Two-thirds of EU states yet to move on free carbon permit handout

LONDON, Nov 11 (Reuters) - Two-thirds of EU member states have yet to take the first step towards handing industry this year's quota of free carbon permits, the European Commission said late on Monday.

The delay has further hampered companies from estimating the cost of complying with the EU Emissions Trading Scheme (ETS).

Nine member states with a combined 218.8 million carbon dioxide (CO2) permits - or 25 percent of the total to be handed out in the EU for free in 2013 - have submitted their final distribution plans to the Commission, the bloc's executive said on its website.

"It now appears likely that the process will take longer to complete in most member states," it added, referring to a Sept. 5 prediction that it would be completed by early December.

Industrial manufacturers such as steel and cement producers get free carbon allowances to help them compete with rivals in other countries that have looser environmental regulations.

According to the Commission, companies across the EU's 28 member states are due to receive around 886.5 million in total.

But before the firms can get their free permits, national governments must update their allocation plans to reflect across-the-board cuts to the amount originally requested, to keep the bloc's total emissions under the scheme's 2013-2020 cap.

The resubmitted plans must then be approved by the Commission before member states can get the green light to start handing out this year's permits.

The nine nations that have sent in their adjusted allocation plans are Austria, the Czech Republic, Denmark, Latvia, Lithuania, Netherlands, Portugal, Slovakia and Britain, the Commission document showed.

This year's EU-wide allocation had been scheduled to occur in February but the process was delayed, largely due to late submissions by governments.

The wait to receive their free permits has already hindered thousands of companies from estimating the future costs of complying with the EU ETS, selling surplus permits to raise cash or using them as collateral for finance.

The Commission also said that just one of eight mostly Eastern European countries eligible to receive free permits for their power plants had taken steps to get them.

Hungary is the only country to have submitted documents proving that it has made the required investment to modernise its power sector, criteria for getting free allowances.

Traders are keenly awaiting the allocations because it will mean more supply coming to a market already drowning in permits, and could put pressure on carbon prices currently valued at around 4.75 euros.

The Commission said it will publish weekly updates on the status of the allocations - http://ec.europa.eu/clima/news/articles/news_2013111101_en.htm (Reporting by Ben Garside and Michael Szabo; Editing by Anthony Barker)