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The Warsaw Voice » Other » March 4, 2009
Energy Security & Environment
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Compromise on Energy and Climate Package
March 4, 2009 By A.R.    
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Poland has welcomed the final version of the energy and climate package the European Parliament approved last December. The document takes into account Polish amendments to the original version of the document submitted by the European Commission. The package recognizes that individual EU member states have different energy systems and should be allowed to take advantage of some special measures not available in other countries.

The package aims to motivate EU countries to counteract global warming: to eschew coal as a key environmental hazard in favor of renewables and adapt energy generation to the new requirements. Carbon dioxide emissions and energy consumption are to be cut by 20 percent, and the use of renewable energy is to increase from the present level to 20 percent by 2020.

The main instrument for reducing greenhouse gas emissions will be the already available emissions allowance trading scheme (ETS). From 2013 onward, industrial plants will have to buy emissions permits at specially organized auctions. Poorer states, including Poland, will be entitled to an exemption of up to 70 percent of the payments in 2013-2019. Beginning 2020, the purchase of permits will be fully obligatory. However, in 2018 Poland will be able to apply to the European Commission for the transition period to be extended.

Money from the auctions will flow into national budgets. It will be used for financing environmental projects. Twelve percent of the entire pool of funds will be set aside to create a compensation mechanism guided by the spirit of solidarity with those less affluent. Poland would obtain about zl.60 billion from the pool in 2013-2020.

Experts say that the latest revisions to the package mean that the Polish economy will be able to face challenges in the years ahead without fear of losing its competitive edge. Importantly, the course of negotiations on the package and the eventual compromise did not call the chief goals into question: Europe still wants to reduce carbon dioxide emissions by 20 percent by 2020, improve energy efficiency, and increase the proportion of renewables in the energy mix. The goals remain the same, only the ways of achieving them have been modified and improved. The gross domestic product (GDP) of Poland versus those of the EU's wealthiest members and the 40-percent cut on emissions achieved by Poland from 1988-2005 in line with the Kyoto Protocol were also considered in the package.

The package takes into account demands by Polish industry, mainly sectors with high energy consumption and carbon dioxide emissions. These industries will pay for emissions under the benchmark principle, or according to emissions levels recorded during production processes based on the best available technology (BAT).

The EU also decided that proceeds from the sale of emissions permits covering 300 million metric tons of carbon dioxide will be used to carry out programs designed to limit pollutant discharges. These include the modernization of Poland's power industry through building power units and power plants based on carbon capture and storage (CCS) technology. Poland plans to seek EU aid for projects in Be³chatów in £ód¼ province and Blachownia in Silesia province.

Regardless of the revisions made in the package, Poland needs to diversify its industry in terms of energy sources. Nuclear energy and natural gas appear to be natural complements of coal, experts say. The role of coal in Polish power generation will depend on the development of technology for reducing carbon dioxide emissions.

The debate on the climate package in Poland has been accompanied by fears of a rise in power prices. "Costs related to the power plants' requirement to buy carbon dioxide emissions permits are only one of many factors that determine electricity prices in Poland," said deputy economy minister Marcin Korolec at a recent conference on the influence of the climate and energy package on Poland's power sector. "And I think these costs will increase to a relatively small extent in the years 2013-2020."

According to Korolec, the cost of power in Poland depends on the price of fuel, transport, investment in power units, and excise tax, while the price paid for emissions plays a relatively small role. The package has prompted the Polish power sector to invest in new power units and clean coal technology, Korolec said.

"It is our obligation to show the European Commission that the funds saved by the power plants thanks to their exemption from the need to buy permits at auctions have been used for investment; but investing in new capacity entails higher electricity prices for end users," Korolec added.

In 2020, when the climate package comes into full force, together with the need to pay for all emissions permits, the price of power generated from coal is expected to go up. "But I hope this situation will force officials and businesspeople to come up with initiatives aimed at curbing the price growth," said Korolec.


EU Energy Priorities
The EU's energy policy is anchored in the Treaty on the European Union, also known as the Maastricht Treaty. The general goal is to create a single energy market that would ensure a free movement of goods, people, services and capital.

With sustainable development in view, the policy comprises three basic goals: energy security, or minimizing the risk and influence of disruptions in the supply of energy to the EU economy and population; development of competitive energy systems in order to ensure low energy costs for both producers and consumers; and environmental protection through sustainable energy production and consumption.

The EU's energy policy priorities include:

  • to develop the common energy market,
  • counteract climate changes and solve other environmental problems,
  • promote an effective use of energy,
  • increase the competitiveness of renewable and alternative energy sources, and
  • promote research and development in the energy sector.
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