What changes in the emissions trading system

• The EU's stability reserve will no longer permanently remove emission allowances from the market.
• The current mechanism cancels about 16 million allowances per month, which means a potential loss of 1.4 billion euros.
• Poland initially wanted a complete halt to cancellations but accepted a compromise to quickly stop the loss of allowances.
• Greater availability of allowances may lower their price and energy costs for businesses and households.

The stability reserve of the EU emissions trading system will stop permanently withdrawing allowances from circulation. The new rules will allow for additional allocations to be introduced to the market when allowances are scarce. Greater availability of allowances lowers their price, which may translate into lower energy costs for enterprises and households (ETS: The EU has plugged the bathtub. Poland wanted more but is satisfied – RMF24).

Quick response to the problem

Leaders of EU countries called for accelerating changes in the mechanism. During the European summit, which included a revision of the ETS, discussions also covered the future EU budget and the fight against China's trade dominance (EU Summit: Poland satisfied with the conclusions on ETS, opposes cuts in the budget - rp.pl – rp.pl). Poland expressed satisfaction with the agreements regarding the ETS, although it opposes the proposed cuts in the EU budget.

Loss of allowances and estimated losses

The current system causes the irreversible removal of about 16 million allowances from the market each month. According to estimates, this means a potential loss of around 1.4 billion euros. A Polish diplomat, quoted by RMF FM, described the agreed solution as a plug that stops the water from draining from the bathtub. This was meant to symbolize the halt of further allowance depletion.

Poland's position on the ETS

Poland initially sought a complete halt to the cancellation of allowances, in line with the European Commission's proposal. Ultimately, Warsaw accepted a compromise, as the priority was to quickly stop the disappearance of allowances from the market. The diplomat indicated that the threshold of 700 million allowances is mainly theoretical, and the key is to stop the cancellation process.