Filenews 26 October 2024 - by Angelos Nicolaou
Significant investments of €21.6 billion are required in the period 2024 – 2030 to achieve specific energy and climate targets for the implementation of the National Energy and Climate Plan. However, for the full implementation of all policies and measures, compliance costs will be borne by the taxpayers of the Republic. With the alignment of the Republic of Cyprus with the Commission's "Fit for 55" legislative package, Cyprus' national greenhouse gas emissions reduction target was increased from 24% to 32% by 2030 in the waste sectors, transport, industry and buildings and more demanding targets were set for RES and energy efficiency.
Therefore, three additional measures will be included in the measures already decided in order to achieve Cyprus' targets, with the aim not of reaching 32%, but of going from 21.6% today to 25.9%.
Cyprus' inability to achieve the target of 32% reduction in GHG emissions, which is the national target, is a given. The cost to purchase allowances for the remaining 7% is estimated at €300 million in total for the period 2021-2030, with an estimated price of €85/tonne CO2.
The three new measures concern a) the increase of the percentage of biofuels in motor fuels, b) no further increase in the cow population and c) the full implementation of policies for the management of municipal waste.
The measure "increasing the share of biofuels in transport fuels" contributes to achieving the 2030 GHG emissions reduction target of 1.7%. In summary, the measure provides for the addition of biofuels to 5% by volume in gasoline in the period 2028-2030 and a gradual increase from 2027 of biofuels in diesel from 7.8% to 17.6% by volume in 2030. Based on the plans, the increase in the share of biofuels in diesel from 7.8% today will increase in 2027 to 10.2% and gradually increase to 17.6% by 2030. In petrol that currently does not contain biofuels, biofuel will be added to 5% from 2028 and this percentage will remain throughout the period 2028-2030. This will lead to an emission reduction of 191 kt CO2 in the period 2027-2030, corresponding to a further reduction in emissions of 1.7% in 2030 compared to the draft revision of the NECP, as well as to the achievement of the two mandatory targets for renewables provided that 85,000 electric vehicles penetrate by 2030. The benefit to the country from increased blending of biofuels by 2030 is expected to amount to €26.7 million, compared to a cost of €52.5 million. In conclusion, the net cost for the entire period 2027-2030 is estimated at €25.8 million, which will be borne by citizens.
However, this measure will place a significant burden on users of conventionally fuelled motor vehicles. The proposed increase in the share of biofuels is expected to increase the retail price of diesel by 7.3 cents per litre in 2030 and around 2.7 cents per litre in petrol. The above increase to consumers will be in addition to the increases expected due to the inclusion of transport fuels in the new Emissions Trading System (ETS2) from 2027. The cumulative impact on the retail price in 2030 from the new ETS2 and the increased use of biofuels is expected at 24.7 cents per litre for petrol and 29.3 cents per litre for diesel.
Both the Green Tax Reform and the implementation of the new ETS2 Emissions Trading System, which is mandatory to implement, will lead to taxation on transport fuels in road transport and buildings (ETS2). The implementation period of ETS2 is 2027-2032, while the implementation period of the Green Tax Reform is 2025-2033. Therefore, it is expected that a gradual taxation on fuels will be adopted, reaching 22 rpm in 2030, while in 2035 it will reach 30 rpm.
Based on the above, it is expected that there will be a time overlap in the taxation of motor fuels for the period from 2027 onwards and therefore, an effort is being made to apply the Green Taxation for the period 2025-2026 only and then to abolish and apply the taxation from the new ETS2. An effort is being made to offset the two taxes with the EU. If the EU does not adopt the offset but insists on the full implementation of the tax, then fuel costs will rise by 49.6 rpm for diesel and by 42.9 rpm for gasoline.
Measures are coming to reduce the cow population by 10% and recover biogas through waste
The implementation of the measures concerning the cow population and the management of municipal waste are in progress by the Ministry of Agriculture, Rural Development and Environment. The cow measure is estimated to have an implementation cost of €15 million by 2030, while the cost of the measure for municipal waste is expected to be estimated through the Feasibility Study for the creation of an integrated network of facilities for the treatment of mixed and separately collected waste, which will be prepared in 2025. Taken together, these two additional measures are expected to deliver an additional reduction in GHG emissions in 2030, of 0.7% (cow measure) and 1.9% (waste measure), respectively.
The non-further increase of the cow population is done by promoting a special intervention in the CAP Strategic Plan 2023 – 2027 to improve the welfare of cattle. The main action of the intervention will be the increase of the available space per cow in the existing premises, resulting in the reduction of the cow population. Improving welfare will allow the same amount of milk to be produced with fewer animals while improving competitiveness in the sector. The intervention provides for a gradual small annual increase in the space per cow and is expected to reduce the cow population by 10% by 2030. The year of entry into force of this policy shall be 2025.
Furthermore, the full implementation of municipal waste policies is promoted with optimal technology in terms of greenhouse gas emissions and full biogas recovery. Specifically, the implementation plan of the projects required on the basis of the Municipal Waste Management Plan 2022-2028 for the completion of the waste management infrastructure network has been determined. For the final determination of the upgrade technologies of the existing units and the rehabilitation works of the new projects that will be implemented, a Feasibility Study will be prepared, which will take into account, inter alia, the waste targets as well as the contribution of the projects/technologies to the reduction of greenhouse gas emissions.
