A new report from Oliver Sartor of CDC Climat Research and Thomas Spencer of IDDRI (Institute for Sustainable Development and International Relations) shows that the impact of higher carbon prices will not drive the energy-intensive industry out of Poland.
Photo: Patnow coal power station (photo: Ecotist)
In a new study, An Empirical Assessment of the Risk of Carbon Leakage in Poland, Oliver Sartor of CDC Climate Research and Thomas Spencer of IDDRI, look at the impact of EU climate policy (in particular, the EU Emission Trading Scheme) on Poland’s energy-intensive industry.
Poland is of course known as the staunchest opponent of more far-reaching climate measures. The country is strongly dependent on coal-fired power generation; its share of coal-fired power in its total power production is even higher than in China and more than twice as high as the EU-15 average.
Nonetheless, the authors conclude that the impact of higher carbion prices – of up to €30/ton – will not drive the energy-intensive industry out of Poland. This is for a large part so because, as they put it, “the mitigating measures provided for in the EU Directive are effective at removing the vast majority of direct and indirect carbon costs for Polish industry”.
I have to admit that I was not aware of those “mitigating measures”. As it turns out, the electricity sector in Poland will receive “a transitional free allocation from Phase III of the EU ETS (2013-2020)”. In addition, “direct compensation for electricity intensive industries is envisaged in the ETS Directive”, the authors note. In other words, the Polish government is allowed to support both its electricity and its industrial sector from the impacts of EU climate policy. Interesting to know!
The authors conclude from their research that “firstly, EU climate policy can be made more stringent without inducing risks of significant carbon leakage. The current benchmarking system appears to be reasonably effective at providing a level playing field while not structurally disadvantaging less carbon efficient Member States like Poland. Secondly, it seems vital to maintain a harmonized climate policy for the industrial and electricity sector. Without this, the internal market would be exposed to unacceptable risks of distortion. Finding a harmonized mechanism to deal with indirect carbon costs may be a key to unlocking Polish support to future policy developments.”