Bulgaria will be suspended from carbon emissions trading under the Kyoto Protocol as a result of poor transparency and untrustworthiness, the country's environment minister said on 13 May. The decision represents a heavy blow for the government in Sofia, which expected to receive €250m in revenue from the scheme this year, according to Dnevnik, EurActiv's partner publication in Bulgaria.
Bulgaria will be suspended from the scheme as of 30 June if a United Nations' committee revokes its accreditation under the treaty. A formal decision is expected by the end of June. Environment Minister Nona Karadzhova said there was no chance of any reversal.
The suspension, which is expected to last until at least November, comes after UN checks had shown that Bulgaria's national system for recording greenhouse gas emissions, which is key for ensuring compliance under Kyoto, was not transparent and trustworthy, Karadzhova explained.
She said the ban would prevent Bulgarian companies from trading on greenhouse gas emission schemes under Kyoto, and would also affect their participation in the European Union's emissions trading scheme (EU-ETS).
"The UN Convention report is devastating. We are likely to lose our accreditation as of 30 June, due to the criminal inaction of the previous government," Karadzhova said.
Over 130 Bulgarian companies, which waited for over two years to begin trading under the ETS, will now only be able to sell their free quotas until 30 June. The government will most likely not receive a single euro of the so-called Assigned Amount Units (AAUs) that it has accumulated, Dnevnik writes.
The news comes as a heavy blow for the Bulgarian government, which had earmarked €500m of such revenue for financing anti-crisis measures.
Just one person responsible for supervision
Foreign experts revealed that just one person, who works in the environment agency, deals with the country's yearly reports. The young female employee reportedly could not maintain consistency in the information included in the reports.
"It's a young woman. She had worked well, but in fact she was on maternity leave during the [foreign experts'] check and we had to call her to come to the office," Karadzhova said.
Her predecessor Dzhevdet Chakarov, now a member of parliament,responded to accusations of negligence by the previous government by saying that throughout his term, nobody had questioned the consistency of the reports.
Bulgaria's suspension from CO2 trading is the "merit" of the current government, he said.
Small impact on EU carbon market
A European Commission spokeswoman said the suspension would have only a limited effect on Bulgaria's participation in the EU emissions trading scheme.
"The suspension would not extend to trade in [EU carbon] allowances, but would temporarily prevent the delivery of allowances," the spokeswoman said in an email, quoted by Reuters.
"In the short-term, the only effect would be that allowances could not be moved into and out of the Bulgarian [emissions] registry, which would hamper spot trading in allowances for Bulgarian companies, as allowances could not be delivered until the suspension is lifted."
Spot trading in EU permits and Bulgaria's share of permits both only account for a small proportion of the total EU carbon market.
"It could impact day-to-day volatility but I don't think it will have a significant effect on prices," said Trevor Sikorski, director of carbon research at Barclays Capital.
Spot EU carbon prices on French exchange BlueNext were unchanged at 15.50 euros a tonne by 14:45 GMT on Thursday (13 May).