LONDON (Reuters) - Britain’s revenues from auctioning European Union carbon permits could swell to over 64 billion euros ($88.94 billion) from 2013 to 2020, a report said.
On Thursday the government sold 4.4 million EU emissions permits in one of its regular auctions. Since it began auctions in November 2008, it has raised over 1 billion euros.
“The UK Government could make over 64 billion more by 2020,” the report from carbon offsetting firm Carbon Retirement said on Thursday.
The EU Emissions Trading Scheme (EU ETS) caps the emissions of heavy industries such as cement and steel. They can buy permits called EU Allowances (EUAs) to cover excess emissions or sell them when they reduce emissions.
The scheme’s rules allow member states to auction up to 10 percent of their EUAs from 2008 to 2012.
Revenues should be used to address fuel poverty, provide funds for developing countries to combat climate change and help Britain meet ambitious emissions cut targets by 2020 and beyond, the report said.
“It’s a real shame that government is not seizing this opportunity to make the EU Emissions Trading Scheme (EU ETS) even more environmentally effective,” said Jane Burston, director and founder of Carbon Retirement.
A spokeswoman for the UK’s department of energy and climate change said government spending is not determined by the way revenue is raised.
“The government will not be earmarking revenue from EU ETS auctions to fund specific projects,” she added.
From 2013 to 2020, Britain will make even more revenue from auctions because of changes to the EU ETS, the report said.
From 2013 the scheme will make polluters pay for the majority of their allowances, rather than receiving them for free. This will mean that at least 50 percent of permits will be auctioned in the UK every year, compared to just 7 percent now.
The price of EUAs should be higher than the current 14 to 15 euros a tonne, which will bring in even greater revenues, and volumes will swell because more sectors will be covered by the scheme, the report said.
“Over eight years (2012-2020), this will amount to 120 billion euros across Europe and 32-64 billion euros in the UK,” the report said.
The EU Commission has proposed that auction income should be used to combat climate change but Britain has refused to commit to the plan, saying it was up to member states to decide the allocation of revenues.
Germany in particular has committed a large proportion of its auction income to environmental schemes, the report said.
Reporting by Nina Chestney; editing by William Hardy