[REPORT] The poorest will pay

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Starting in 2029, the European CO2 emissions trading scheme is to cover residential heating and private transportation apart from industry. The Warsaw Enterprise Institute, in a report titled “The poorest will pay,” compiled by economist Marek Lachowicz, calculated that this will mean an increase in costs for the average household of about PLN 1560 a year.

The report shows that the poorest households, living in rural areas, will be most affected by the upcoming changes. Urban households will not be as affected by the implementation of ETS 2, as they get their energy and heating from the grid, bearing the costs of the EC’s climate policy, although indirectly, in the tariff.

The negative consequences of EU climate policy are to be compensated through the Climate Social Fund. The EC estimates the amount of CSF disbursements to Poland at about 17 percent of the total. Assuming, following the EC, that the size of the fund will be €87 billion, this comes to €15.3 billion. The annual cost of implementing ETS 2 will cost households about 21 billion zlotys a year. Since residential buildings and private transportation are included in the system from 2029, by 2032 the system’s costs will total up to 63 billion zlotys. To this amount must be added the expenses that businesses will incur (ETS 2 will first cover commercial buildings and commercial transportation).

This means that Poland, as a result of the implementation of this system, will be at a loss, even if CSF disbursements were made without problems.

Until ETS 2 is implemented, there is still time to rationalize it and negotiate more favorable terms for Poland. One of WEI’s recommendations is to locate the emissions trading platform in Warsaw. Why? Just as before Brexit, industrial EU allowances were traded in Leipzig and London, so now ETS BRT allowances should also be traded on two trading floors. Given the past, the natural candidate for one of the venues is Leipzig. The other place should be Warsaw. All the strengths of Polish diplomacy should be used for this, and the area of the Trimarium should be convinced about this idea as well.


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