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"A continuation of free emission permits for Poland's coal-reliant energy system would be a grave mistake.
In the proposed legislation, Congress granted free emission allowances to coal-burning utilities to forestall the possibility of huge increases in electric bills.
"By allowing free emission allowances to maintain coal production from existing coal plants, while providing mandates that there be more wind and solar, you squeeze gas out in the middle," said William F. Whitsitt, an executive vice president at Devon Energy, a major natural gas producer.
Poland, which relies on coal to produce 90% of its energy, threatened to veto any deal that would lead to higher domestic energy prices, but was won around after being promised various goodies, such as the right to issue free emission permits to its power sector.
There are several structural reasons for this, most prominently an over-allocation of free emission allowances.
The environment ministry has drafted a policy paper on the future of the ETS which would mean Polish industry would continue to receive free emission allowances.
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Between 2013 and 2019, it allocated 673m free emissions allowances to coal-dependent countries whose GDP per capita was 50% below the EU average.
Those sectors would receive free emissions permits if they can show their costs are increasing and that they are significantly exposed to international competition.
Under a cap- and-trade program, this can be done in a straightforward way by awarding free emissions permits to EITE companies.
Germany, for example, is making it easier to build new coal plants by granting them free emissions permits, even though it aims to reduce emissions to 40% below the 1990 level by 2020.
Emmanuel Panagiotakis, the president of the Greek public power corporation (GPPC), told MEPs last year that without access to free emissions allowances, Greek lignite production would be discredited, causing electricity costs to skyrocket and jeapordising energy security.
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