The Bulgarian state will subsidize industrial companies with energy-intensive production in order for them to remain in the country and not to move their business elsewhere. Up to 25% of the revenue generated from the auctioning of carbon emission allowances will be used for this purpose.
The Council of Ministers today approved a draft amendment to the Climate Change Act. It establishes a legal framework for the introduction of this financial mechanism, from which will benefit about 190 companies.
In order to be able to work, electricity generators (mainly thermal power plants) spend more and more on emission allowances, passing that cost on to end-users. The companies most affected are the large electricity consumers, who respond have to respond by either raise the price of their final output or moving their production outside the EU, where the environmental requirements are not as strict.
In the past year, carbon prices have increased by nearly 300% – from 8 euros per tonne/CO2 to 25 euros per tonne/CO2 and are expected to reach 30 euros per tonne/CO2, according to the justification of the bill. As a result, electricity prices for large industrial companies have risen by about 40% in just one year. According to the government, the compensation will contribute to some relief for the most affected.
The State aid scheme will be implemented through an ordinance of the Minister of Economy, which must firstly be approved by the European Commission.
Bill on Climate Change Act:
Motives for the Bill on Climate Change Act:
Impact assessment:
Sources: Dnevnik
