Irish firms to net €850m carbon windfall
The Irish cement industry stands to make windfall profits of up to €850m, according to sources familiar with the EU’s emissions trading scheme, reports the Sunday Business Post.
The sources estimate that companies such as CRH, Quinn Cement and Lagan Cement have made €226m over the last five years from the over-allocation of carbon credits by the government.
The sources estimate the cement industry stands to make a further €625m when the next round of carbon credits is allocated under the scheme.
The government allocates a certain amount of emission permits to companies for free.
The idea is that polluting companies would buy credits in the market if they exceeded the permitted amount of emissions. The system is known as ‘cap-and-trade’.
The initial over-allocation arose partly because of the construction bust which meant that firms didn’t produce as much cement as expected.
The sources said the transfer was a waste of public funds at a time when the exchequer was financially stressed.
They also argued that the effect was to distort the market in favour of polluting cement.
The estimate of the scale of the subsidy comes after the Economic and Social Research Institute (ESRI) noted earlier this year that the current EU regime provided potentially large windfall gains for certain industries, such as electricity generation and cement production.
The ESRI argued that such windfall gains should be recaptured by society through the tax system. A spokesman for Cement Manufacturers Ireland did not dispute the figures.
He said the industry had invested over €300 million in technology upgrades, and was now one of the most efficient in Europe.
‘‘The current recession was not predicted when allowances were allocated under rules proposed by the Commission," the spokesman said.
Published under Cement News
