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CLIMATE ACTION | interview by Wojciech Kość
26 November 2012

Marcin Korolec: Full of Doubts

Marcin Korolec: Full of Doubts
Poland has raised many questions recently about the European Union’s low carbon policy endeavors. Cleantech talks to Marcin Korolec, Poland’s environment minister and to many the face of Polish skepticism about the EU’s current course in climate change action.

Estimates vary, but Poland could receive up to PLN 60 billion (€14.5 billion) from auctioning CO2 allowances by 2020. The ETS directive proposes spending at least half of these resources on goals such as climate change mitigation and adaptation, but there’s no obligation to do so. Is there an agreement in the Polish government where this money will go?

We’re not able to predict what amounts the auctioning will yield. The PLN 60 billion figure is, I think, greatly exaggerated. It would mean that the price of allowances that it’s based upon is very radically higher than today. Today’s market price is only about €7 per EUA [EU emission allowance]. Since the system isn’t up to speed yet and we don’t know what amounts of money it will generate, the government ought to discuss the issue of proceeds and how to manage them early in 2014, after the system has been up and running for some time.

With allowances trading at mere €7, what is the shape of the market? If the price goes up, is that going to be a good development?

I can’t say if it’s going to be good or bad for the market. It’s a simple function of the adopted legislation, the market nature of the ETS and the current economic situation. When in 2008/2009 Poland proposed a safety mechanism preventing the price of allowances from going below or above certain limits, the representatives of the Commisison and the then Presidency of the Council would tell us that we didn’t understand market mechanisms. So we went with the market approach and I don’t see a reason for which we would manipulate the price today. If the market puts the price where it is now, so be it.

What’s the ETS for? Emissions reduction as such or development of a low-emissions economy?

I think it’s enough to read the text of the ETS directive to find out what the ETS is for. The text is clear: reduction of CO2 emissions on an annual basis, based on a market mechanism which is applied uniformly to all member states. There’s nothing more about the directive. Is the directive offering the best possible solution? I have very serious doubts about it, but Poland was very isolated in expressing those doubts when the system was being worked out. Today, however, only a few months before the new phase of the ETS begins, I would be very much against any hurried and nervous moves about changing it because stable regulatory environment is so important to all parties involved. The ETS in its current shape hasn’t been like this for long. We need to gather experience before we use opportunities to change it in a few years.

Did the Commission’s decision on derogation for the Polish power industry meet your expectations?

It was a good decision, overall, because it allows some installations to benefit from free allocation of allowances in exchange for investments. But there are caveats that we need to address and Poland now needs to consider how to address them. Wherever doubts do exist, there will be discussions with the Commission and this is what could prove problematic in the future.

The European Commission is impatient with Poland because the renewable energy directive should have been implemented in December 2010. The renewable energy market is stalled, as lack of regulatory framework poses investment risk for financial institutions. Has the ministry done anything to speed up the process?

The ministry of economy is responsible for the implementation of this directive and we are doing all we can to help them from our position. Of course, it would be so much better if the law had been in effect from December 2010, but it’s not easy to draft such legislation. We would like to avoid mistakes that we see in some other member states where a generous support systems for solar energy resulted in serious problems with the network and the cost of the whole scheme. It’s better to spend more time on this and come with a better regulation eventually.


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