“Extra” PLN 1,250 per tonne of hard coal, PLN 1.10 per cubic meter. natural gas, PLN 85 per liter of LPG, PLN 1.25 per liter of petrol and PLN 1.4 per liter of diesel are the estimated additional costs of fuels for heating and transport, which could result in 2030 from the price of EUR 122 per tonne of CO2 in the ETS2 system. Compared to 2024 prices, petrol and diesel would then increase in price by over 15%, LPG and natural gas by almost 20%, and hard coal, the most emissive and therefore most affected by fees, by over 40%. Robert Jeszke, deputy director for emission management at the Institute of Environmental Protection – National Research Institute (IOŚ-PIB) and head of the National Center for Emission Balancing and Management (KOBiZE), shared the estimates with our editorial office in September. However, there is hope that the increases will be lower.
Read also: Poland will be particularly affected by ETS2. People with low incomes are most at risk
The system will come into force a year later
Let us recall the most important facts – the ETS2 system is nothing more than an extension of the CO2 emission allowance trading system, which has been operating as a “classic” ETS since 2005, to other sectors, i.e. primarily buildings and individual transport (but also smaller industrial and heating plants and micro-enterprises). Fuel sellers will pay fees for carbon dioxide emissions and pass the costs on to consumers.
The European Union adopted regulations in this area two years ago, and the system was originally supposed to come into force in 2027, but recently Poland and other countries reluctant to ETS2 (which will obviously increase the cost of living for citizens) managed to achieve the first, preliminary changes. At the end of October, the conclusions of the European Council, i.e. the leaders of the member states, obliged the European Commission to present proposals for changes that would limit the increase in allowance prices.
As Krzysztof Bolesta, the deputy minister of climate and environment responsible for the negotiations, recently said in our pages, the mechanism will probably consist in activating the so-called market stability reserve, i.e. releasing additional allowances to the market when their price exceeds a set level. Ultimately, prices will then go down. The commission is expected to present its proposal later this year. Regardless, in November the EU Council agreed to postpone the start of ETS2 from 2027 to 2028 (Polish demand to set a later date for 2030 has not yet found support). On November 13, the proposal was supported by the European Parliament.
Drastic price increase? “It doesn't benefit anyone”
However, the case is not entirely clear from a legal point of view, as Michał Wojtyło, senior public policy analyst at the Reform Institute, says in a comment for Business Insider. – The Council and Parliament agreed to delay ETS2 on the occasion of the revision of the climate law, which includes the target of reducing greenhouse gas emissions by 2040. However, trading in emission allowances is regulated by another act, the ETS Directive. In order to postpone the system by a year “according to art”, this directive should be changed, and the initiative in this respect belongs to the European Commission. It will probably be revised anyway, since the Commission is also supposed to prepare price control mechanisms, but this is not done in a transparent way, as lawyers point out, the expert notes.
We will not know the details regarding limiting price increases until the Commission presents its mechanism. — The impact of these proposals on carbon market prices, and therefore citizens' costs for heating and transport fuels, will depend on their precise content – e.g. whether the Commission proposes to increase the supply of allowances two, three or four times a year and in what quantities; of the order of 20.30 or e.g. 50 million – Wojtyło points out.
Giving very specific values today of what we will pay for petrol, gas or coal in the coming years would be fortune telling at this point. – It's good that Brussels wants to increase price predictability and reduce the risk of sudden spikes. No one wants prices to go up dramatically — even to countries that are much more favorable to ETS2 than Poland, such as Germany, our interlocutor adds.
In an interview with our editorial office, Minister Bolesta said that the Commission will release new allowances to the market when their price exceeds, for example, EUR 45 per tonne of CO2. Reaching this value as the moment of increasing supply is already included in the current ETS2 directive, but in the updated mechanism it should happen more often than previously predicted. Quoted by Reuters, EU Commissioner for Climate, Carbon Neutrality and Clean Growth Wopke Hoekstra said that the additional allowances will probably be twice as many – up to 80 million in 2027-2029.
Delay alone won't work
Let's assume that the price remains at the level of the above-mentioned EUR 45 – what will this mean in practice for our wallets? Bloomberg's September report on various ETS2 implementation scenarios shows that if the average price of allowances remained at this level until the end of the decade, the costs for consumers would be almost 55 percent. lower than in the baseline scenario (an average of EUR 99 per tonne in 2027-2030 and EUR 122 in 2030 – then in 2030 the price of gasoline would increase by PLN 1.25 per liter, natural gas by PLN 1.10 per cubic meter, and coal by PLN 1,250 per tonne).
Optimistically, Bloomberg states that emission reductions would then be similar – so we are able to achieve similar climate effects at lower social costs. However, these will still occur. ING Bank Śląski analysts recently calculated that At a price of around EUR 45 per tonne, a liter of E95 petrol would be 46 cents more expensive, and a liter of diesel oil would be 54 cents more expensive. Gas prices would increase by PLN 90 per megawatt hour, and coal by PLN 400 per tonne.
Importantly for Poland, the one-year delay of ETS2 – from 2027 to 2028 – does not exclude the planned launch of the Social Climate Fund. Wopke Hoekstra said in the European Parliament on November 12 that the instrument intended as a response to the increase in the cost of living, which will finance investments in thermal modernization, replacement of heat sources and sustainable transport, is still to be launched in 2026. Michał Wojtyło emphasizes that since we have gained some time for better preparation, we must use it well.
Read also: How to spend PLN 65 billion? Consultations on the Socio-Climate Plan are ongoing
— If we do not accelerate the green transformation of buildings and transport, a year of delay will not change anything. The mere postponement of the deadline is also less important than price control. There are reduction targets in ETS2 – in 2030, CO2 emissions in the covered sectors are to be 42%. lower than in 2005. Without changes in control mechanisms, with a one-year delay this will mean higher prices – there is less time to achieve the goals, and the path to them will become steeper – warns the specialist. – It is worth considering whether the delay itself, without additional corrections, may increase the subsequent shock. It is possible that a better solution would be the scheduled launch of ETS2 in 2027, but with stronger price reduction mechanisms and lower prices that are easier for social and institutional acceptance, he adds.
What about micro-entrepreneurs?
The expert also calms fears about extreme scenarios. — Estimates popular in the media showed that in 2050, the additional annual cost of heating a house with an area of 100 square meters with coal would be PLN 17,000. zloty. The actually available projections show such hypothetical results, but by now Poland will almost certainly have successfully moved away from individual coal combustion at home, he says.
NHowever, this does not mean that there is nothing to worry about at all — as Wojtyło points out, many households are still dependent on coal for heating, and the Clean Air program, focused on thermal modernization and replacement of heat sources, is in crisis and has lost social trust. – It also lacks long-term financing, which could be partially provided by the Social Climate Fund and other revenues from ETS2 – suggests.
Read also: Clean air: protest in Warsaw today. Contractors are threatening a wave of bankruptcies
What about micro-enterprises that will also be covered by the system? Will bakeries be forced to sell bread for PLN 15 as a result of the fees? — In the discussion about ETS2, micro-enterprises are mentioned too rarely. The draft Social and Climate Plan, which determines the expenditure of funds from the Fund, provides for a support instrument in the form of increasing the energy efficiency of buildings, including the replacement of heat sources. According to the project, the tool will be addressed to micro-enterprises in which the share of the costs of purchasing heating fuels in revenues exceeds 5%. We are waiting for the ready version of the Plan from the Ministry of Funds after social consultations. But this will not be sufficient for the needs. Especially since it does not concern the transport sector. The government should plan additional support from the remaining revenues from ETS2 for small enterprises, so that they can effectively decarbonize based on investments from these funds, summarizes Michał Wojtyło.
