Citizens - and not only - will have a dividend from the utilization of part of the revenues that the Republic will have in 2027 from the auctioning of emission allowances, in the context of its participation in the European Emissions Trading System.
From 2012 to 2025, the country's net revenues (not the total burden on electricity consumers for pollutants) from the auctioning of emission allowances exceeded €658 million. The specific money, according to the Law on the Establishment of a Greenhouse Gas Emission Allowance Trading System, ends up in the Standing Fund of the Republic.
50% of these revenues must be allocated to designated purposes related to the environment, the development of renewable energy sources, carbon storage and tackling energy poverty.
It is noted that every year the revenues are utilized through relevant expenses included in the state budget and in the budgets of the ministries.
The Ministry of Finance, on the occasion of the preparation of the state budget for 2027, in a circular to the other ministries, invites them to submit their proposals in relation to the financing of expenditure from greenhouse gas emission auctioning revenues.
The ministries, according to the circular of the Ministry of Finance, should submit a list of the projects and actions they propose, which can be financed from the auction revenues, in accordance with the provisions of the law on the Establishment of a Greenhouse Gas Emission Allowance Trading System.
A total of 14 actions
For 2027, based on the relevant legislation, the budget will include 14 actions to exploit the revenues from the auctioning of emission allowances. According to the circular sent by the Ministry of Finance, the measures, actions and projects that can be financed by the "pollutant money" are as follows:
• Providing financial support to low- and middle-income households, reducing distortive taxes and targeted reductions in duties and fees on electricity from renewable energy sources.
• Reduction of greenhouse gas emissions, including the contribution to the Global Energy Efficiency Fund and RES, as well as to the operation of the Climate Change Adaptation Fund, with the aim of adapting to its impacts.
* Funding research and development, as well as projects that will contribute to reducing emissions and adapting to climate change, including participation in initiatives under the Strategic European Energy Technology Plan and European Technology Platforms.
• Development of RES and electricity transmission networks, with the aim of meeting the European Union's commitment to the use of renewables and meeting the European targets regarding interconnections and the development of other technologies that contribute to the transition towards a safe and sustainable low-carbon economy. Deliver on the EU's commitments to increase energy efficiency to the levels set out in the legislation, including electricity generation by self-consumers of renewable energy and renewable energy communities.
• Take measures to avoid deforestation and support the protection and restoration of forests and other terrestrial or marine ecosystems. This includes measures that contribute to their protection, restoration and better management, especially for marine protected areas, as well as to enhancing biodiversity and reforestation.
• Sequestration of carbon dioxide from EU forests and soils.
• Environmentally safe capture and geological storage of carbon dioxide, especially from power plants using solid fossil fuels and from industry sectors, including third countries. Implementation of innovative methods of carbon removal, including its direct capture from the air and its storage.
• Invest in and accelerate the transition to transport modes that make a significant contribution to the decarbonisation of the sector, including the development of climate-friendly passenger and freight transport, as well as bus services and technologies. Take measures to decarbonise the maritime sector, including improving the energy efficiency of ships and ports, as well as developing innovative technologies, infrastructure and sustainable alternative fuels, such as hydrogen and ammonia produced from RES. Promote zero-emission technologies and finance measures to decarbonise airports.
• Funding research and development in the fields of energy efficiency and clean technologies, climate change monitoring, as well as emissions recording and monitoring.
• Taking measures to improve the energy efficiency of district heating and insulation systems, supporting efficient heating and cooling systems using renewable energy sources, as well as gradual and radical renovation of buildings.
• Financing national climate dividend schemes that have a positive environmental impact.
• Coverage of administrative costs for the EU Emissions Trading System.
• Financing climate actions in vulnerable third countries, including adaptation to the impacts of climate change.
• Promote skills development and labour redeployment, as a contribution to a just transition towards a climate-neutral economy, especially in the regions most affected by changes in jobs. Actions will be promoted in close cooperation with social partners and will include investments in upskilling and qualification of workers affected by the green transition, including maritime transport workers.
• Addressing the risk of carbon leakage, supporting the green transition and promoting decarbonisation.
Net income of €658 million for the state
Under the legislation, every year the competent authority has the obligation to inform both the EU and the Parliament about the use of the revenues from the auctioning of emission allowances.
According to the Parliament's most recent briefing on the issue, which took place about six months ago, the state had revenues of €488.1 million from the auctioning of emission allowances during the period from 2012 to 2024. The total burden on electricity consumers in Cyprus, from the cost of pollutants, is significantly higher, as not all revenues end up in the state and the fixed fund.
As the Government informed the Parliament, the €488.1 million allocated to the Republic was allocated to actions and projects that contribute to tackling climate change and adapting to its impacts.
Among other things, the programmes concern energy efficiency and energy saving plans, the promotion of renewable energy sources, green transport and sustainable mobility, environmental restoration and reforestation, as well as the strengthening of research and technical actions for emission reduction and climate adaptation.
Especially for 2024, out of a total of €94.6 million, the largest fund, amounting to €42 million, was allocated to provide emergency income support to citizens, with the aim of alleviating the cost of electricity bills.
A total of €3.8 million were made available to the University of Cyprus for measures aimed at improving the energy efficiency of building facilities. Another €10.1 million were allocated for aircraft and sea rental fees.
For 2025, it is estimated that Cyprus' net revenues amounted to €170 million, without, however, yet providing information on how the funds were used.
