Poland calls on EU to remove 'speculators' from its carbon market (updated)

Seafarms

15/02/2022 20:37

(Adds industry letter)
    By Kate Abnett and Marek Strzelecki
    BRUSSELS/WARSAW, Feb 15 (Reuters) - Poland has urged the
European Union to introduce "control mechanisms" to the bloc's
carbon market and curb financial speculators' participation in
the scheme, the Polish government said on Tuesday. 
    European Union policymakers are preparing to negotiate a
major reform of its core policy tool for curbing emissions - the
emissions trading system (ETS), which requires power plants and
industry to buy CO2 "allowances" to cover each tonne of CO2 they
release.
    The ETS is designed to have a gradually shrinking supply of
permits, which trade on exchanges like other assets. Their price
soared by around 150% last year and hit a record high of 98.49
euros ($112) per tonne this month. The benchmark carbon price
 CFI2Zc1  was around 91 euros a tonne on Tuesday.
    Poland last week sent Brussels its demands concerning the
ETS and has built a coalition of countries that want to reform
the system, Warsaw said in a statement on Tuesday, following a
meeting between Polish Climate Minister Anna Moskwa and EU
climate policy chief Frans Timmermans in Brussels on Monday.
    "It is crucial for us to withdraw financial institutions
from the ETS market as soon as possible. Our second demand is to
abandon the withdrawal of free allowances," the statement quoted
Moskwa as saying.
    Industries get a share of free CO2 allowances to help them
compete with international rivals that have no CO2 costs, but
Brussels wants to phase them out to push industries to curb
emissions. 
    Moskwa said Brussels should also introduce "control
mechanisms" to the market, without specifying what these would
do.
    "At present, the European Commission is helpless and legally
and formally unable to interfere in this market," she said.
    A group of 10 industry bodies on Tuesday wrote to the
commission urging it not to limit speculators, and pointed to a
preliminary investigation by the EU securities watchdog in
November, which said there was no proof of abuse in the ETS.
    "Introducing position limits or restricting the
participation of financial and non-financial actors would run
the risk of weakening the market. It would make it more
expensive and complex for compliance entities to hedge for the
future and plan for investments into low carbon alternatives,"
the letter said.
    Poland relies on coal for more than 70% of its power and has
long argued that EU climate policies must take into account that
such an energy mix makes reaching the climate targets more
costly than for other EU members.
    The EU and other countries see higher CO2 prices as an
essential incentive for companies to invest in the green
technologies needed for the EU to meet a goal of cutting
emissions by 55% from 1990 levels by 2030.
    
($1 = 0.8810 euros)

 (Reporting by Kate Abnett and Marek Strzelecki; editing by Nina
Chestney, Tomasz Janowski and Mark Porter)
 ((Marek.Strzelecki@thomsonreuters.com;))