WARSAW, March 18 (Reuters) – Ten European Union member states have called on the bloc to keep handing out free carbon permits to industry to help curb costs as the U.S.-Israeli war on Iran sends energy prices soaring.
European Union leaders, who meet for a summit in Brussels on Thursday, are debating proposals to modify the bloc’s carbon market that have become central to discussions on containing the rise in energy prices.
Speaking at an energy conference in the northern Polish city of Gdansk, Polish Prime Minister Donald Tusk said that Poland was one of the signatories to a letter sent to European Council President Antonio Costa and European Commission chief Ursula von der Leyen on Wednesday demanding that industry should continue to receive free carbon allowances that limit their bill for releasing carbon emissions.
CALL FOR ‘THOROUGH REVIEW’
A copy of the letter seen by Reuters was also signed by the leaders of Austria, Bulgaria, Croatia, the Czech Republic, Greece, Hungary, Italy, Romania and Slovakia.
“We consider a thorough review of ETS aimed at mitigating its impact on electricity prices and at reducing the risk of volatility of carbon pricing including an extension of the free EU allowances under ETS 1 beyond 2034 to be necessary,” the letter said, referring to the Emissions Trading Scheme.
“Furthermore, it is crucial to smooth the phase-out of free allowances from 2028 onwards to avoid placing an excessive burden on industry during this transition period.”
The European Commission confirmed receipt of the letter.
Launched in 2005, the ETS forces power plants and industries to buy permits to cover their CO2 emissions, but manufacturing and energy‑intensive industries can get some allowances for free.
Tusk also said he would also urge the EU to tailor its approach to climate policy to countries’ individual needs.
“This is about a change of philosophy, a profound adjustment so that each member state can count on a specific approach that takes into account its specific characteristics,” he said.
Poland, which still relies on carbon-intensive coal for around half of its electricity, has been particularly dependent on its allocation of free permits to limit costs.
The changes to the carbon trading scheme, known as ETS2, will impose a price on CO2 emissions from heating and transport fuels from 2028, and spend the collected revenues to help households and businesses invest in electric cars and energy-saving renovations.
(Reporting by Alan Charlish, Karol Badohal in Warsaw, Philip Blenkinsopp, Kate Abnett in Brussels; editing by Barbara Lewis, Kirsten Donovan)
