OECD-CEFIM Focus Group Discussion: Implementation and technical design elements of ETS schemes, 14 December 2021, Paris

1. General aspects of EU ETS
from Poland’s perspective
Focus Group Discussion II (FGD): Approaches to Emission Trading
System (ETS) schemes in the power sector
14.12.2021
Project entitled „The impact assessment of the EU Emission Trading System with the long-term vision for a climate neutral economy by 2050
(LIFE VIIEW 2050 – LIFE19 GIC/PL/001205)” is co-funded by the Life Programme of the European Union and the National Fund
for Environmental Protection and Water Management.

2. IOŚ-PIB / KOBiZE / CAKE
• IOŚ-PIB (Institute of Environmental Protection – National
Research Institute)
• Complex researches related to the environment
• Supervised by Polish Ministry of Climate and Environment
• KOBiZE (The National Centre for Emissions Management)
• Administration of the EU ETS:
• Allocation of free allowances
• Monitoring and verification
• Reports related to the system
• Administration of EU Registry
• Auctions
• Database with information on the emitters
• UNFCCC processes
• CAKE (Centre for Climate and Energy Analyses)
• Analytical centre with CGE and sectoral modelling tools
developing projects and analyses on climate and energy policy
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3. EU ETS from Polish perspective
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Advantages:
- cost effective way to reduce emissions
- significant revenues to the state budget
- modernization of the electricity generation
sector (derogation 10c, Modernization Fund),
heat (free allowances, bonus for heat
production), industry (free allowances,
compensation for energy-intensive sectors,
protection against the risk of carbon leakage)
- support for the implementation of other EU
goals, i.e. RES and EE
- reduction of emissions of other pollutants
- participation in international efforts to combat
climate change
- increasing the environmental awareness of
society and business
Challanges:
to EU MS’s (also legislative and administration):
- number of implementations documents
(regulations; decisions; guidelines) to be
implemented at MS’s level
- high complexity of implemented solutions
- interactions between different EU policies (EU
ETS/non-ETS/RES/EE);
- ongoing EU ETS revision
but also distortions in current economic
performance

4. EUA prices in 2013-2021 [EUR]
• EUA allowances in the period from Jan. 2013 to Dec., 2021
increased almost 14 times (from approx. EUR 6,5 to EUR 90).
• This price increase was favored by supply (cap tightening) and
demand (speculative) factors:
• Backloading,
• Increase of emission reduction
targets,
• Introducing the MSR,
• Hedging needs,
• New players (hedging funds),
• Correlation with other markets
(e.g. gas & equities)
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Poland 2013-2020
Number of allowances EUA i EUAA auctioned 506,12 [mln EUA]
Revenues 8 015 [mln euro]
Source: KOBiZE based on ICE and EEX data

5. Predictions of energy mix for Poland and costs
– 2020-2050
CAKE analysis: Poland net-zero 2050
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Source: Eurostat, CAKE

6. Poland net-zero 2050 – Results (1)
• „Poland net-zero 2050: The roadmap toward achievement of the EU
climate policy goals in Poland by 2050“
• The decarbonisation targets are very ambitious but can be
achievable with both swift technological progress (i.e. transport,
agriculture and industry) and adequate access to financial resources
(public and private).
• Most of emission reduction in the energy sector (reduction of fossil
fuels’ use and increase of RES share), but the role will decrease over
time: 80% of total emission reduction by 2030 (relative to 2015) and
55% by 2050.
• The following transition will increasingly rely on costly GHG
mitigation options in industry, transport and agriculture: large scale
adoption of BECCS, CCS, and CCU technologies, electrification of
industry, adoption of hydrogen technologies, spread of
electromobility and reduction of livestock production in
agriculture. 5

7. Poland net-zero 2050 – Results (2)
• „Poland net-zero 2050: The roadmap toward achievement of
the EU climate policy goals in Poland by 2050“
• The important factor are costs. According to CAKE analysis the
climate neutrality in 2050 will be achieved with relatively high
marginal cost of emission abatement – above 400 EUR/tCO2
eq. in the EU ETS and above 1,300 EUR/tCO2 eq. in non-ETS
sector in Poland.
• CAKE forecasts that the new investment for the energy sector
in the scenario of increasing the reduction target will in 2021-
2030 amount to approx. 45.6 billion EUR in Poland.
• Modernisation Fund in EU ETS can be estimated at approx.
EUR 9.88 bilion (four times less).
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8. Poland: ensuring energy security and
obtain and use financial resources
properly while achieving the reduction
target will be a challenge for the
transformation of the energy sector
and industry.
Fit for 55
main
challanges
CBAM
Financing
RES & EE
LULUCF
Redistribution
of non-ETS
targets among
Member
States
Scope of EU
ETS/ non-ETS
– transport &
building
Market
Sstability
Reserve

9. Thank you!
www.climatecake.pl | #LIFEVIIEW2050 | cake@kobize.pl | Twitter: @climate_cake
Marta Rosłaniec
Project entitled „The impact assessment of the EU Emission Trading System with the long-term vision for a climate neutral economy by 2050
(LIFE VIIEW 2050 – LIFE19 GIC/PL/001205)” is co-funded by the Life Programme of the European Union and the National Fund for Environmental Protection
and Water Management.