Poland may fight for concessions on EU climate change package

WARSAW (Thomson Financial) - Poland is likely to fight to change the European Union's new plan to produce cleaner energy, which it says may hurt its fast-growing emerging economy by forcing coal-fired power companies to raise prices as they seek funds for investments.

The European Commission said yesterday that the power sector will have to pay fully for carbon credits within the 25-member block's emission trading scheme between 2013 and 2020.

The move is a part of the plan to reduce EU's carbon dioxide emissions by a fifth pct in 12 years compared to 2005.

'We have a lot of doubts about the plans presented by the commission,' Mikolaj Budzanowski, a senior official at Warsaw's Environment Ministry told Thomson Financial News.

'In our opinion the package goes a step too far and doesn't take into consideration the specifics of the Polish economy.'

Poland gets 96 pct of its electricity from coal, and its power companies will have to scramble in years ahead to boost their capacity as demand jumps on the back of the booming economy.

Budzanowski said the government was 'particularly concerned' that unlike other sectors like transport or construction, the power companies will be covered by the full auctioning of CO2 emissions as of 2013.

This would pit local power companies, most of which are state-owned and set to float in Warsaw this or next year, against heavyweight utilities like Germany's RWE on the market for emissions rights. Budzanowski said this could force them to raise prices for customers 'sharply'.

Poland is moving gradually toward full liberalisation of its energy markets, although retail prices are currently approved by a regulator. Officials last week approved increases of 12 pct on average this year.

The European Commission yesterday proposed to raise one carbon dioxide emission quota for Poland by 14 pct by 2020 compared to a previous plan. Warsaw's last conservative government took the EU executive to court over the previous plan.

In a separate interview with a local daily today, Environment minister Maciej Nowicki said Poland will continue to push for higher emission targets, but signalled the government was ready to soften its stance.

'We stick to out plan, but we also negotiate,' Nowicki told newspaper Rzeczpospolita. 'I would be happy with a compromise.'

Source: By Piotr Skolimowski,
forbes.com