Polish President Karol Nawrocki has conveyed his position to Prime Minister Donald Tusk that the EU should abolish the Emissions Trading System (ETS) to reduce costs and prevent an exodus of industry from the bloc. Tusk is due to meet other EU leaders to discuss ETS in Brussels on Thursday, Kallanish notes.
The current Polish heads of state and government come from different political parties and rarely see eye to eye. Although Tusk is under no obligation to follow Nawrocki’s lead, the President has the power to propose and veto legislation.
The EU has reduced CO2 emissions by nearly 35% in 20 years to approximately 2.4 billion tonnes, but emissions on a global scale have increased, driven by China, Undersecretary of State in the Chancellery of the President Karol Rabenda said during a press conference earlier this week.
The EU’s share in industrial production has declined to 17%, while China’s has surged to 28%, indicating that ETS “does not reduce industrial production, but pushes it to other regions of the world”, he added.
If the majority vote required to abolish ETS cannot be obtained, the Polish President proposes alternative solutions, including the payment of a so-called substitution fee to the budgets of individual member states. The Market Stability Reserve should meanwhile be adapted to enable the release of additional ETS allowances when their price exceeds €10/tonne.
Financial institutions “that in no way contribute to decarbonisation” should also be excluded from trading allowances, presidential advisor Wanda Buk explained. Finally, free allowances should be retained because “CBAM doesn’t work – it doesn’t cover the entire supply chain, and it can be easily circumvented”, she added.
According to press reports, European Commission President Ursula von der Leyen wrote to EU government heads this week proposing that ETS prices could be capped and subsidies channelled towards less wealthy members. This would include using the Market Stability Reserve to keep prices in check.
Various steelmaking representatives have recently called for ETS free allowances to be retained for longer, including Italian steel association Federacciai, voestalpine and Moravia Steel (see separate story). The situation is receiving even greater scrutiny since the escalation of the Middle East conflict has elevated energy prices.
