Climate Policy Energy 19 March, 2020 10:00 am   
COMMENTS: Janusz Kowalski

Kowalski: the coronavirus may exclude Poland from the ETS (INTERVIEW)

Janusz Kowalski, Deputy Minister of State Assets, says Poland needs to be excluded from the EU Emissions Trading System. Is it possible to reform the EU ETS system?

Janusz Kowalski: Because of the coronavirus not only the world, not only Europe, but also Poland have changed overnight. I am absolutely sure that within the next few weeks the European Union will have to make unanimous decisions to respond to the economic and social impacts of the coronavirus pandemic. Therefore, the future of the EU ETS depends on the political decision of the European Council that includes all heads of member states. I reject the argument about the EU’s inability to make decisions. I believe the EU is effective and able to quickly make smart decisions in a time of crisis.

When we talk about the Polish perspective the numbers don’t lie. Annually Poland emits about 160 million tons of CO2 due to energy and heat production, and we have a free allowance of 51 m t, which means we have to buy about 109 m t. In 2014 a mechanism called the Market Stability Reserve was introduced to manually control the prices of allowances, which, according to the European Council, should be as high as possible, which is at least EUR 30 per ton as of 2021. Moreover, the amount of free allowances for Poland will continue to go down, so costs for the power and heating industries will grow. We will not wish it away. A number of analyses prove that Poland’s power industry is in a bad shape and that between 2021 and 2028 it would have to bear gigantic costs because of a climate policy that is detached from reality.

What can we do as politicians? It is a political decision. I talk to entrepreneurs, owners of micro businesses and representatives of state-owned companies who are doing their best to counter the coronavirus crisis. We will have to look for solutions that will permanently stimulate our economy, which may experience some problems because of issues with business, just like any other EU country. One of those solutions should be the political decision at the EU level to permanently exclude Poland from the EU ETS.

How can we achieve this?

The EU ETS has completely failed in Poland as the EU’s main political and regulatory instrument for climate policy. The third stage of the EU ETS between 2013 and 2020 was a disaster for the Polish economy. The money that goes into our budget comes from over 700 Polish businesses, and then some of it goes back to the Polish people to decrease the costs caused by increases in power prices.

Poland’s participation in the EU ETS is a threat to our energy security, it leads to the degradation of our power sector and coal industry and in result to the pauperization of our society. It is in Poland’s interest to be excluded from the EU ETS. Other states, such as Greece and Germany may become our allies in shutting down the EU ETS.

It is technically impossible to replace Poland’s current capacity dominated by coal-fuelled power plants in the next several years with other installations. It is technically impossible. It is a dangerous ideological pipe dream that millions of Poles are paying for. Today is the perfect moment to end this, as we are preparing for an assessment of the 15 years of the EU ETS before a new perspective for 2021-2018 starts.

What should be the first step?

The dynamics of making political decisions is that a few days ago our German friends criticized the Polish government for closing our borders, when Poland actually made the wise decisions to limit the spread of the coronavirus. Today the entire European Union is closing borders. The EU decision-making process has sped up. From now on political decisions will be made incredibly quickly and – I hope – with a positive outcome for the entire continent. This is what’s necessary to counteract the impact of the coronavirus pandemic. The regular work of the European Union, whose efficiency I question, will be now completely replaced with the determination of heads of member states interested in responding to the social pressure exerted by their citizens. The first signal from a very high level has been already sent – the Czech prime minister said that we should forget about the European Green Deal, He’s right, we should forget about Franz Timmermans’s ideological plan to step up climate targets by 2030. Europe will start to forget about the green deal understood as a gigantic regulatory and ideological European idea for pursuing a climate policy that will become a burden on the economy. Coronavirus will eliminate this way of thinking because there will be no money to fund this. Today it is the citizens and the businesses who need the money to handle the impact of the pandemic.

What actions will the Polish government take?

Today the Polish government is focusing on limiting the physical spread of the virus and working on new bills and legislative changes that will ease the economic and social impact of what has already happened. Next week we will hold a parliamentary session. I support the conversation and an agreement with the opposition on specific decisions that will limit the socio-economic impact of the pandemic. To protect our economy the government and the opposition need to be on board when it comes to issues at the national and EU levels.

The EU ETS is a regulatory system that in normal times, in a country different than Poland, could theoretically achieve its goals, but today it is a giant burden and a problem. Hundreds of environmental and climate organizations and experts that make their living from boosting climate goals against common sense are worried about the future, but we need to think about the citizens of Poland and the EU and about the economy. This isn’t the time for ideological disputes, it’s time to be realistic and to keep our feet on the ground.

By 2028 the EU ETS would destroy our economy and I will do anything to free Poland from this burden. I am a student of Piotr Naimiski’s school of energy security – the same school with which our climate minister Marcin Kurtyka identifies with. I deeply appreciate the minister’s professionalism and knowledge. I am convinced that now is the time to do what it takes to free Poland’s economy from the EU burden in the form of climate policy. Poland’s government is able to take care of the climate on its own. This has been proven over the past 30 years when the Polish economy managed to achieve the biggest reduction in CO2 emissions across Europe. This is why now is the time to permanently exclude Poland from the EU ETS, which is destroying our economy.

Interview by Wojciech Jakóbik