Regulation of quota sales and the Green Investment Scheme

Law

Pursuant to Act LX of 2007 on the Implementation Framework of the United Nations Framework Convention On Climate Change and its Kyoto Protocol (“Climate Change Act”), the minister responsible for energy policy exercises asset management rights over the emission allowances.

Pursuant to Section 84 f) of Government Decree 212/2010 (VII. 1.) (on the duties and authority of certain ministers and the state secretary heading the Prime Minister’s Office), as amended on 3 December 2010, the minister of national development is the member of the Government responsible for energy policy.

In the framework of international emissions trading, he may sell and buy emission allowancess on behalf of the Hungarian State, and the Kyoto units may be used to offset greenhouse gas emissions in the territory of the Republic of Hungary and to create emission reduction units corresponding to emission reduction realised in the framework of joint implementation projects.

In the initial commitment period, the revenue originating from the transfer of Kyoto units must be allocated to the support of activities and measures targeting the reduction of the domestic emission of greenhouse gases, the increase of their removal with sinks and adjustment to the effects of climate change, in accordance with the National Climate Change Strategy and the National Climate Change Programme. The Government reports to Parliament on the use of the revenues.

In the course of the sales procedure of Kyoto units, in addition to the Climate Change Act and the implementation decree thereof listed below, Act XXXVIII of 1992 on the State Budget (“Budget Act”) serves as a background regulation.

Government Decree

Government Decree 323/2007 (XII. 11.) on particular rules on the implementation of Act LX of 2007 on the Implementation Framework of the United Nations Framework Convention on Climate Change and its Kyoto Protocol.

The government decree amended:

  • Government Decree 121/2009 (VI. 11.) on the amendment of Government Decree 323/2007 (XII. 11.) on particular rules on the implementation of Act LX of 2007 on the Implementation Framework of the United Nations Framework Convention on Climate Change and its Kyoto Protocol
  • Government Decree 280/2009 (XII. 11.) on the amendment of Government Decree 323/2007 (XII. 11.) on particular rules on the implementation of Act LX of 2007 on the Implementation Framework of the United Nations Framework Convention on Climate Change and its Kyoto Protocol
  • Government Decree 362/2010 (XII. 30.) on the amendment of certain government decrees relating to climate policy.

The government decree regulates the terms and conditions, detailed rules related to the sale of Kyoto units and the operation of the Green Investment Scheme, as well as the realisation of joint implementation projects.

The government decree sets out that the Kyoto units are sold by the minister on the basis of his proposal, in agreement with the minister responsible for the central budget.

In the Green Investment Scheme, funds are available for the following purposes:

  • improvement of building energy efficiency,
  • increased use of renewable energy,
  • improved efficiency of district heating systems,
  • promotion of the construction of buildings with low energy consumption,
  • energy efficient modernisation of lighting and public lighting systems,
  • promotion of the establishment of sinks,
  • emission reduction implemented in the transport sector,
  • support of replacements with household appliances and electronic equipment with environmentally friendly certification if these result in the cost effective, evidenced reduction of emissions in the long term, and
  • implementation of other emission reduction tasks.

The government decree, in line with international quota market practices, sets out that the basic criterion of the Green Investment Scheme is additionality in the following three forms:

  • Environmental additionality: invitations to tender are acceptable only if, in the framework thereof, on the basis of the presented preliminary calculations, a net emission reduction affecting emission originating from human activity, converted to a carbon dioxide equivalent, is achieved.
  • Financial additionality: invitations to tender are acceptable if, on the basis of the presented preliminary calculations, they cannot be economically implemented without the transfer of Kyoto units.
  • Legal additionality: invitations to tender are acceptable if their implementation does not constitute a statutory obligation in force.

Up to 5% of the annual budget of the Green Investment Scheme may be spent on the management and operation of the Green Investment Scheme.

Ministerial order

Order 18/2011 (III. 29.) of the Ministry of National Development on the detailed rules of the operation, titles of use, records and monitoring of the Green Investment Scheme, to be soon superseded by a ministerial order of the Ministry of National Development pending approval.

It sets out particular rules applicable to ministerial duties, contracting, payments relating to the operation of the Green Investment Scheme.

Annual audit reports and annual reports are is produced on the use of the GIS.

Invitations to applications

They set out the specific rules of particular sub-programmes not regulated by law.

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