Poland ready to block EU budget over ETS revenue, with about €1.14bn a year at stake

Poland will not agree to part of the revenue from the EU emissions trading system (ETS) going into the EU's 2028–2034 budget. RMF FM reported this on Tuesday morning, citing unofficial sources. The European Commission proposes that 30% of revenue from allowance auctions should go into the common pot, about €9.6 billion a year. Poland would lose about €1.14 billion a year as a result.

What the ETS is and what the dispute is about

The ETS is an EU system under which power plants and industrial sites must hold an emission allowance for every tonne of carbon dioxide they emit. Member states sell a large share of these allowances at auction, and the money currently goes to national budgets. The more expensive the allowances, the more companies pay and the more states earn from auctions. For Poland this amounts to about €3.8 billion a year. The Commission wants 30% of that revenue to become a new source of income for the EU budget in the next financial period. For Poland this would mean losing about €1.14 billion a year.

"We are against. Full stop"

Warsaw's position is unambiguous. "We are against. Full stop," an anonymous diplomat told RMF FM. "We do not want ETS revenue to go into the EU budget," says Deputy Foreign Minister Ignacy Niemczycki. The government has also rejected a compromise put forward on Saturday by the Irish presidency of the Council of the EU. This means that, for now, no side has found a solution that Poland would be ready to accept.

Unanimity, the Sejm and the president's signature

Poland has a real veto in this matter. Introducing new sources of EU revenue requires unanimity among member states, so the objection of a single country is enough to block the whole arrangement. Ratification is then also required. In Poland this means approval by the Sejm and the Senate and the president's signature. Even if the government agreed to a compromise in Brussels, the final say would therefore also lie with Karol Nawrocki. And the president goes further than the government: "The European Union should start on the path of leaving the ETS," he said.

Summit in Brussels

On Tuesday EU affairs ministers are meeting in Luxembourg to prepare the EU leaders' summit in Brussels on 15–16 October. Niemczycki represents Poland. The ETS dispute is part of wider negotiations on the EU's long-term budget for 2028–2034, in which member states must agree both on spending and on how to finance it.

What it means for Poland

For a country whose energy sector still relies heavily on coal, the ETS is both a cost for the economy and a source of budget revenue. The Commission's proposal concerns the second of these: it would reduce the money that stays in the country. Part of the money that now goes into the state budget would flow into the common EU budget instead. It should be borne in mind, however, that the information about Poland's position comes from anonymous sources speaking to RMF FM, and the government has not yet officially presented its own figures.