TVA forms obstacle in Romania for selling EUA’s

Romania is counting her self rich: “Romania could derive almost 1 billion euro each year because the carbon emissions of its industries are 40% under the limits provided for under the Kyoto Protocol”. The value has been confirmed by officials of the World Bank in Washington during a conversation with Chairman of the Committee on Industries and Services of the Romanian Chamber of Deputies, the lower chamber of Parliament, daily Jurnalul national reports.

ex-minister Videanu said that energy investments in Romania could be supported by funds derived from trading in the carbon emission rights. Romania has to close 41 coal fired power plants by 2015, which would be 22% of its total production base, to get in line with the pollution rules of the European Commission.

Another good business, and in fact generating revenues, is the selling of the surplus of EU Allowances. These are the difference between the quota that companies receive in the ETS scheme according to the Kyoto Protocol and the EUA’s they really need based on their pollution. Now the economy continues to go down, companies produce less and less, therefore pollute less and less. The difference between the EUA’s they need and the EUA’s they received based on the ETS is available to be sold.

One big obstacle however is that for selling Carbon Credits abroad TVA (VAT) of 24% needs to be applied. Companies (brokers) that sell the Carbon Credits buy them from Romanian companies and them pay TVA. When exporting they do not receive TVA, so they need to pre-finance the TVA until they receive it back from the Government. Now the government doesn’t have the money to pay the TVA the time to recover the TVA (receiving the refund) can be more than 6 months and even then the authorities will try to invent any excuse not to refund the TVA. One broker told Carbon Credit Romania that they have been waiting 8 months for a refund of 1.2 Million EURO worth TVA while they could trade up to 2 million EURO per day, meaning to paying 500.000 EURO TVA per day. Brokers might be forced to stop selling Carbon Credits due to this situation as they cannot finance the TVA anymore.

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