Jan. 4 (Bloomberg) -- A group of Polish lawmakers wants the European Union to soften its emissions-trading system rules as of next year to protect the region’s economic growth and competitiveness amid a lack of international carbon curbs.
The Solidarna Polska group, composed of 20 opposition members of the Polish lower house of parliament and two senators, is planning to start in April an initiative to call on the EU regulator to propose a revision of the 2008 climate package that bolstered the European carbon cap-and-trade program, according to its deputy, Ludwik Dorn. To succeed, they will need backing from 1 million EU citizens from at least one-quarter of the 27 nations in the bloc.
“We want to create a tool to pressure the European Commission and national governments to relax the emissions trading system rules,” Dorn said today in a telephone interview from Warsaw. “We’ll be calling on the commission to suspend the implementation of the climate package. While we realize that the chances for a suspension are not great, we’ll be giving the governments a card to play in talks about the system.”
The planned initiative highlights the difficulty of the EU responding to calls by carbon investors and companies including Royal Dutch Shell Plc to strengthen its climate policies after emissions prices fell to record lows on oversupply concerns. Permits for delivery in December fell as much as 3 percent to 6.40 euros on the ICE Futures Europe exchange in London today, down 57 percent from a year ago.
The emissions trading system, or the ETS, is the cornerstone of the EU law to cut greenhouse gases blamed for climate change by 20 percent in 2020 compared with 1990 levels. The program, the world’s biggest, imposes pollution limits on more than 11,000 utilities and manufacturers, leading to a cap in 2020 that will be 21 percent less than 2005 discharges.
Dorn’s comments come after Denmark, which took over the six-month rotating EU presidency on Jan. 1, vowed action to deal with the decline of carbon prices in the ETS. The level of 6 euros per carbon allowance is “neither economically sustainable nor environmentally sustainable,” Danish Climate and Energy Minister Martin Lidegaard told reporters in Brussels on Dec. 19.
The initiative of Polish lawmakers is also at odds with efforts by the European Parliament’s environment committee, which on Dec. 20 backed a draft rule inviting the European Commission, the bloc’s executive, to propose a mechanism that would prevent a decrease in carbon prices if new energy-saving measures curb demand for emission rights.
The committee supported an amendment to the Energy Efficiency Directive that calls on the commission by the end of next year to propose fixes to its emissions auctioning regulation in order to “withhold a significant amount of allowances.” The committee’s suggestion would have to be backed by a majority of lawmakers in the parliament as well as member states to become binding. A subsequent proposal by the commission to set aside permits would require consent from national governments in a separate regulatory process.
Dorn said the EU should rethink its strategy after the United Nations climate summit in Durban in December, when envoys from more than 190 countries pledged to work toward a global pollution-curbing deal with a legal force to be agreed by 2015 and enacted by 2020.
“The EU climate package is an unbelievably significant threat to the competitiveness of our companies,” Dorn said. “What’s the sense in continuing it after the summit in Durban, which was a veiled fiasco? The road map to a new treaty is very weakly sketched out and there will be no binding global deal in force before 2020.”
In the centerpiece of the 2008 climate package, EU member states agreed to tighten emission caps on companies in the ETS as of 2013 and to allocate fewer of the allowances that make up the shrinking quotas for free, requiring some power producers to buy their whole allotment as of next year.
A second law set national targets to limit discharges by industries outside the trading system and a third piece of legislation sets a 20 percent target for renewable energy in Europe in 2020.
“The biggest problem for Poland and other central and eastern European countries is the ETS, though non-ETS requirements are also an economic challenge,” Dorn said. “It’s up to the governments to decide how to modify it. There may be different mechanisms, but the ultimate target should to be to lower the burden for the economy.”
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