The Implications of the European Union’s Climate Policy for the Power Sector
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Publish date: 2010-08-31
Gospodarka Narodowa 2010;241(7-8):85–105
The European Union’s carbon policy, designed to prevent climate change, is a key determinant of the bloc’s energy policy, along with the security of energy supply and market liberalization. While the EU’s energy security agenda is beyond dispute, its carbon policy priority can be questioned in two ways, according to Szablewski. First, the soundness of the policy’s fundamentals raises some serious doubts, and second, the policy can be questioned in the context of its extensive economic implications, especially for the coal-based power sector. Considering that 95 percent of Poland’s electricity is produced from coal, the latter issue is too rarely raised in the ongoing debate on the future of Poland’s power sector, the author says. His analysis focuses on available mechanisms and means of supporting the deployment of low-carbon technologies, which, Szablewski says, are grossly uncompetitive with regard to the traditional coal and gas generation technology. The paper aims to show how low-carbon technologies can be deployed in an effective and economically efficient manner—an issue that has been hotly discussed in international research reports over the past few years. The analysis starts with sketching out the main points of the key mechanisms of supporting low-carbon technologies, i.e. picking winners and level playing field. It then focuses on two economic instruments applied in this area—carbon tax and cap and trade schemes. The conclusion is that there is a conflict between economic efficiency and political considerations.