France eyes EU ETS compromise to appease Polish rebellion
London, 12 November: France will put forward plans on Friday aimed at meeting Poland's demands on changes to the EU Emissions Trading Scheme (EU ETS) post-2012 and breaking the deadlock on the energy package.

According to sources close to the French government, Polish Prime Minister Donald Tusk will meet French President Nicolas Sarkozy in Paris on Thursday and France, the current holder of the EU presidency, will propose a solution to Poland's problems with the planned changes to the EU ETS.

While the details of the compromise are not known, sources have indicated that the French government is listening to Polish concerns. Poland last week, during a meeting of finance ministers in Brussels, asked for free carbon dioxide allowances for some power plants and for a carbon price floor and ceiling – prices of €10-15 ($12.50-18.75) to €38 per tonne are understood to have been discussed.  

Warsaw is also pushing for recognition of the emissions reductions achieved by new EU members, whose economies contracted after 1990, the Kyoto Protocol baseline year. This is in response to EU proposals to use 2005 emissions levels to calculate each member state's emissions reduction target for Phase III of the EU ETS, which runs from 2013 to 2020, as opposed to 1990.

Sources close to the Polish government suggest Tusk is unlikely to sign up to the energy package unless some of its concerns are answered. Warsaw is particularly worried that the introduction of full auctioning for power plants will cause fuel bills to soar when its population is already struggling with the consequences of a global economic downturn.

The majority of Poland's power supply comes from coal-fired plants, meaning that operators would need to buy more allowances than those in countries such as the UK and the Netherlands, where gas-fired plants account for a substantial amount of supply, and France, where nuclear power dominates.

In addition to fellow central European members of the so-called Visegrad group, diplomats in Brussels suggest Italy, Belgium, Luxembourg and Austria have also expressed sympathy with Poland's position.

The Czech Republic would like to see a phasing-in of auctioning for the power sector but, as the next EU presidency holder, wants to distance itself from Poland's strident criticism of the package.

Even if France manages to get agreement on the energy package from the 27 member states at the final EU summit of 2008, the Czech government is likely to have to broker the final deal and cannot, therefore, be seen as forming alliances with any member state.

"We are supporting the French government to reach an agreement by the end of the year," said a Brussels-based Czech diplomat. “The Czech Republic is ready to take up the reins.”