BRIEFING: In or out? Poland approaches EU climate crossroads

Published 11:28 on August 5, 2015  /  Last updated at 13:37 on August 31, 2015  /  EMEA, EU ETS  /  No Comments

Poland could seek to opt out of EU climate policies altogether next year as its influence wanes in Brussels and the poll-leading opposition takes an even harder line.

Poland could seek to opt out of EU climate policies altogether next year as its influence wanes in Brussels and the poll-leading opposition takes an even harder line.

The new Polish president Andrzej Duda is due to be sworn into office on Thursday and his Law and Justice Party (PiS) is ahead in polls for October’s general election.

Such an opt out would mean companies in Europe’s third largest emitter would no longer be regulated under the EU ETS, dealing a severe blow to the EU’s credibility as a trading bloc. But it would raise the prospect of more ambitious climate policies among the remaining 27 nations no longer restrained by a government that has consistently sought to weaken climate action.

In this briefing, we examine why such a drastic step as Poland renegotiating the terms of its EU membership could be on the cards as a combination of changes to EU lawmaking procedures and a new hardline government come to a head.

NEW EU VOTING RULES

Brought in for an enlarged EU, the 2007 Lisbon Treaty  gave greater strength to the bloc’s parliament and reduced the number of decisions that required unanimity among member states. But its provisions are only slowly taking effect.

It made changes to voting rules among member states from Nov. 1, 2014, although transitional measures allowing even one member state to request the old rules until March 2017 would effectively make that the start date.

The new system of Qualified Majority Voting for member states removes an adjustment in favour of smaller states to leave voting weighted to size of population alone. This cuts the required majority threshold but gives more influence to bigger states such as Germany and France but less to many of Poland’s traditional allies in the east.

  • A quality majority under the old rules required at least 260 of 352 votes from at least 15 nations, representing at least 62% of the EU population. This meant a blocking minority could be achieved with 93 votes.
  • The new rules require 55% of member states representing at least 65% of the EU population. At least four member states are needed to form a blocking minority.

KNIFE-EDGE MSR VOTE

As the MSR was going through the legislative process, the transitional voting rules meant the EU presidency holder (Italy in H2 2014 and Latvia in H1 2015) waited to gather a majority large enough under either system before calling a vote.

Poland led opposition to an earlier start date for the MSR than 2021, and claimed support from seven other member states sufficient for a blocking minority: Bulgaria, Croatia, the Czech Republic, Cyprus, Hungary, Lithuania and Romania.

Although this never came down to a formal vote, the eight mainly poorer member states were just enough to block the proposal under the old rules but not under the new ones.

A 2019 MSR start date was eventually agreed after the Czech Republic and Lithuania defected to the western camp led by Germany and the UK.

The clinching move was a compromise that involved richer EU governments giving up some €845 million in carbon revenues to poorer states, according to calculations by Thomson Reuters Point Carbon.

The countries reached an agreement calling for a so-called modernisation fund of billions of allowances – meant for sale by poorer EU states – be untouched by the reserve between 2021 and 2025.

The states stand to earn the €845 million in auction revenue because the balance of auctionable allowances to be withheld from sale in the MSR will have to be drawn from the allocations of richer governments, cutting into their sale revenues.

The windfall for poorer nations is seen as being only temporary, as the richer governments will benefit more when the MSR is forecast to start returning allowances to market after 2025, when the current oversupply dwindles and prices are expected to be much higher

POLAND OPT-OUT TALK AS POWER WANES

With the transitional rule changes expiring in March 2017, Poland’s ability to block or weaken climate protection measures could wane. And with less influence on EU climate policy, it may become more tempting for Polish governments try to opt out of the laws altogether.

Signs of this possibility emerged in June 2015 when Poland’s poll-leading Law & Justice (PiS) party said it would adopt an even tougher line against the bloc’s climate policy than the sitting government of the Civic Platform (PO) party.

PiS said it wants to negotiate exemptions from the EU’s binding emission curbs, which would include withdrawing companies from the EU ETS.

“The strategy that we’re planning for the economy rejects the dogma of de-carbonization,” Piotr Naimski, in charge of preparing energy policy at Law & Justice, said in an interview with Bloomberg. “The role of coal in Poland’s economy fully deserves to receive special treatment.”

“Nobody is thinking of leaving the EU, but there is an idea to again look at Poland’s unique situation,” he said, referring to a strategy of bolstering Poland’s loss-making domestic coal miners to reduce its heavy reliance on Russian gas imports.

According to opinion polls, the surprise victory of PiS candidate Andrzej Duda in presidential elections in May has paved the way for the party to win October parliamentary elections.

Poland’s incumbent Civic Platform party (PO), the main governing party since 2007, has led opposition to tougher EU climate policies since the bloc agreed to cut total greenhouse gas emissions 20% by 2020 in late 2008.

It didn’t veto an EU leaders’ deal to extend the goal to a 40% cut by 2030 last October, but it secured the continuation of several concessions that could divert more than €30 billion for itself and its eastern EU neighbours from the coffers of richer western member states.

These include continuing to be allowed to give EUAs to its power generators for free and a big share of proceeds from the Modernisation Fund created from auctioning allowances.

Additional resources

European Commission explanation of qualified majority voting.

Council of member states’ voting calculator (both old and new)

 

By Ben Garside – ben@carbon-pulse.com

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