Wednesday 6 May 2015
Stabilization reserve for the European CO2 emission allowances market : Polish statement
Last Tuesday ( May 5,2014) negotiators from the
Member States of the EU and the European Parliament agreed upon the creation
of so-called “stabilization reserve” for
the European CO2 emission allowances market. The compromise provides that
provision (stabilization reserve) will be in force from January 1, 2019. Poland
wanted to start this new mechanism a bit later, in 2021 – in line with the
proposal of the European Commission.
Polish diplomats did their best to delay the date of
the start of the mechanism. Poland managed to build a blocking minority at the
EU Council, but due to the Czech’s change in the decision – Poland had to
follow different strategy.
The compromise made by the representatives of the EU
and the EP predicts that by the end of 2025, 10 per cent of the allowances will
be excluded from the reserve. This, so-called, solidarity envelope is to be distributed among the poorest
countries in the EU (with a GDP of less than 90 per cent. of the EU average).
It is difficult to specify if Poland will manage to obtain any of those. Many market analysts express opinions that
since the creation of reserves (2019), the price of emission allowances will
exceed 20 euros per tonne, which will be three times higher than today.
Although the Member States of the EU and the European
Parliament must still approve Tuesday’s compromise, virtually there is no
chance of a beneficial change for Poland. Approval of the compromise by
ministers to be just a formality, and is scheduled for June.
The stabilization reserve (market stability reserve)
functions based on raising the price of CO2 emission permits, to mobilize the
industry to achieve the objectives of the EU climate and energy policy and
investment in green technologies. Currently, the price of emission permits
fluctuates around 7 euros, and it's definitely not enough to achieve the goals
that the Commission established, creating a market for emissions trading.
The compromise is problematic for Poland as it may
cause fast raise in the energy price. Polish Committee for Electricity, based
in Brussels, pointed out that if there was a price increase of the emission
allowance of 1 euro per tonne, it would translate into increase of electricity
price by about 1 euro per megawatt hour.
According to National Statistical Office (based on
data from 2012), a family of four consumes about 3200 kWh per year. Assuming
that the price of permits rose to 20 euros, electricity bills for the average
Pole could be higher by almost 150 zł per annum(approx.: 37-40 euro) . At the
moment, it is difficult to predict whether the market actually behaves as some
analysts predict. As an example of ETS shows, when the system was introduced,
the price of ETS was predicted to be about 50 euros per tonne – what is 7 times
more than now.
Based
on/read more:
http://www.wsj.com/articles/eu-agrees-to-overhaul-carbon-trading-system-1430847318
http://www.polskieradio.pl/42/273/Artykul/1437048,Data-startu-rezerwy-stabilizacyjnej-CO2-nie-do-zmiany
https://ec.europa.eu/energy/
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