Carbon tax and high electricity bills loom for Cyprus taxpayers

Taxpayers should brace for a tough 2024, what with the carbon tax slated to kick in early next year while electricity bills will remain high due mainly to the purchase cost of carbon emissions allowances, MPs heard on Thursday.

Lakis Mesimeris, an official with the Department of the Environment, said this year the public will be saddled with €300 million going to the purchase of emissions allowances.

But next year, he warned, that number might skyrocket to €500 million.

However, an official with the Electricity Authority of Cyprus (EAC) provided a different calculation. Adonis Yiasemidis, general manager at the EAC, said the island’s power plants will emit 3.1 million tonnes of carbon dioxide in 2024. At an average price of €88.4 per tonne, the amount works out to €270 million in emissions allowances.

The EAC buys allowances for greenhouse gas emissions, and then makes the necessary adjustments to electricity bills.

Coming back, Mesimeris said realistically Cyprus won’t be able to meet its ‘green’ targets for 2030.

“To reach the target of -24 per cent [in greenhouse gas emissions] we’d need to have about 80,000 electrical cars by then,” he offered.

The officials were discussing a special report compiled by the auditor-general regarding government policies and actions to cut down on greenhouse gas emissions.

In parliament, Auditor-general Odysseas Michaelides remarked that no reliable assessment can be made of the government’s policies because of a lack of a monitoring mechanism for them.

Commenting on the coming carbon (or green) tax, Environment Commissioner Maria Panayiotou said it would apply to everyone.

Speaking to the media later, Akel MP Costas Costa called it outrageous that the public would pay €300 million in ‘fines’ for emissions.

“Just think how many hospitals and how many schools we could have built, fully equipped and staffed, with this €300 million,” he said.

“But what’s the reason for this? It is lack of responsibility, sloppiness and catering to special interests.”

Costa recalled the several failed attempts to bring natural gas to power the island’s stations.

“Had we had natural gas since June 2022, today we’d be paying about 25 to 35 per cent less on emissions,” he noted.

For now, the public can enjoy a brief respite from high energy costs due to the state subsidising electricity bills. The EAC said on Thursday it calculates savings of around 12 per cent for residential consumers.

EAC spokesperson Christina Papadopoulou said a residential user consuming 1,000 kilowatt-hours every two months would pay about €300 compared to €350 before the subsidy.

The staggered electricity subsidy applies between November 1 and February 29, and concerns residential, commercial, and industrial consumers. The subsidy rate is based on consumption, except for ‘vulnerable’ consumers who qualify for a 100 per cent subsidy on any increases in the basic tariff.