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Poland loses legal battle for more free carbon allowances

07 Mar 2013 18:35:30 | edcm

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Poland has lost its legal battle to get more free carbon allowances for its industry in phase III of the EU emissions trading system (EU ETS).

The European Commission's decision on the free carbon allocation to Polish plants was upheld in the European Court in Luxemburg in a judgement on Thursday.

The judgement will fend off fears that revising the Polish free allocation upwards in the wake of the court appeal would swell the already bloated supply surplus in the EU ETS market.

The Polish lawsuit argued the benchmarks used by the Commission led to a too-small allocation of allowances to plants dependent heavily on coal for fuel.

The court threw out this argument and said that emissions costs would grow only gradually for CO2-intensive industry in Poland (see EDCM 11 July 2011).

Polish industry can count on a banked surplus of allowances that has built up over phase II, as emissions have consistently been lower than the free allocation of allowances. The accumulated surplus stood at 16.2m tonnes of CO2 equivalent in 2011, the most recent year for which there is EU data.

Industrial plants continue to receive free emissions allowances in phase III, based on benchmarks set by the Commission.

The benchmarks are based on the top 10% most carbon-efficient plants in any sector. Sectors will receive allowances matching 80-100% of the benchmark free of charge in phase III of the EU ETS.

Most industrial sectors will get emissions allowances matching 100% of the benchmark for free in 2013, with this figure then falling each year in phase III (see EDCM 10 September 2010).

Poland will have two months to appeal Thursday's judgement. Karolina Zagrodna

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