets set for 2030, to reduce pollutants by 55%. Furthermore, at the world climate summit currently being held in Glasgow it was stated that in order to achieve the objective of limiting global warming to 1.5 degrees Celsius, the methane contained in natural gas should be reduced.
For more than a decade, natural gas-fired power has dominated the public debate. With the new data taking shape at European and international level, it appears that the hydrocarbon policy will be economically damaging and from the trump card of the Republic of Cyprus it is turning into an Achilles heel. The long delay that occurred in the advent of natural gas for power generation, has the corresponding price, since now this investment is considered outdated. Indeed, at the summit on climate change in Glasgow, a commitment was made to limit the dangerous emissions of methane contained in natural gas, which causes greater overheating than carbon dioxide.
This issue was addressed at yesterday's session of the Parliamentary Committee on the Environment, during the presentation of the Commission's new package to reduce greenhouse gas emissions by at least 55% from 40% today until 2030 and the proposed package of legislative reforms and actions to achieve the climate and energy targets, as well as the possibility for the Republic of Cyprus to meet the new ambitious targets set at EU level.
The presence of the Commission's package was made by the senior environmental officer, Theodoulos Mesimeri. As he said, it consists of 13 proposals aimed at achieving the 55% target, but also at contributing to the achievement of the objective of climate neutrality in 2050. The basic building tools of the package are three: Carbon pricing, revision of targets and new construction standards. According to Mr. Mesimeri, carbon pricing has begun, continues and is intensifying. It started with the tool of the Emissions Trading System (ETS), and is intensified with the expansion of the System to maritime transport, road transport and buildings. The basic philosophy of this building block is that carbon dioxide emissions will be paid for. After all, this was the key statement by Commission President Ursula von der Leyen in Glasgow where she said that reducing the methane attracted "is one of the most effective things we can do" towards achieving the goal of limiting global warming to 1.5 degrees Celsius and called on the whole world to move in that direction.
Therefore, the structural element of carbon pricing and the other building block for setting more ambitious targets at state level and energy-intensive installations will be strengthened, which will create data that will give higher costs because the relationship between supply and demand in terms of rights will change. So those who do not reduce greenhouse gas emissions will face increased compliance costs. The session mentioned that the use of natural gas in electricity generation is expected to reduce to some extent greenhouse gas emissions compared to other conventional fuels such as fuel oil and oil, but will still have significant greenhouse gas emissions that will bear the cost of compliance by those who use it. As a consequence, any role that is determined for natural gas in Cyprus to have will have to be accompanied by the cost of greenhouse gas emission allowances.
According to Mr. Mesimeri, for every megawatt hour today EAC has 0.7 tons of carbon dioxide and each ton today is about €60. In each megawatt hour, €42 corresponds to the purchase price of emission allowances, while each ton of carbon dioxide emitted corresponds to a right. So if the cost of generating electricity of a megawatt hour today is €125 out of that €42 is a penalty. That is, every kilowatt-hour costs 12.5 cents and 4.2 cents go for a 'penalty shootout'. As explained by the officer of the Department of Environment, the rights are expected to be more sought after and there will be more demand for their purchase and the price from the €42 that is today will increase by a lot. Today, 35% of the cost of electricity generation is in the purchase of greenhouse rights. For the increased cost of pollutants, EAC will have an increased cost of around €200 million. that burden the electricity bills. According to Mr. Mesimeri "if we want to have electricity from fossil fuels, we can have it, but we must know that we will pay for it".
He explained that the new greenhouse gas emission reduction target is 55%. Especially with regard to the Republic of Cyprus, this target is allocated to a reduction of 32% in sectors not included in the ETS and 61% in sectors included in the ETS. The ETS in Cyprus includes nine energy-intensive units, the three power stations of EAC, the Vassiliko cement works and five pottery-brickworks.
He even referred to the Commission's proposal to include all transport in the ETS system, such as operators of ships and will have an obligation to surrender allowances corresponding to greenhouse gas emissions. He explained that the freight of maritime transport from 2023 will include additional carbon costs.
Separate fund and not in the state coffers the revenues of pollutants
Terra Cypria submitted its reflections on the existing national energy and climate plan. It was reported that Cyprus set a target of reducing greenhouse gas emissions by 21% compared to the European obligation of 24%. Terra Cypria suggested the creation of an annual list of climate actions and investments, separate from the state budget, which will be publicly posted and will clearly explain the degree of implementation and success of national goals and actions.
The Energy Office pointed out that if EAC was a private company and did not make projects to reduce emissions it would be closed, but it is a closed system, he added, and the cost is borne by consumers. He also suggested that the revenues from pollutants should instead end up in the fixed fund to be deposited in a separate fund.
The Federation of Environmental Organizations of Cyprus suggested that the new Social Fund for climate should use the profits from the ETS to contribute towards the financing of the socially just transition. In addition, he identified land use, land use change and forestry as a particularly important sector for Cyprus. As far as the electricity sector is concerned, he described two particularly important points as particularly important: the immediate reinforcement of the target for electricity generation from RENEWABLES by 100% by 2050 and the electrification of the vast majority of the energy and transport sectors. As regards the transport sector, full electrification of the private transport sector must be promoted by 2050.
The objectives need to be revised
The chairman of the Parliamentary Committee on the Environment, Charalambos Theopempto, said that the program refers to the policies that will be implemented in order to achieve a 55% reduction in emissions by 2030. He added that there is a need to increase all the targets included in the energy and climate plan prepared by Cyprus. He also said that there is an immediate need to make a national planning that will achieve the goals, a planning of monitoring and involvement of the whole society, so that there is a hope that we will be able to reach the goals.
