On Thursday, The European Union’s General Court rejected a challenge by Poland over the free allocation of carbon permits to energy-intensive industries.
Poland argued that the rules for free allocation of CO2 permits of the ETS do not take into account the countries situation of being an emerging Eastern European economy with its businesses heavily reliant on coal. Moreover, the country asserted that the method of allocation of free allowances affected a country’s right of deciding its own energy mix. However, the General Court in Luxembourg disagreed with this call.
The General Court stated that the allocation of free carbon allowances is fully accordant with the law and that the Polish complaint had no basis. Further, the Court rejected Poland’s claims that the current system will decrease the competitiveness of companies in the EU whom are dependent of coal.
If Poland seeks to appeal the courts decision, the case will have to be disputed at the European Court of Justice.
Method of Allocation
The method the ETS allocates emission allowances are by firstly giving out free allowances to companies. If companies exceed the given level, they can either choose to buy more allowances through the ETS or to invest in new technology to reduce their carbon emissions. Such a move may result in companies having extra permits to sell to others.
TheCompensators* applaud the decision of the General Court. In essence, the dispute centers on the idea of whether countries in Eastern Europe, which have had limited time to adapt their economies to use greener technologies should have more flexibility to pollute. Given the low price of carbon allowances, TheCompensators* believe that this will not hurt the competitiveness of businesses in Eastern European companies especially when they are given free carbon permits. Further, to avoid buying permits, businesses should have the incentive to invest in green technology instead of contesting an already weak system.
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