The battle for billions is over. On the third attempt, the government approved the distribution of money from emission allowances

On the third attempt, the government succeeded in approving a new system of distribution of profits from emission allowances. According to this amendment, an estimated 40 billion crowns are to be distributed this year alone. Up to 200 billion crowns could be processed according to this key by the end of the decade. A number of ministries, such as industry and trade, the environment, or finance, were interested in these finances. Finally, in 2025, the income from allowances will be the income of the state budget, and from 2026, most of these funds should go to the State Fund for the Environment. The amendment complies with the European directive, according to which 100% of income from emission allowances must go to new climate protection projects.

The aim of the amendment to the law is primarily the transposition of the European directive from 2023, with which the Czech Republic is late. According to this directive, 100% of the revenues from allowances must go to climate protection. “From 2024, all proceeds from emission allowance auctions are to be used for climate measures, such as reducing emissions, development of RES, development of electricity distribution networks and technologies that contribute to the transition to a safe and sustainable low-carbon economy, and the like,” she already said in the past, Miluše Trefancová, spokeswoman for the Department of Industry, told Echo24.

The amendment has not been passed by the government twice due to disputes between individual ministries. An agreement was reached on Wednesday, based on which profits from allowances will go to the state budget in 2025 and to the State Environmental Fund from 2026. And they will be able to be used for a number of modernization programs if they target climate protection.

“Finance obtained from auctions of emission allowances will be able to be used to reduce greenhouse gas emissions, develop renewable energy sources, compensate for industry threatened by carbon leakage and to financially support households with lower and middle incomes. Also to support forests and capture carbon dioxide in forest stands and soil, the protection and restoration of peatlands and other ecosystems. It will also be possible to invest in the safe capture and storage of carbon dioxide in geological structures, the reduction of greenhouse gas emissions in transport, including the development of passenger and freight rail transport and emission-free mass transport,” she said after the amendment the press spokesperson of the Ministry of the Environment, Veronika Krejčí, by the government.

Disputes between the ministries led to the delay of the entire amendment. The first draft of the amendment appeared already in the summer of last year, and the directive to which the law responds was supposed to be adopted into the national legislation already at the beginning of 2024. Due to the high energy prices of the past years, high revenues from allowances are expected. And for a long time there were disputes about the distribution of money between ministries. Until now, the money from the allowances was distributed between the Ministry of the Environment, the Ministry of Industry and Trade, which manages the modernization fund, and the state budget.

For example, the Ministry of Transport reported in the comment procedure that 30% of the revenue from emission allowances was redirected to the State Transport Infrastructure Fund. As a possibility of using this money, the ministry mentioned projects that should lead to the transfer of the majority of freight transport to railways or to the development of electromobility. However, it failed in the final draft.

The Ministry of Finance proposed that the income from allowances become income of the state budget, from where they would be further distributed. The Ministry also pointed out that it considers it non-standard that a committee under the Ministry of the Environment would decide on the distribution of funds from allowances. These complaints eventually led to the establishment of the Revenue Utilization Council, whose five members will be nominated by the government collectively.