Global Economics

Poland Wants to Block EU's CO2 Trading


Poland, which depends on high-polluting coal plants, fears the auction system will drive up energy costs and hinder new technologies

Poland is seeking allies to stop the EU launch of "full auctioning" of CO2 credits from 2013, amid fears the union's push to cut overall emissions by 2020 could damage new EU states' economies and undermine energy security.

"We are trying to find allies for our position, especially among new member states. It's possible to form a blocking minority and we are working on this," senior Polish government aide Michal Boni told Polish press agency PAP on Wednesday (6 August).

Under the EU's current Emissions Trading Scheme (ETS)—in which high-polluting companies buy CO2 emission credits from lower-polluting firms to fall in with national carbon output quotas—90 percent of credits are given out free.

A European Commission climate change package, unveiled in January, proposes that from 2013 companies will have to buy credits in international auctions, with some sectors, such as power generation to buy 100 percent.

The package—which aims to reduce total EU industrial emissions by 21 percent by 2020—also proposes that Brussels will cut the overall number of emissions credits available in the EU by 1.74 percent annually after 2012.

But Poland, which produces 96 percent of its energy from high-polluting coal plants, fears the auction system will see its energy firms outbid by richer western rivals and will spike energy costs, hampering investment in new technologies.

"The French [EU] presidency will try to close this topic. So we need to be even more active in defending our cause, which is economic development," Mr Boni said, with Warsaw already embroiled in legal action against Brussels' decision to cut Poland's 2008 to 2012 national CO2 quotas.

"The negotiations are ongoing...We can't allow a situation in which we are forced to limit CO2 emissions, without being able to invest in our own energy security."

UN link-up

On Wednesday, the commission also announced plans to dovetail the ETS system with the Clean Development Mechanism—a parallel CO2 reduction scheme run by the UN under the Kyoto protocol—by December.

The move will allow EU companies to get CO2 credits if they invest in climate change projects, such as tree planting or replacing "dirty" technology with newer alternatives, in developing countries.

"Linking up with the UN's carbon credit registry will further strengthen Europe's leading role in the global carbon market," environment commissioner, Stavros Dimas, said, AFP reports.

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