Poland seeks to overturn decision on CO2 emission limits


On 8 July 2011, Poland filed a challenge with the European Court of Justice against the decision by the European Commission concerning limits on free CO2 emission rights in industry.

Amendments to the Emissions Trading Directive (2003/87/EC) go into effect at the beginning of 2013, introducing a harmonised EU-wide methodology for allocating free CO2 emissions allowances. Under the amended directive, free emissions allowances will no longer be awarded for production of electricity (except for production from waste gases) or for CO2 capture, transport and storage. The directive also requires the European Commission to define interim free allocations of emissions allowances, which will be reduced each year until such allowances are eliminated entirely in 2027.

On 27 April 2011 the EC adopted a decision on Community-wide Implementing Measures, under which the criteria for allocating free emissions allowances will be benchmarks based on emissions levels using the best available technology for the EU as a whole (rather than specific countries).

The Polish economy, and the utility industry in particular, is to a large degree dependent on high-emissions technologies (such as outdated generation units at Polish power plants). In the Polish government’s view, the criteria defined in the CIM decision are based on gas-fuelled technology (used in Poland only to a small extent), whereas the main fuel used in Poland is coal. This puts Poland in a particularly unfavourable position compared to other EU member states.

Application of the criteria set forth in the CIM decision may result in a significant increase in production costs in energy-intensive industries, such as heating, chemicals, cement and paper.

Because of these concerns, on 8 July 2011 Poland filed a challenge to the CIM decision with the European Court of Justice, alleging violation of the principles of solidarity and proportionality and arguing that the goal of reducing CO2 emissions should be achieved using the least costly methods.

Poland also alleged that the CIM decision favours gas over coal, without justification, which in the government’s view violates the EU principle of non-discrimination.

Maciej Szewczyk, Environmental Law practice, Wardyński & Partners