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Deputy minister of State Assets Janusz Kowalski suggested on a social media platform that the European CO2 trading system should be reformed in order to help the economies impacted by the coronavirus. “Suspending the system or eliminating it altogether means the directive would have to be amended. Putting forward propositions that are doomed to fail, lack legal basis and sound argumentation weakens the government’s position in its relations with EU institutions and member states,” Paweł Wróbel, BiznesAlert.pl’s contributor and head of Gate Brussels explains in an interview.
Will the EU ETS be reformed?
“It is necessary to reform the EU Emissions Trading System (EU ETS) – over the past eight years the prices of greenhouse emission trading allowances jumped from EUR 5 to as much as 30. To see how the ETS impacts Poland’s economy and our wallets one only needs to have a peak at the higher electricity bills and the incredibly overpriced stock value of Poland’s energy companies,” Janusz Kowalski, Deputy Minister at the Ministry of State Assets argued in an interview with BiznesAlert.pl. “Poland and other states should protect the climate on their own and the ETS should be shut down on January 1st 2021, or at least it should exclude Polish power installations. Electricity prices would drop and millions of Poles would feel a real difference in their wallets, while our power industry would become profitable again allowing it to invest in its own development,” the deputy said.
Directive revision – first hurdle
The ETS was introduced on the basis of an EU directive that was transposed into national law by all member states. This is the legal construction of the system. “Suspending the system or eliminating it altogether means the directive would have to be revised. For this to happen the initiative has to come either from the European Commission or the European Council. In the latter case such a decision would have to be supported unanimously by all member states. This isn’t doable. Both institutions assess the ETS positively. If there is any criticism it usually pertains to the fact that the allowances are too cheap. Even the Czechs who at the beginning of the years suggested that the works on the “European Green Deal” should be suspended, for years have been among those states that support making the ETS more strict and increasing allowances prices,” Paweł Wróbel explains.
The energy sector and industry may profit, but small business will lose
Wróbel also told BiznesAlert.pl that it was necessary to counter the economic crisis that would impact businesses, which had been mentioned by the deputy minister, by taking the appropriate steps. “There is no doubt that it is necessary to analyze who really needs help and how it should be delivered to those affected during and after the coronavirus pandemic. We already know that micro companies will be impacted the most as well as small and medium enterprises, all of which will need support as soon as possible. The energy sector and industry that are under the ETS may actually benefit because due to the virus the allowances prices have already dropped, at one point they cost EUR 19 per ton, which is the lowest price in over a year. Assistance for these sectors should be about supporting modernization, investments in innovations and getting politics out of the equation so that the energy companies are not engaged in investments that go against their interest,” Wróbel stressed. In his opinion it should be remembered that the ETS provides significant revenue to member states’ budgets. In 2019 Poland received over PLN 19 bn.
A proposal doomed to fail
“It is true that the EU climate policy generates costs and we have to remember about this in the face of an impending economic crisis. However, we should expect that when government officials make public announcements in the Polish and foreign media, the proposals had been accepted by the government, especially with regard to such a difficult subject as this one. Putting forward propositions that are doomed to fail, lack legal basis and sound argumentation weakens the government’s position in its relations with EU institutions and member states,” Wróbel concluded.
Edited by Bartłomiej Sawicki
