Greece Set to Earn Billions from Carbon Emissions Allowance Sales

Greece is poised to generate billions of euros in revenue through the sale of surplus carbon emissions allowances to other European countries struggling to meet their climate targets. With around 40 million tonnes of carbon credits available for sale, Greece could earn between €3 billion and €5 billion, depending on market prices and future agreements.

The first confirmed buyer is Cyprus, which has entered into advanced talks with the Greek Ministry of Environment and Energy to purchase part of Greece’s surplus. These discussions began under the former energy minister and have continued under the current minister, Stavros Papastavrou. Other countries that have expressed interest include Sweden and Norway, with exploratory discussions also underway with Germany and Italy.

A Lucrative Market

The current market price for one tonne of CO₂ emissions is approximately €76, a price that has been steadily rising since late 2021. Analysts predict that prices could reach as high as €129 per tonne by 2030, making the potential value of Greece’s surplus even more significant. Even at today’s rates, selling all 40 million tonnes could bring in over €3 billion, while future prices could boost that figure closer to €5 billion.

To determine the most effective pricing and sales methodology, Greece’s environment ministry has invited three consultancy firms—Ernst & Young, IPPC, and Envirometrics—to submit bids for a contract to develop the pricing strategy. The selected firm will produce a comprehensive framework to guide the bilateral agreement with Cyprus, which will serve as a model for similar future agreements with other EU member states.

Once a consultancy firm is selected at the end of June, a preliminary report estimating the market value of Greece’s carbon credits will be delivered within one month. This report will incorporate international benchmarks, cost data from emission-reduction projects in both Greece and Cyprus, and other key inputs. Within three months, a full methodology will be finalized, including pricing factors, assumptions, and a detailed pricing model.

A Result of Overachievement in Climate Policy

Greece’s ability to sell these allowances is due to its overachievement in emissions reduction, largely driven by the significant adoption of renewable energy sources. The European Union’s Effort Sharing Regulation (ESR) requires member states to reduce emissions in sectors not covered by the EU Emissions Trading System (EU ETS), including transport, buildings, small industry, waste, and agriculture. Each country has annual caps on allowable emissions from 2021 to 2030, and mechanisms like credit borrowing, saving, or transferring between member states are allowed to meet these limits.

Since Greece is on track to exceed its climate targets, it now holds surplus emissions allowances that other countries—especially those lagging behind—can purchase. The revenue generated will be reinvested into projects in key sectors like transport, waste management, and agriculture.

Interest Across Europe

Beyond Cyprus, several countries are actively exploring the option of buying allowances from Greece. Sweden and Norway have shown strong interest, and contacts have also been made with Germany and Italy, both of which face significant challenges in meeting their 2030 climate goals.

According to a recent study by the European clean transport and energy consultancy T&E, 12 EU countries are projected to miss their emission targets, while another seven may fall short. Only eight member states are expected to have a surplus of carbon credits, and among them, Greece, Spain, and Poland are likely to hold significant volumes available for sale.

Greece’s 40 million tonnes represent a considerable share of the estimated 246 million tonnes of surplus allowances held by these eight countries.

Source: Tovima.com