CO2 emission prices soar, crushing Polish industry sector

Prices of CO2 emission allowances broke a record last week, reaching almost EUR 59 per ton, up from must a few euros in early 2018. The constant, clear growth directly translates into increases in energy prices and is felt hard by enterprises, especially large industrial energy consumers.

In Poland, the law on compensation for energy-intensive entities and industries has been in force since 2019, but – as noted by the Electricity and Gas Recipients Forum – the prices of CO2 emission allowances were calculated much lower than the current prices of CO2 emission allowances, which means that it no longer fulfills its function. The organization also points out that the way the European allowances market operates and the participation of speculative investors in them is becoming a growing threat to the competitiveness of the EU industry.

We are observing a sharp increase in electricity prices on the market. In March and April we could buy it for about PLN 240 per megawatt hour, now the prices quoted on the Polish Power Exchange exceed PLN 350. It is a catastrophe for the industry and its competitiveness, says Henryk Kaliś, the chairman of the Forum of Electricity and Gas Recipients (FOEEiG) and the president of the Chamber of Industrial Energy and Energy Recipients, to the Newseria Biznes agency.

The Ministry of Development reports that in Poland (the energy sector is still based on coal in over 70%), in order to produce 1 kWh of electricity, 724 g of CO2 must be emitted, which is three times more than the European average (226 g). This is one of the reasons why the level of electricity prices in Poland is the highest in the EU (according to the European Commission, in the third quarter of last year, the average price of electricity on the Polish wholesale market was EUR 52 per 1 MWh, i.e. as much as 60% more than the European average in this period. )

This means much higher fees that Polish companies have to pay for CO2 emission allowances. These, in turn, broke a new, historic record last week (the previous one fell in mid-May), reaching almost EUR 59 per ton. Even at the beginning of 2018, the prices of emission allowances fluctuated around a few euros per ton.

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