Polish authorities have granted greenhouse gas permits to 13 ineligible, unbuilt coal power plant projects in a bid to make them qualify for free emissions allowances under the EU emissions trading scheme (ETS). Environmental law organisation ClientEarth says that Poland is breaching both EU and national law to gain financial advantage for its power sector. The ETS is intended to discourage high carbon investment. But free emissions allowances granted as a result of Poland’s legal breach could give investors an incentive to invest in a new generation of coal power, in direct conflict with the ETS.
 
In the last possible days before the deadline of 30 June 2011, Polish authorities granted GHG emission permits to 13 power projects that are still “on paper”. This was done in breach of both Polish law, including the Polish Emissions Trading Scheme (ETS) Act and the EU ETS Directive. Granting GHG permits to those planned investments that do not qualify is just the first step in the government’s plan to apply for free ETS allowances for those installations. However, ClientEarth emphasises that those projects cannot legally receive the permits, and thus do not qualify for the free allowances.
 
Poland’s ETS Act says that emission permits can be granted to planned power plants if their investment process was physically initiated by 31 December 2008. ClientEarth claims that in the case of 13 installations, the investment process was not physically initiated by this date because the investors did not possess a valid building permit at that time, as required by Polish law. According to Poland’s Building Law Act, possessing a valid building permit is an indispensable condition for the preparatory works which may physically initiate the investment process as understood by Poland's ETS Act.

“ClientEarth has no doubt that granting greenhouse gas emission permits to the power plant projects that did not possess a building permit by the end of 2008 violates Polish law. Publicly available records show that of the planned coal installations, only one (Belchatow) possessed a building permit at that time. The remaining 13 don’t meet the eligibility criteria, shouldn’t have been given GHG permits, and consequently, cannot be included in the national application for derogations that Poland is going to send to the European Commission by end of September”, says Piotr Turowicz, Energy Lawyer at ClientEarth.
 
ClientEarth will continue to monitor the situation of the planned investments and will take the necessary legal steps, both in Poland and in the EU, to prevent them from receiving derogations in an unlawful manner.
 
“Instead of investing in renewable energy and energy efficiency for a sustainable secure energy system, the Polish government is falling back on support for coal power. The government cannot treat European law selectively and just pick elements that suit it. Poland is just taking over the EU Presidency and it should not take advantage of its position to force its interests against EU law.” – says Karla Hill, Director of Programmes at ClientEarth.
 
Background

In the 2008 negotiations of the revised EU emissions trading scheme (ETS) directive Poland managed to secure a “derogation” allowing it to distribute some free emissions allowances in the power sector during a transition period from 2013-2020. Since then Poland has been working to try to ensure that a series of planned new coal power station projects would be able to qualify.
 
There are two categories of power plants that, according to the EU ETS Directive, can apply for free allowances. The first are those that were already in operation in 2008, which covers Poland’s existing power stations and these are clearly eligible for derogation. The second category comprises proposed new installations for which investment process was “physically initiated” by 31 December 2008 and for which the first GHG emission permit was obtained by 30 June 2011. It is this second group that ClientEarth has been monitoring: the newly distributed GHG permits would appear to place 13 ineligible power stations in this category. However, ClientEarth says that the permits were granted unlawfully and, thus, they are at risk of challenge as invalid.
 

Poland will have to apply to the European Commission for approval of its free allocation plans by the end of September 2011.