EU rules hinder Poland's plans for new coal power

BRUSSELS Tue Mar 29, 2011 11:26am EDT

BRUSSELS (Reuters) - Poland appears to have lost its fight to exempt new coal-fired power stations from paying for European Union emissions permits, an EU document showed on Tuesday.

Poland had planned to give away tens of millions of free carbon emissions permits to new power stations as it struggles to align its high-carbon economy with the EU's ambitions to cut carbon dioxide emissions.

Warsaw had aimed to exploit ambiguous wording in an EU climate agreement from 2008, but EU officials in Brussels have tightened up the loophole and restricted that option.

Poland's environment ministry was not immediately available to comment.

Ministers agreed in December 2008 that from 2013 all EU power producers would have to pay for permits to emit each tonne of carbon dioxide -- the main gas blamed for climate change.

Poland and several eastern European allies had opposed the move, saying it would be too costly for their carbon-intensive, coal-powered economies.

In return for dropping their opposition, they were allowed to grant up to 70 percent of those permits for free in 2013, gradually reducing the number to zero by 2020.

The exemption also applied to plants that were "physically initiated" by the end of 2008 -- a term that most people assumed to mean "already under construction."

Last year, Poland started a diplomatic push to broadly reinterpret the definition of "physically initiated" to include sites that were under preparation, a move that could allow the construction of up to 15,000 megawatts more of new capacity -- equivalent to about 10-20 coal-fired plants.

But the final legal interpretation has now been published by the European Commission, stating that for a power plant to be eligible, visible construction work must have started before the end of 2008, or a construction contract must have been signed.

"The Commission will require clear and substantiated evidence that these conditions have been met," said the document.

Campaigning group Greenpeace has been keeping the pressure on Poland to stick to the rules by photographing many of the sites to provide evidence of inaction.

One such photograph circulated to media shows what Greenpeace says is the site of a planned 1,600 megawatt coal-fired plant near Leczna, but the spot appears to be untouched agricultural land.

"The European Commission must not allow Poland to bend the rules to wriggle out of its obligations," said Greenpeace campaigner Julia Michalak. "Poland has a real potential for energy savings and renewables, and there is no reason it should get a free ride."

Environment group WWF previously estimated that Poland was aiming to give away permits for 33.6 million tonnes of carbon emissions each year on average, close to the entire annual emissions of countries such as Norway and Slovakia.

(Reporting by Pete Harrison, editing by Rex Merrifield and Jane Baird)