ETS: Warsaw may allocate free allowances after 2012
By Anne Eckstein | Monday 16 July 2012
Under certain conditions and on a temporary basis, Poland may allocate free emissions allowances to the energy sector after 2012, announced the European Commission, on 13 July. Its decision came in response to a request from Warsaw submitted under Directive 2009/29/EC on the EU’s Emission Trading Scheme (ETS), which permits certain EU member states to apply for exemptions from the general rule obliging the energy sector to pay for all its emissions allowances from 1 January 2013.
Under the 2009 directive, ten member states are eligible for exemptions from the general rule. In September 2011, eight states - Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Lithuania, Poland and Romania – submitted applications to the Commission for authorisation to continue to allocate free allowances to the energy sector after 2012. Malta and Latvia, which are also eligible, have not applied for derogations.
Warsaw will thus be allowed to grant all allowances requested by the energy sector for free, provided it makes certain changes to the scheme as currently applied in the country. These amendments must be notified to the Commission before the end of 2012. They concern the methodology used to calculate free allowances on the basis of verified emissions and certain installations, which otherwise may not receive free allowances.
The decision also states that certain investments proposed by Poland concerning new fossil fuel production capacity may not be used to justify free allowances. The Commission adds that Poland’s free allowances may be granted to certain installations only after admissible modernisation investments have been made.
The EU executive has already responded positively to the requests by Cyprus, Estonia, Lithuania, Bulgaria, the Czech Republic and Romania. It is still assessing the application from Hungary and is expected to make its decision known soon.
Nearly 673 million allowances will be allocated to the energy sector in these seven countries from 2013 to 2019. The volume of free allowances will be reduced annually and phased out entirely in 2020.