Poland’s problems with emissions trading are homemade

Poland’s problems with emissions trading are homemade

There is no better proof of the impact of European emissions trading than the protest of Polish Prime Minister Mateusz Morawiecki.

No country in Europe produces more hard coal than Poland. More than 70 percent of Poland’s electricity comes from coal-fired power plants. Worse, the country’s 100 or so power plants are on average about 40 years old and emit far more greenhouse gases than modern power plants. More than 160 million tons of CO2 were emitted by them per year at last count. Three more coal-fired power plants, emitting around 4 million tons of CO2 per year, are in the planning stage.

And although 33 of the 50 European cities with the highest air pollution are in Poland, the ruling PiS party openly questioned the EU’s climate targets until the summer of 2020, defended coal mining and was the only country in the EU to refuse to approve the “Climate Neutrality 2050” program. Coal mining is now set to end by 2049 – just in time to register full claims for funding from the €17 billion “Just Transition Fund.”

Emission rights must be purchased for every ton of CO2 released during power generation. It should have been clear to everyone for a long time that these are becoming increasingly expensive with functioning emissions trading. Thus, investments in emissions avoidance are stimulated and profitable. Nevertheless, Poland has continued to expand power generation capacity with coal-fired power plants by a net 1.5 gigawatts since 2019. The rest of Europe did just the opposite, reducing coal-fired power capacity by a net 13.2 gigawatts over the same period. Poland has relied exclusively on coal for far too long – and is now paying the price in the form of higher emissions prices.

On top of this, the country has been hit hard by the fact that – whether due to the political desire for self-sufficiency or in view of its own hoped-for fracking gas reserves in the Baltic basin between Podlasie and Lublin – long-term coal supply contracts with Russia have not been extended, but on the contrary the import of cheaper Russian coal has even been curtailed by law and the country now has to pay the sharply increased world market prices.

A way out is now being sought in the construction of gas-fired power plants: 10 more with a capacity of 4.4 gigawatts are being planned or are already under construction. Based on plausible assumptions about the number of full-load hours, this is likely to generate roughly an additional 10 million tons of CO2, for which emissions allowances will also have to be purchased every year.

So when one of Europe’s biggest climate sinners complains that pollution used to be cheaper, it shows that climate protection works via emissions trading. In fact, Poland seems to care less about climate protection than it does about propping up its domestic coal industry. It fits in well that the Polish state, through its company PGG, is the largest mining company in Europe, with over 20 mines.

On the other hand, Morawiecki seems to have crossed the line into cynicism when he suggests that the high emission prices would increase inequality in Europe. Almost all of the revenue from the auctioning of emission rights, which rises along with their prices, goes to the member states. Each country is responsible for using the additional revenue to cushion the social consequences of higher energy prices by making transfer payments to the weak. If Poland fails to do this, the state will make itself better off at the expense of its citizens. And if this compensation is not possible in a revenue-neutral way, then it is because Poland has failed to meet its own reduction targets.

FAZ, 27.12.2021, p.52.

More interesting articles

Emissions trading to be expanded in 2024: International shipping to be included on a mandatory basis

Integration into the EU ETS This year, international shipping will be inte-grated into the EU...

Read now
CO2 reduction in portfolios from a regulatory perspective

It is not always so easy with regulation. What was well-intentioned on the part of politicians can...

Read now
COP28 – Interim conclusion on the last meter

The COP28 conference in Dubai is slowly coming to an end and it is time to draw a first conclusion....

Read now