Setback for Warsaw: EU Parliament Says Energy Utilities Should Pay for Emissions

In a key vote on Tuesday, the European Parliament's environment committee affirmed plans for an emissions trading system. Brussels' only elected body says utility companies who pollute with coal should pay the full price for certificates, but gives other industries a break as recession approaches.

Environmental activists call for the closure of coal-fired power plants at a rally near the European Parliament in Brussels Tuesday.
AP

Environmental activists call for the closure of coal-fired power plants at a rally near the European Parliament in Brussels Tuesday.

Polish efforts to loosen future European Union environmental standards experienced a setback on Tuesday after the European Parliament's environment committee voted to back a plan to force power generators to purchase all of their carbon certificates for their emissions starting in 2013. However, EU lawmakers also sought to ease the cost for manufacturers as much of the bloc slides into a recession.

Currently, carbon permits are issued for free in the EU. And in recent weeks, Poland has been gathering allies to form a blocking minority to protect its utility industry from having to pay for the right to pollute under the EU's proposed emissions trading scheme (ETS). Like many Eastern European countries, Poland is highly dependent on coal-fired plants for producing electricity; and in Warsaw political leaders fear the new rules will place a disproportionate burden on the country. Poland wants to continue to exploit its coal reserves to produce electricity and is resisting measures that would penalize it for not adopting cleaner energy sources.

While requiring utility companies to pay for all emissions, the parliamentary committee softened measures for manufacturers, saying that it would phase in the fee-based certificates for energy-intensive industries like steel that are vulnerable to competition from countries without strict emissions regimes. They would be required to pay for 15 percent of carbon permits starting in 2013, with that figure gradually rising to 100 percent by 2020. With the vote, the committee also rejected an initiative led by the German Conservatives that would keep the certificates for industry free until the successor to the Kyoto protocol on climate change has been approved.

'The Crisis in Liquidity Is not a Helpful Backdrop'

In recent days, anti-ETS lobbyists have taken advantage of the current global financial crisis to exert massive pressure on the EU to water down standards that could cost industry billions of euros.

"The economic climate has just gone from bad to worse, but for all the trouble we have, the single greatest challenge facing us is climate change," Avril Doyle, an Irish Conservative member of the EU parliament said, according to Reuters.

"The crisis in liquidity is not a helpful backdrop, but it does not mean my colleagues or I should drop the ball," she said.

Still, Doyle told the news agency, "the clear political message from us ... is that we want these energy-intensive industries looked after. We do not want to unnecessarily expose them to competition from countries that don't have the same carbon constraints as the EU."

Doyle also sought to reassure Polish leaders, saying that "if there are real problems for some of our newer member states, I think they'll be looked after."

Heavy Reliance on Coal

Poland generates 96 percent of its electricity by burning its rich Silesian coal reserves. The country warns the climate scheme would force it to turn away from coal, a move it claims could hamstring its economy and force Warsaw to turn to Russia for natural gas.

On Monday, Polish Environment Minister Maciej Nowicki said his government is proposing that "80 percent of emission permits should be granted to the energy sector free of charge and only 20 percent bought on the market," according to the Warsaw Business Journal. "Then the number of free emissions would shrink by 10 percentage points every year, with full auctioning in 2020 instead of 2013." Nowicki said he feared Polish utility companies would have insufficient funds to compete with larger European utility companies at free-market certificate auctions, he told the paper.

Poland is by no means alone in its efforts to dilute EU climate goals. Britain is seeking an exclusion for the aviation industry for EU targets on renewable fuels, and the German government is pushing for a loosening of emissions limits for new automobiles because industry sales depend heavily on gas-guzzling luxury sedans.

The European Parliament represents only one strand of EU decision-making, and Tuesday's vote is not the final say on the issue. Nevertheless, the decision will set the tone for negotiations with EU leaders in the European Council ahead of a final agreement expected later this year or in 2009. The EU's stated goal is to cut 20 percent of carbon dioxide emissions in the bloc by 2020.

The committee also voted on Tuesday to support a proposal to provide as much as €10 billion to install carbon capture and storage (CCS) facilities at greenhouse gas-emitting coal-powered fire plants. The process involves trapping CO2 from power stations and sequestering it underground.

The world's first coal-fired CCS test plant opened in September in Germany, but the technology is thus far largely untested. A recent report by consulting firm McKinsey suggested CCS would not be commercially viable until 2030.

rbn -- with wire reports

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