The Polish energy sector has been misusing free emission allowances intended to support the transition to clean energy to prop up its ailing coal power industry, research from ClientEarth shows today.
Up to 70% of projects which Polish power stations are obliged to fulfil in return for free greenhouse gas emission allowances are based on coal infrastructure. Investments in renewable sources of energy constitute only about 10%.
The whole purpose of these free allowances for the Polish power sector, known as derogations, is to modernise outdated installations and diversify energy sources in a country where around 80% of electricity comes from coal.
Derogations from a transition, a new analysis published by ClientEarth Poland, interrogates the way Poland makes use of the free emission allowances for the power sector for years 2013-2020. According to the Ministry of Environment’s calculations, free allowances were granted to 68 holdings at the start of the programme. The investments were estimated to be worth around 4.5 billion euro, according to prices from 2010.
The European Council granted Poland a right to allocate a number of greenhouse gas emission allowances for free – 70% of allowances until 2020 and 40% in 2021-2030. The EU ETS Directive requires the rest to be auctioned off. In return for free allowances, power plants are supposed to modernise infrastructure and help Poland become less dependent on just one energy source.
Free emission allowances used to maintain the status quo
Agnieszka Warso-Buchanan, lawyer at ClientEarth Poland, explains: “Conclusions from our report are not optimistic.
“This money was supposed to fulfil specific goals – modernisation of energy infrastructure and diversification of energy sources – which would help Poland get off coal step by step. However, most of the money was used for investments maintaining the status quo.
“Even the projects meant to contribute to the development of renewable energy sources are mostly modernisations of co-firing plants. Co-combustion of fuel and biomass is considered a controversial technology,”
Lack of transparency
ClientEarth’s analysis shows that one-third of the companies do not even share information on the real costs of the investments they are obliged to fulfil in return for free allowances, because they claim it is sensitive data. This makes it impossible to assess the scale and quality of the investments.
“Not only do we have a right to know as a society, but citizens should also have an active role in deciding which investments we want to finance in return for these free allowances. This is not private money, but public funds” Agnieszka said.
The report points out the lack of transparency in the decision-making process. ClientEarth shows that investments carried out with public funds should be the subject of public consultations. Furthermore, the shape and scope of reports from these projects should be made public, so the investments can be realistically assessed. ClientEarth also argues that at least 50% of the funds should go to development of citizens’ energy production.
The stakes are high, because the European Commission estimated the value of the free emission allowances requested by Poland for 2013-2021 to be around 7.5 billion euro.