Poland has stood its ground on carbon quotas as the European Commission yesterday (19 April) accepted its revised plan for allocating emission allowances. The agreement maintained the amount of allowances originally proposed by Poland despite the Commission's objections.
The EU executive said the new plan, submitted by Poland for the second phase of the EU's emissions trading scheme (EU ETS) from 2008 to 2012, fulfilled the directive's requirements.
The decision marks a milestone in the battle by several Central and Eastern European member states to raise the cap imposed by the EU ETS and ease the burden on their industries.
In 2007, the EU executive rejected Poland's national allocation plan (NAP), which sets its total emission allocations and outlines how it intends to distribute them to individual factories covered by the scheme.
Its main objection was that the countries intended to allocate too many allowances to their operators. It therefore asked Poland to cut its allocation by 26.7% to 208.5 million.
However, the Commission's decision was overturned by the European Court of First Instance - now known as the General Court - in September 2009. The court found that member states alone can take the final decision on the total number of allowances to allocate, and ruled that the EU executive had misused its powers.
The Commission went on to reject the country's CO2 allocation plan again in December, arguing that it violates criteria set out in the EU ETS directive. However, mindful not to contravene the court ruling, it did not specify what changes would be necessary to make any new plan acceptable.
The Commission said it had decided not to raise objections to the new plan submitted by Poland since it respected "the terms of the directive". In fact, it only changes "some technical rules governing the reserve of allowances not allocated to companies," it added.
The total number of allowances thus remains 208.5 Mt per year, as originally proposed by Poland.
In the meantime, an appeal by the Commission against the Court of First Instance's ruling is pending before the European Court of Justice.
"The appeal remains in place and the Commission will decide at a later stage whether to withdraw the appeal," a Commission spokesperson said.
EU Commissioner for Climate Action Connie Hedegaard described the latest decision as a "mutually satisfactory outcome".
"I warmly welcome the decision by Poland to submit an allocation plan consistent with the methodology used for all other member states. The Commission's decision has removed uncertainty for Polish companies and most importantly maintains the environmental integrity of the EU emissions trading system," she said.
Analysts have raised concerns that the price of EU allowances (EUAs) could fall if the emissions cap under the EU ETS was eased.
The most recent EU data shows that industrial emissions fell by 11% in 2009, taking them below the ETS cap (EurActiv 02/04/10). This has attracted criticism from the green lobby that the cap is in fact not stringent enough.