Poland Loses EU Court Appeal of Carbon Permit Hand-Out Rules

Poland lost a European Union court appeal seeking to quash EU rules on how to allocate free carbon-dioxide permits in the world’s largest emissions market starting this year.

The regulation contested by Poland doesn’t infringe the country’s rights to decide about its energy mix, the EU General Court in Luxembourg ruled today.

Poland sued the Brussels-based European Commission in July 2011 saying the EU regulator failed to take into account fuel-usage patterns in individual member states when devising the carbon-efficiency benchmarks. The standards, which are used to determine the number of free permits for emitters after 2012 are “more restrictive” than required to meet the climate-protecting targets, the Polish Foreign Ministry argued.

The commission welcomes the judgment as it confirms its interpretation of the EU emissions-trading law and “provides legal certainty with regard to free allocation,” Isaac Valero-Ladron, climate spokesman for the EU regulatory arm, said in an e-mailed statement.

The 54-billion-euro ($70 billion) EU carbon cap-and-trade program is moving toward selling a greater proportion of allowances to emitters after giving most of them for free in the past eight years. The EU adopted 52 benchmarks to allocate a dwindling supply of free permits in the so-called third phase from 2013 until 2020.

‘Stronger Motivation’

“This ruling gives us stronger motivation to engage in talks on the 2030 energy and climate policy framework so that we avoid the necessity to resort to similar lawsuits in the future,” the Polish environment ministry said in an e-mailed statement.

The EU is set to start this year a debate about climate and energy policies for the post-2020 period, including future carbon goals, renewable energy rules and energy efficiency tools. The commission is due to present a consultation paper on this by the end of March.

EU carbon allowances for delivery in December extended losses after the verdict and fell to as low as 4.16 euros a metric ton. They were 1.9 percent up at 4.36 euros on the ICE Futures Europe Exchange as of 1:30 p.m. in London.

The case is: T-370/11, Poland v. Commission.

(Updates with comment from Poland in sixth paragraph.)
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