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In 2009, emissions in the EU were for the first time lower than the legal caps that have been set to try to constrain them. To increase incentives to invest in emissions reductions, the caps need to be tightened but a number of Member States have been trying to do the opposite by taking the EU to court to ask for more permits.

Poland’s legal wrangling with the European Commission has come to an end after the approval of its new national allocation plan (NAP) submitted on the 9th April. The dispute began in 2007 when the Commission rejected Poland’s NAP – which requested a carbon allowance of 285 million tones per year – for being too generous. The EU regulator cut the countries carbon allowance by 27% reducing it to 208.5 million tones. Poland retaliated by taking the Commission to the court of First Instance which ruled that the Commission had exceeded the limits of its power of review. The court clarified that the Commission was not able to set target, but has only the power to reject or approve NAPs.

Poland’s new NAP has been approved by the Commission after no fault or concern was found with it. The new NAP requests a total carbon allowance of 208.5 million tons per year. The ability of each Member State to set their own NAP is seen as a weakness of the emissions trading system, allowing countries to set themselves generous allocations. This is set to change, from 2012 the issuing of allowance will be centralised in the hands of the Commission.

Climate Action Commissioner [Connie Hedegaard](http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/442&format=HTML&aged=0&language=EN&guiLanguage=en “”) said: The Commission’s decision has removed uncertainty for Polish companies and most importantly maintains the environmental integrity of the EU Emissions Trading System.

The new allowance of 208.5 million tons is welcome news, however, with EU emissions dropping by 11% in 2009 there is strong evidence to suggest that this figure is still generous and will not create the incentive needed for industry to invest in new green technology and reduce emissions. With Poland’s 2009 emissions looking set to come in lower than its cap, at 188 million tons, the approved NAP allowance of 208.5 million tons is still set to give Poland a comfortable surplus of allowances in the future. Polish emissions fell by 8% in 2009 compared to 2008, giving a surplus of allowance equivalent to more than 13 million tonnes. Allowances which can be banked and surrendered in the next phase of the emissions trading system.

The Commission appears to have used the threat of recalculating Poland’s NAP using updated economic projections, which would have supported an even lower number, to get it to agree to the original number proposed. We now need them to apply the same logic to the EU-wide caps to be set from 2013 onwards, as new economic forecasts will show we can relatively easily tighten caps to deliver a more ambitious climate reduction target.