Defence of BSP members' position on amendments to EC Guidelines
In 2021, as part of the adopted Fit for 55 package, the European Commission committed to update the level of emission reductions, in line with the new targets set by the EU. These changes concerned, inter alia, the Directive establishing the European Emissions Trading System (EU ETS). This process culminated in a preliminary political agreement reached by the Czech Presidency with the European Commission and the European Parliament on 18 December 2022.
Key aspects and mechanisms of the EU ETS
The EU, driven by the goal of combating climate change, is seeking to adapt its regulations to new challenges. For sectors covered by the EU ETS, discussions on mechanisms to reduce emissions and maintain measures such as free allocation of emission allowances and compensation of indirect costs are crucial. The Carbon Border Adjustment Mechanism (CBAM) aims to prevent the risk of carbon leakage and support global efforts to reduce emissions.
Impact on EU climate policy
The EU ETS, together with related acts such as the MSR (Market Stability Reserve), has been a crucial element of the European Union's climate policy since 2005. The legislative processes related to the European Green Deal take place in the context of the post-pandemic recovery of European economies and the ongoing geopolitical conflict, which affects commodity markets and prices of basic goods.
Compensation for energy-intensive sectors
BSP's activities in the area of the EU ETS included defending the interests of Polish companies in the single market, including maintaining the sectors entitled to receive financial compensation in the new draft EC guidelines. The BSP successfully persuaded the European Commission to include sectors such as copper, lead, zinc, tin and certain plastics in the list of sectors eligible for state aid.
Reforms and changes to the EU ETS
The December 2022 agreement raised the EU ETS reduction target to 62% by 2030, speeding up the loss of all allowances. The linear reduction factor (LRF) has been set at 4.3% in 2024-2027 and 4.4% in 2028-2030. The phase-out of free allowances is expected to be completed by 2034, with almost half of the free allowances to be phased out by 2030.
Criteria for free allocation of allowances
As a condition of free allocation of allowances, installations must comply with recommendations from energy audits or certified energy management systems. In addition, installations with emissions above the 80th percentile of emission levels from the relevant product benchmark must develop climate neutrality plans by May 1, 2024.
The impact of BSP on legislative processes
The BSP actively presented its views in the consultation processes of the European Commission, participated in the analysis of voting documents from plenary meetings and prepared summaries of work on the provisions of the revised Directive. These activities were aimed at ensuring the stability of the functioning of the EU ETS and supporting innovative technological solutions in industrial sectors.