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EU refuses emissions permits for 'ghost' Polish power plants

6th August 2012
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Over 30 planned energy projects from major Polish and foreign firms will not benefit from free CO2 allowances after 2013

Industry players have mixed reactions when it comes to the potential effects of the EU's decision

Following a ruling by the European Commission in mid-July, a total of 36 energy projects, including new coal-fired and gas-fired power plants, will be denied free CO2 emission permits.

They include PKN Orlen’s planned 450-600 megawatt (MW) gas-fired power plant in Płock, as well as new power blocks at coal-fired plants belonging to PGE (Opole), Enea (Kozienice) and Energa (Ostrołęka). Projects by Poland’s Tauron, France’s EDF and GDF Suez, as well as Vattenfall, are also affected by the ruling.

In its judgment, the European Commission gave a green light for Poland to provide its power firms with free carbon allowances after the next phase of the EU’s Emissions Trading Scheme starts in 2013. However, the EU’s executive arm also argued that several projects submitted by Poland were not eligible to benefit from these exemptions because they have not yet been constructed and therefore do not qualify for the allowance.

Due to highly fluctuating prices for carbon permits, it is difficult to estimate the total value of what was gained and lost in this judgment. A July Reuters poll of analysts put EU carbon permits prices at an average of E11.46 over the 2013-2020 period, meaning free emissions granted to Poland in the period would be worth E4.6 billion.

Orlen argues that the commission’s refusal to back projects aimed at increasing the share of gas in the firm’s overall fuel consumption “threatens to negatively affect competition in the market. [Such] decisions also have an adverse impact on the economics of projects carried out by our company,” the firm’s press office said in a statement.

But Bogdan Janicki, a senior adviser at lobby group Central Europe Energy Partners (CEEP), which represents 11 energy companies from Central and Eastern Europe, downplayed the importance of the decision saying that in the best conditions, the new power plants would be up and running no earlier than in 2018-2019, which corresponds to the end of the derogation period.

Alice Trudelle

From Warsaw Business Journal by Alice Trudelle

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