Poland's request for a continued free allocation approved but is this really the end of the game?
Saturday, 14 July 2012 12:25


The question may be posed, how the Commission intends ‘to provide legal certainty to the Member States, the power generators concerned and the market on the quantity and terms of the transitional free allocation in the situation, where the issue is not decided yet due to required and not made State aid assessments?

 

The European Commission on 13 July 2012 approved Poland's request for a continued free allocation of EU Emissions Trading System (EU ETS) allowances to its power sector beyond this year, ‘subject to certain modifications being made’.

 

Pursuant to the Commission’s press release the modifications Poland is required to make relate to installations which otherwise may not receive free allowances and to some technical aspects of the allocation methodology used.

 

The modifications need to be notified by end 2012 and the Commission will work with Poland to implement them.

 

In MEMO/12/562 of 13 July 2012 the European Commission additionally explains the issue ‘Why has the Commission issued Decisions approving applications when, under the legislation, a Decision is required only if it decides to reject an application?’

 

In that regard in the said document it is stated that:

‘The EU ETS Directive indeed foresees that applications are considered tacitly approved if the Commission does not reject them. However, the Commission has decided to issue Decisions even in cases where it raises no objections, for two main reasons:

 

1. The Commission wants to provide legal certainty to the Member States and the power generators concerned on the quantity and terms of the transitional free allocation;

 

2. Given that the allowances allocated for free will be deducted from the auctioning rights of the Member States concerned, the Commission wants to provide clarity to the market on the

quantity and expected timing of the free allocation to power generators.’

 

The above Commission’s explanations can’t be assessed positively. It follows from the fact that the decisions mentioned above are subject to the further scrutiny under the State aid framework rules. In the press release of 13 July 2012 the Commission itself reserves that the decisions in question ‘are without prejudice to a state aid assessment by the Commission’.

 

The question therefore may be posed, how the Commission intends to provide legal certainty to the Member States, the power generators concerned and the market on the quantity and terms of the transitional free allocation in the situation, where the issue is not decided yet due to required and not made State aid assessments?

 

Legal certainty and transparency isn’t also achieved when the stated modifications Poland is required to make, which ‘relate to installations which otherwise may not receive free allowances and to some technical aspects of the allocation methodology used’ are not precisely indicated in the press release, and, therefore, can’t be assessed by the market taking into account the risk of Poland’s non-compliance.

 

It appears that, contrary to the optimistic tone of the Commission’s press release of 13 July 2012, anything isn’t clear yet and the political bargaining will still take place.

The relevant rules for State aid assessments in that regard can be viewed here.

They were already carried out with respect to Cyprus and Estonia only.

 

 

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