Nov. 17 (Bloomberg) -- Poland, which burns coal to make 93 percent of its electricity, is sparring with its European Union partners over proposed laws to curb emissions of carbon dioxide, the main greenhouse gas blamed for global warming.

The Polish government opposes an 11 billion-euro ($14 billion) EU subsidy plan for testing how to trap and bury CO2, Environment Minister Maciej Nowicki said in an interview. While the new technology would primarily benefit coal-fired plants, Poland rejects the way the EU would fund the research, he said.

``We're against'' the subsidy plan, Nowicki said in Warsaw earlier this month. ``We're open to talks, but the proposal will have to be changed if it's to win our agreement.'' Poland also has protested a separate EU plan to tighten emissions-trading rules that would boost costs for coal-burning power generators.

Poland's dependence on coal means it's among the EU nations most affected by policies to change the cost structure of the fossil fuel. Coal, the dirtiest energy source for generating power in industrialized countries, needs more than twice the emission permits than cleaner-burning natural gas. Both release heat-trapping gases scientists blame for warming the planet.

The EU, seeking to put a higher cost on pollution, plans to begin charging power generators for all emissions permits from 2013. Poland opposed the plan since it was drawn up in January, saying it would push up production costs too far and is proposing a phase-in period instead.

EU Approval

The European Parliament's environment committee gave initial approval last month to a proposal to grant free emission permits currently worth around 11 billion euros for so-called carbon capture and storage projects. They would come from a reserve earmarked for new industrial installations set up during the 2013-2020 period, such as power generation and steelmaking.

Poland has the world's 12th-largest domestic coal reserves, or 7.5 billion tons as of the end of 2007, BP Plc's Statistical Review of World Energy in 2008 shows. The government is eager to locate two experimental plants to trap and store CO2, though it wants a different funding mechanism used, Nowicki said.

Money for the projects, which will test new technology to bury CO2 emissions in underground caverns and aquifers, should come from the EU's research and development fund, he said. The reserve fund must be kept for new entrants into the market, Nowicki added.

One of the plants may be located in the central Polish town of Belchatow and the other in Kedzierzyn-Kozle, in southern Poland, he said. Polska Grupa Energetyczna SA, Poland's largest power producer, ``may be involved'' in building the plants, he added.

Biggest Objection

The carbon capture and storage project is only one aspect of the climate change package EU leaders are supposed to agree on at a December summit in Brussels. The package is currently ``our biggest struggle with Brussels,'' Slawomir Nowak, chief political adviser to Prime Minister Donald Tusk, said in an Oct. 30 interview with Bloomberg.

The Polish government's main objection to the package is the planned introduction of full auctioning of CO2 emissions permits for energy producers from 2013, which Nowak said could boost domestic electricity prices by more than 100 percent.

Poland will be hosting an international conference next month aimed at negotiating a replacement for the Kyoto Protocol on climate change, which expires in 2012. Critics say that unless the EU reaches an agreement on cutting emissions it will not be in a position to persuade the U.S. and China, the biggest emitters, to sign up to the new global accord.

Reducing Emissions

The climate package aims to allow the EU to achieve its own target of reducing emissions of greenhouse gases by at least 20 percent in 2020 compared with 1990. French President Nicolas Sarkozy, who currently holds the EU's rotating presidency, said last week he would be making an ``important announcement'' about the package when he meets Tusk and leaders of other eastern EU member states in the Polish city of Gdansk on Dec. 6.

While Sarkozy said last month that a solution to the dispute over the package must be found ``before January,'' Nowicki does not agree.

``As far as we're concerned, we don't need a decision on the package this year -- there's no hurry,'' he said in the Nov. 5 interview. ``The question is whether what's on the table at the moment is the only proposal, the optimal proposal or a just proposal -- and at present I'd answer `no' to each.''

To contact the reporter on this story: Katya Andrusz in Warsaw at kandrusz@bloomberg.net

Last Updated: November 17, 2008 09:37 EST