The European Union should reassess its emissions reduction plan for the sale of carbon emissions credits in 2013, due to the deepening financial crisis and utilities' limited access to capital, the head of sales at Czech power company CEZ AS (BAACEZ.PR) said Friday.
Alan Svoboda said that plans to begin auctioning emissions credits, compared with the current system in which individual countries give companies fixed amounts of the credits for free, is counterproductive and adds a sharp financial burden to companies when access to capital is severely limited.
"Technology to cut emissions is expensive and we can't expect that those prices will fall," Alan Svoboda said, adding that auctions of carbon credits in 2013 will further drive up power prices, drain corporate balance sheets and delay emissions-reducing investments.
Additionally, only larger companies will be able to operate in that environment at a time when banks are very reluctant to lend, forcing further consolidation of the market and reduced market competition, Svoboda said.
The European Union's plan seeks to reduce carbon emissions by 20% from 1990 levels by 2020.